MEMIC Selects Gradient AI to Enhance Claims Outcomes

August 21, 2023

Expanding on an existing relationship, the insurer will use advanced benchmarking and predictive solutions to manage better forecast trends, optimize case reserves and manage costs.

By Anthony R. O’Donnell

MEMIC (Portland, Maine), an A.M. Best “A” rated workers’ compensation insurer, has expanded its relationship Gradient AI (Boston), an enterprise software provider of artificial intelligence solutions for the insurance industry. Having already adopted Gradient AI’s underwriting solution to enhance risk prediction and capture institutional knowledge, MEMIC has now chosen Gradient AI to enhance its claims management outcomes.

Under this expanded agreement, MEMIC will leverage the advanced capabilities of Gradient AI’s Claims Benchmarking and Total Incurred Prediction solutions. These tools empower MEMIC to identify trends and outliers, improve the decision-making process and refine its reserve management processes so that sufficient funds are set aside to address anticipated claim costs, according to a vendor statement.

MEMIC serves more than 20,000 employers and their estimated 300,000 employees with dedicated safety and injury management service teams from Maine to Florida. With approximately 11,000 open claims at any given time, MEMIC is constantly looking for strategies to improve the efficiency and accuracy of its claims management operations, according to a joint statement. Recognizing the value of leveraging artificial intelligence and machine learning, MEMIC sought to gain additional insights to optimize claim outcomes, reduce claim costs, and improve the accuracy of caseload reserves. These needs motivated MEMIC to choose Gradient AI’s Benchmarking and Total Incurred Prediction solutions, the statement says.

Gradient AI says its benchmarking solution uses a data lake containing tens of millions of claims and policies, enabling users to see how their claims’ reserves compare to similar industry claims. Claims managers can then assess whether the reserve for a specific claim is on target or needs attention because it is over- or under-reserved, the vendor says.

Raising the Bar

“Our claim team is excellent but Gradient AI takes our game to a new level,” comments Matt Harmon, SVP, Claims, MEMIC. “The benchmarking tool compares individual claims to similar industry claims. It highlights those claims deviating from norms, enabling us to decide if reserve levels are adequate. Adequate reserves create greater accuracy when calculating experience modification factors, and in turn better serve the interest of the policyholder and MEMIC alike.”

The companies’ joint statement explains that the total incurred prediction solution predicts the future cost on a case-by-case basis. This enables MEMIC’s claims managers to set future reserves within a certain range of the predicted cost.

“We can create guardrails on our reserve levels so that more of our future predictions fall within those parameters, enabling us to be much more consistent than we are today, and delivering more reliable results,” Harmon adds. “We operate under considerable pressure to ensure the utmost accuracy in our case file reserves. While we have engaged with other AI providers, Gradient AI stands apart by introducing reserve-based solutions that are truly game changers. The inclusion of both benchmarking and predictive tools represents new and exciting territory for us. They are filling a previously unmet need, which holds immense promise.”

Journey Toward Greater Excellence

“MEMIC’s visionary approach to unleashing the potential of data within its workers’ comp claim operations is commendable,” says Stan Smith, founder and CEO, Gradient AI. “Through strategic benchmarking against industry-wide data, and leveraging powerful predictive insights, the company is poised to elevate the precision of its case reserves, amplify claims management effectiveness, and enhance its ability to grow profitably. We are proud to provide industry-leading underwriting and claims management solutions and thrilled to continue to support MEMIC on its journey toward greater excellence.”