How Crawford & Company’s Broadspire aligns technology and AI to client outcomes

AI insurance claims technology: Crawford & Company ties 25% cost cuts to AI rollout

Sarah Mills | GlobalBeat

Crawford & Company said its Broadspire unit trimmed claims- handling expenses by one quarter after embedding artificial intelligence across its workers’ compensation and liability platforms.

The Atlanta based claims administrator said average case duration fell 20 days, savings that surfaced in client renewals during the first quarter.

Insurers have pressured adjusters to cut loss-adjustment costs as inflation pushed claim values higher, according to National Association of Insurance Commissioners filings.

Speaking on a May 14 webinar, Broadspire chief operating officer Paul Tyrell said machine-learning models now triage 70 percent of new injury reports within 15 minutes. “AI flags the 30 percent that need human eyes and routes the rest straight to medical or settlement tracks,” Tyrell told reporters. Crawford said the shift released 180 adjusters to complex claims without adding headcount.

Client data released by the unit show average medical-bill review time dropped to 4.2 days from 6.8 days year-over-year. Tyrell attributed the gain to natural-language tools that extract diagnosis codes and fee-schedule benchmarks from unstructured invoices. “What took a bill-review clerk 20 minutes now takes the bot 90 seconds,” he said.

The technology push began in 2021 when Crawford signed a multi-year licence for a machine-learning platform from Insrael start-up Five Sigma. Crawford said it spent $14 million on AI pilots that year and another $11 million in 2022 before rolling the tools to all Broadspire offices in the United States and Canada.

Tyrell said savings already exceed investment. Crawford told investors in April that Broadspire posted a 320 basis-point improvement in operating margin for 2023, lifting the unit’s profit to $92 million on $1.2 billion revenue. “Every point we shave off cycle time converts to fee income,” Tyrell said.

Third-party administrators compete on price, according to a May report from rating agency AM Best. The report said TPAs that integrate AI “show measurable expense advantages” when vying for renewals with carriers such as Liberty Mutual and Travelers. Both insurers declined to comment on vendor performance.

Crawford shares rose 12 percent after the earnings call, closing at $7.84 on April 30. The stock traded at $5.90 twelve months earlier.

Privacy advocates questioned the breadth of data fed to algorithms. Cindy O’Neil, director of consumer group PatientPrivacyRights, said injury reports contain medical records protected by HIPAA. “TPAs must prove AI vendors meet the same privacy standards as human adjusters,” O’Neil said in an email. Crawford replied that all Five Sigma servers sit inside U.S. cloud regions certified under HIPAA and SOC 2.

The Georgia Department of Insurance confirmed it has received no consumer complaints related to Broadspire AI practices since January 2023. Commissioner Spokesman Weston Burleson said the department “monitors emerging technology for unfair claims methods” but has opened no investigation.

Industry lobbyists warned regulators could tighten oversight. The American Insurance Association said in March it expects state insurance departments to issue AI guidance by 2025. “Adjusters remain liable for algorithmic decisions,” vice president Robert Gordon told a Florida hearing. Crawford said it keeps a licensed adjuster in the loop on every claim closed above $25,000.

Tyrell said the company plans to export the platform to the U.K. later this year where Crawford handles liability claims for London-market insurers. Britain’s Financial Conduct Authority published discussion papers in 2023 asking whether AI claim systems create “harmful consumer outcomes.” Crawford said it will run a six-month pilot with 50 U.K. clients before full deployment.

Background

Crawford & Company built the largest independent claims-handling network in North America after its 1941 founding in Waco, Texas. The firm grew by taking over back-office tasks for insurers that wanted to avoid fixed payroll costs. TPAs traditionally profit by charging a percentage of settled claim value while keeping labor costs low.

Pressure on margins intensified after 2016 when auto and property claim severity began rising faster than premiums. A 2022 Insurance Information Institute study shows loss-adjustment expenses reached 11.9 percent of earned premium, the highest ratio in two decades. Carriers responded by demanding faster cycle times and lower per-claim fees from vendors.

What’s Next

Crawford said it will publish updated AI savings metrics at its August investor day. The company expects to complete U.K. pilots by December and decide on European roll-out in the first quarter of 2025.