Clara Analytics, a predictive analytics company for workers’ compensation claims, today announced that it has raised $25 million. The company says the proceeds will help extend its product suite, attract talent, and expand its global reach.
Insurance companies are increasingly applying AI across all aspects of their business. A study by Genpact found that 87% of carriers set aside at least $5 million for AI last year, more than banking, consumer goods, and retail companies. AI can expedite underwriting and claims processes, as well as combating insurance fraud, which rose in 2018 for the third consecutive time in six years. But it can also address new scenarios in light of the pandemic, which the National Council on Compensation Insurance expects could add $81.5 billion to the cost of workers’ compensation claims in the U.S.
Clara’s suite of AI-powered software — Clara Claims, Clara Providers, and Clara Litigation — taps both structured and unstructured data to extract knowledge from medical notes (including handwritten notes), bills, and other relevant documents. Its algorithms generate predictions and insights from within a cross-industry repository, all informed by a training set spanning millions of data points.
Clara’s dozens of compensation carrier and state fund customers benefit from image and language processing systems that can distill and interpret more than 25 PDF files a second. The models adjust to new data flowing in, according to CEO Gary Hagmueller, enabling claims teams to see real-time estimates that reflect the environment.
Clara fast-tracks simple claims and isolates and tracks more complex ones to identify the factors driving costs. Real-time updates flag high-risk claims before they escalate — using a workflow that enables users to prioritize and take action. And a complementary risk management toolkit provides an overview of claim performance over time. “[W]ith AI, you can quickly get insights from far more data than ever before and respond more nimbly to the fluctuations,” Hagmueller told VentureBeat via email. “We think this will ultimately create distance between firms anchored in the past and those willing to aggressively adopt AI.”
Clara Providers surfaces health providers across specialties and remote locations using an algorithm that scores physicians based on past performance. The tool offers a breakdown of claims’ costs to show what determines provider scoring, including the denied rate, the average claim paid, top injury categories, and attorney involvement rate.
As for Clara Litigation, it sends alerts if it determines claims are likely to go into litigation. Other alerts indicate when it might be time to settle, and the tool ranks attorneys based on costs, open claims, closed claims, and more. Beyond this, Clara Litigation keeps tabs on attorney involvement rates by both adjuster and venue.
Hagmueller doesn’t see Clara’s platform replacing humans in the loop, but rather providing them with useful information. For instance, Clara Providers lets adjusters identify claims when medical notes don’t contain a COVID-19 diagnostics code but refer to “shortness of breath” and “fever” for people near locations with high infection rates. Acting on this information, the adjusters can engage specialists on their team to ensure the claims are handled appropriately.
“The massive fluctuations created by COVID-19 and the downturn make it really challenging for claims teams working with traditional rules-based prediction methods. They have to update forecasts based on best guesses and often manually collected inputs,” added Hagmueller. “We believe AI is a powerful complement to human intuition. Ultimately, our AI enhances the work of claims adjusters by giving them access to data and insights that leverage their skill and experience.”
Aspen Capital Group led this latest investment in Santa Clara-based Clara, with participation from Oak HC/FT and additional undisclosed investors. It brings the 60-employee company’s total raised to $36.5 million following an $11.5 million round in January 2018.
The insurance tech market is red hot at the moment — a record $2.5 billion went to U.S. startup deals in 2018. Last year, online platform Next Insurance, which targets small business owners with a focus on specific niches (like landscaper insurance and personal trainer insurance), raised $250 million. In March 2019, Washington, D.C.-based workers’ compensation insurer Pie Insurance brought in $45 million, a month after CoverHound nabbed $58 million. Commercial insurance company Embroker raised $28 million for its policy-matching online platform last April, and Huckleberry — a startup that matches small businesses with insurance plans using AI — raised $18 million.