Advocating for airlines: stabilizing the aviation industry in a time of unprecedented change

November 1, 2023

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This blog is the first installment in a series where our experts highlight the aviation industry’s challenges and trends. In part one, we discuss the people story. Stay tuned for the second blog focused on the property/liability claims story, which is coming soon.

The global airline industry landscape has seen unprecedented fluctuations in recent years — from mass layoff upheavals and labor shortages to operational challenges resulting in widespread flight delays and cancellations. Today, airlines around the world are focused on increasing capacity, smoothing out operational kinks and retaining workers. 

As flights returned to 2019, pre-pandemic volumes, airlines are playing catch up through hiring sprees. Amid widespread labor switch-ups, a concerning trend has taken shape: a substantial rise in employee workers’ compensation claims, in both frequency and severity. Are airline employees being sufficiently advocated for?

Airline employee claim trends

The types of workers’ comp claims range from a flight attendant slipping and falling during a layover at a hotel to a fatigued baggage handler spraining an ankle during a night shift. Some airlines are experiencing notable increases in newer employees sustaining on-the-job injuries, while others are seeing older, longer-held workers sustaining more severe injuries due to steep physical demands while aging. Regardless, there are injuries abound. 

The concentration of injuries among newer employees could point to lackluster pre-employment testing, unequipped new hires or poor training when it comes to the job’s physical demands. A large majority of the claims we see are musculoskeletal-related, resulting from ground crew members lifting, pulling and pushing. But there are other factors, too. 

As the climate changes and severe weather events occur more frequently, increased temperatures are affecting workers on the tarmac and other outdoor environments. Additionally, claims are more expensive and complex now than before. When comparing 2022 versus 2019 airline workers’ compensation claims, increased severity of claim cost has contributed to 5.3% more total temporary disability (TTD) days and 4.2% longer durations, according to Sedgwick’s aviation book of business. Medical treatment is more complex, disability durations are longer, and claims aren’t closing as quickly as they were pre-pandemic.

Harnessing industry-leading tools

In an environment where employee absences — whether from injury or illness — can quickly impact the bottom line, it is critical that employers have the right tools and resources at their disposal. 

First, employers need to understand the root of a problem, and those answers lie in an organization’s data. To successfully manage productivity, and protect itself from litigation, employers need access to all current data: workers’ compensation, disability, absence, accommodations, liability and property claims, etc. However, many airlines do not have a data collection system in place. 

With more than 30 airline clients, Sedgwick’s benchmarking is the largest data set in the airline industry. It allows for sophisticated predictive modeling, industry benchmarking and data analysis that can clearly pinpoint trends, identify cost drivers and track performance metrics. Above all, it grants Sedgwick the ability to provide an unprecedented level of insight — like no one else can. Our data assets are leveraged by our tech offerings: proprietary claims systems, our flexible intake platform Smart.ly, viaOne suite for clients and mySedgwick self-service tool for consumers. 

Customizable solutions

Managing risks for airline clients creates unique challenges, from the breadth of potential exposure to the diversity of possible claims. A cookie cutter approach will not fly. That’s why each program is designed with flexibility in mind — bolstered by the understanding that an airline’s needs today may be drastically different than their needs six months from now. Whether the need be addressing pain points related to workers’ comp, providing additional structure for accommodation requests or white-glove-service handling of non-occupational injuries, all solutions ebb and flow with the client’s ever-changing needs.

Airline employees range from pilots and flight crew to ground and support personnel — with several different collective bargaining agreements. Whether an airline is a union or not, custom return to work management is critical. Sedgwick’s suite of services can administer limited duty placement and provide the oversight required to support the airlines’ interactions with labor groups and avoid unnecessary violations. 

Advocating for your valued employees

Airlines run 24/7 operations, so when an employee needs urgent medical assistance, it could be at any hour of the day or night. The industry has seen significant gaps in readily available clinical consultation resources when on-the-job injuries and illnesses do occur. That’s where Sedgwick comes in, as an extension of our airline clients, to provide injured workers with the highest level of care — no matter what time of day they may need it.

As claims volumes increase, and litigated claim expenses, such as legal defense, surveillance and special investigations continue to rise, advocating for employees has never been more critical. According to data from the National Association of Insurance Commissioners (NAIC), litigated claim expense costs as a percentage of the total incurred losses can account for as much as one-third, or even one-half, of total incurred losses. Additionally, awarded verdicts are higher than ever. A study by Verdict Search found that between 2019 and 2020, there was a 300% increase in awards across the insurance industry of $20 million or more. Reported losses across various lines of business are growing at a faster pace than insurance premium rate increases. 

