Understanding the Behavioural Drivers of Organisational Decision ...
Using Behavioural Insights to Improve - Actuaries Institute · • Identifying behavioural drivers...
Transcript of Using Behavioural Insights to Improve - Actuaries Institute · • Identifying behavioural drivers...
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Using Behavioural Insights to Improve
Return to Work Outcomes
© Andrew Smith, Jason Collins, Chao Qiao
PricewaterhouseCoopers
This presentation has been prepared for the Actuaries Institute 2015
Injury Schemes Seminar.
The Institute Council wishes it to be understood that opinions put forward herein are not
necessarily those of the Institute and the Council is not responsible for those opinions.
© 2015 PricewaterhouseCoopers. All rights reserved.
PwC refers to the Australian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
Liability limited by a scheme approved under Professional Standards Legislation.
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Contents
• Background
• Challenges in Return to Work
• Behavioural economics 101
• Application of behavioural insights to Return to Work
• Case studies
• How can actuaries help
• Future directions
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Background
Wide range of technical expertise to ensure successful application of behavioural insights to desired outcomes.
Actuaries • Long-tail claims expertise • Technical data analysis • Injury schemes industry
knowledge
Behavioural Economists • Strong customer focus • Expertise to identify
game-changing
behavioural interventions
Change
Management
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Challenges in Return to Work
• Schemes not optimising customer-centric support to injured workers
– Tendency towards an adversarial claims environment
– Lack of trusted interactions between claimant and claims manager on a
personal level
– Sometimes a strained relationship between employer and injured worker
• Not achieving optimal outcome which benefits both employer and injured
worker
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Behavioural Economics?
Citizen1
Time, attention and ability
Planner
Just the facts
Personal outcomes
Knows what he/she wants
Citizen 2
Limited time, attention and ability
Present biased
Presentation matters
Social considerations
Looks for cues to take shortcuts
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Choice architecture
Image source: public domain; Theory source: “Nudge: Improving Decisions about Health, Wealth, and Happiness” by C. R. Sunstein and R. H. Thaler
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An organised approach
Source: PricewaterhouseCoopers Australia
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Frictions and complexity
Source: PricewaterhouseCoopers Australia
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Frictions and complexity
The action
Source: PricewaterhouseCoopers Australia with anonymised confidential client material
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Frictions and complexity
The decision Legislation
Source: PricewaterhouseCoopers Australia with anonymised confidential client material
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Social
Source: Excerpt from
the TED Talk “Moral
behavior in animals” by
Frans de Waal
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Social
Source: Behavioural Insights Team (UK Cabinet Office), “Applying Behavioural Insights to Charitable Giving”
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Frames Which patient had a better memory of their experience?
Source: “Thinking
Fast and Slow”
by Daniel
Kahneman
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Frames
16%
0%
84%
68%
32%
Image source: “The Economist” Website; Data source: “Predictably Irrational” by Dan Ariely
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Cues and signals
Source: Australian Taxation Office
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Cues and signals
7 CANS 3.3 CANS
NO LIMIT PER PERSON LIMIT OF 12 PER PERSON
Source: “Thinking
Fast and Slow” by
Daniel Kahneman
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Cues and signals
• “Provisional liability allows weekly payments to continue for a
maximum of 12 weeks …...”
• “For the first 13 weeks where you have no current work capacity……”
• “From 14 to 130 weeks of weekly payments….”
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How do we know it’s working?
Source: PricewaterhouseCoopers Australia
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How do we know it’s working? – Trial Construction
• Before-and-after analysis
– Step change in behaviour and results
• Randomised control trial
– control group vs. test group
– Parallel operations
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How do we know it’s working? – Simple Results
Source: PricewaterhouseCoopers Australia
Graphical source: “Understanding People, Better Outcomes” by the Behavioural Insights Unit of the
NSW Department of Premier and Cabinet
Analytical and data source: PricewaterhouseCoopers Australia and icare Self Insurance
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Results Measurements
• Simple approach
– Rate analysis – plot graph of activity
– Cohort analysis
– Statistical tests (e.g. t-test)
– Before and after analysis
– Measured through metrics
• A more complex approach
– Factor models and GLMs
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Example – icare Self Insurance (NSW)
• Commercial trial involving Allianz and NSW Department of Education (DEC)
• Intervention conducted by the Behavioural Insights Team in conjunction with NSW Department of Premier and Cabinet; analytical and data support of the intervention conducted by PwC
• Method:
– Not randomised controlled
– Groups based on geographical location
• Three of the major interventions trialled were:
– Simplification: Communications were simplified by reducing text, moving legislation to the back of letters removing unnecessary letters
– Consistent messaging: Messaging focused on recovery and returning to work, rather than ‘injury management’.
– Commitments: Workers were asked to make personal commitments to support their return to work
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Example – icare Self Insurance (NSW)
• Three of the major interventions trialled were:
– Simplification: Communications were simplified by reducing text,
moving legislation to the back of letters removing unnecessary
letters
– Consistent messaging: Messaging focused on recovery and
returning to work, rather than ‘injury management’.
– Commitments: Workers were asked to make personal
commitments to support their return to work
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Example – icare Self Insurance (NSW) – Cohort Analysis
Source: PricewaterhouseCoopers Australia
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Example – icare Self Insurance (NSW) – results
• Finalisation rates significantly better in the early stages
• Fewer days spent incapacitated in test groups. Significance level
varies.
• RTW rates are becoming increasingly better in the test group in later
cohorts as behavioural change is entrenched.
• 27% RTW improvement overall
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How Actuaries Fit In – Actuarial Control Cycle
Source: PricewaterhouseCoopers Australia
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How Actuaries Fit In – Actuarial Control Cycle
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How Actuaries Fit In
• Identifying behavioural drivers
- Use predictive analytics to identify drivers and causes of behaviours
- Leverage industry knowledge and experience
- Knowledge of claimant behaviour, target behaviours to drive desired change
- Historical partnership with schemes
• Pilot design
- We design pilots to cater for practical interventions and trial designs
• Measurement
- Distinguish between changes in behaviour due to active intervention, and changes
due to systemic environmental influence
- Control for confounding effects and unintended consequences
- Give management confidence in trial outcomes
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Actuaries Alone are Not Enough
• Scheme challenges – Trust, communication style
– Adversarial environment
– Customer-centric
– Win-win, empower claimants to create lasting change
• Power of different skill sets – Behavioural economists
– Actuaries
• Behavioural Economists – Skilled in human observations,
choice and interactions
– Create optimal environment for change
– Manage and implement change
• Actuaries – Access to data, scheme history,
anecdotal evidence
– Industry knowledge and experience
– Data analysis to give confidence in outcomes
– Deep knowledge and experience on the workers comp
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Future Directions
• Apply behavioural programs to benefit societal-relevant issues
• Greater engagement with behavioural research academics
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Questions