Looking forward

Many airlines are seizing the current growth opportunity by offering more flights and adding more destinations to their routes. That will likely continue. As growth increases, so will claim volumes — unless employers reassess their approach to employee advocacy. In the coming months, organizations that demonstrate a commitment to exploring promising solutions and supporting their injured workers will be the ones that overcome current challenges and come out ahead.

How data and AI/ML are shaping the future of claims management

June 15, 2022

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By Adam Fisher, chief data officer

The volume of claims processed every day and the amount of data attributed to those claims is growing.

But what we’re doing with data within the claims management space is constantly changing. And while risk factors must be considered, we’ve only begun to tap into opportunities for the future. Data, combined with artificial intelligence, can be used to reduce claims costs and processing times, and to facilitate adjusters, clinicians, and customers with a more intelligent way of making claims handling decisions.

My role as chief data officer has given me unique insight into the possibilities for data in our industry. I came into this role in 2021 and in just the 1.5 years since I joined Sedgwick, so many things have changed for our data science team. We’ve strategically invested in expanding this team, as well as breaking down silos for analysts to more effectively collaborate across our organization in support of decision optimization for our business units. We are focused on training, educating, and upskilling the data analyst population. And to make it all possible, we’ve integrated new AI-focused platforms and tools to allow both highly technical users as well as business users who hold valuable contextual knowledge to collaborate in new ways.

But why such an investment and focus? It comes down to two things in my mind: efficiency, sure, but also opportunity. At Sedgwick, we like to say that taking care of people is at the heart of everything we do, and that’s true even when we think about why we take on new initiatives in technology.

Efficiency is essential to evolving the claims process – and the way we care for people

Claims management has always been a data-driven endeavor to some extent. The future is about helping our large population of examiners/adjusters/clinicians save more time on the highly repetative tasks so they can spend even more time thinking about and strategizing on the more complex aspects of claims adjudication such as reserving/settlement actions. Simplifying the claims process helps us care for clients and the people they support – from employees to policyholders to customers. It’s critical for user experience, quality of outcomes, and speed of resolution. The goal is to improve outcomes by reducing claim costs or processing times, and we take on projects that we believe will be the most impactful.

How data science and AI are making a difference:

  1. Easy access: By linking our team and our data through a new platform that is both robust and user-friendly for a large portion of our population, analysts and data scientists can easily access data elements that were very hard to get to before. Generalized data for the popular elements needed to analyze and model claim outcomes now easily flows into the system, and models that are found to be useful can be replicated easily to benefit additional clients almost instantly.
  2. Let’s connect: With new supporting tools and more robust reporting capabilities, we’re now better able to work together across our IT organization and better collaborate with the business. Our decision optimization team and analysts and stakeholders within our business units are, together, finding opportunities where they can capitalize on areas of efficiency within current systems or extract valuable insights from data to improve the process.
  3. Sharing is the standard: By linking people, technology and data in new ways, our data science team can now rapidly develop, share and deploy scorecards, benchmarking tools and models to capitalize on benefits and value across clients. With the tools for progress all in their hands, replication of projects is now easy. If we build a customer model that’s successful for one of our clients, we can simply copy the model, change the client, and then fine tune it to the client’s unique use case and historic data. We have achieved a new level of global collaboration which goes above and beyond the technology.

Industry-wide impact and opportunities for transformation

We have the responsibility to reduce risk and to prepare and protect our clients using data science. A common challenge for corporations and carriers is finding an attorney or firm they can trust to improve claim outcomes. They’re also seeking to protect themselves against financial and reputational risks, specific challenges such as fraud and nuclear verdicts. We believe comparable performance metrics should be used to address these concerns. In the same way that provider benchmarking relies on data to predict which providers will bring the best outcomes to a claim, we believe an attorney scorecard based on the history of claims and court case outcomes can provide a similar benefit.

When it comes to systemizing the use of data and AI, and giving more roles and profiles a seat at the table, there is indeed an opportunity for new and existing models to be woven into the entire claims handling process. Everyone involved such as claims examiners, client service directors, and managers would use the data and insights provided to augment their decision-making capabilities.

One opportunity would be to apply a global score to all claims. This way, those working at the claim level might be able to use these scores to prioritize and compare claims universally, offering a rating system to the industry as a benchmarking standard. Today, this only exists in the form of time ranges for things like return to work guidelines or severity indices. Having scores or models applied to multiple areas of the claim can certainly help to streamline the workflows, but it’s not until AI or machine learning itself is performing those examiner tasks that the team will have achieved AI at scale.

For us, success when it comes to data and AI is having a process that delivers a usable product from start to finish and is fully integrated into Sedgwick’s systems while requiring minimal maintenance or manual intervention. Thanks to the caliber of our global data teams, the tools we’re putting in place and the power of our data, our organization is poised to uncover unique opportunities that might not be possible anywhere else. We can leverage our data to not only improve our own claims management process, but also develop new methods or insights that bring value to the entire industry.