A data-driven approach to identifying cost drivers and risk concentration within a group health insurance portfolio of 554 members over a 1-year period. This analysis demonstrates how structured claims data can be used to segment members into risk tiers and guide targeted medical interventions.
Executive Summary (TL;DR)
Conclusion · Problem · Solution · Impact
Conclusion — Health insurance costs in this portfolio are highly concentrated. By segmenting members into four risk tiers using historical claims data, the insurer can control high-cost exposure while protecting low-risk members from unnecessary cost escalation.
Problem — Claims spending is uneven and reactive. A small portion of members drives the majority of costs, yet all members are managed under the same policy rules.
Solution — A claims-based risk scoring model was built to rank 554 members into four risk tiers based on claim frequency, cost severity, and chronic condition indicators.
Impact — The model isolates:
- 19% of members driving over 53% of total claims cost
- Rp 2.31B in predictable chronic spending requiring active management
- 57.8% of members suitable for preventive care to reduce future cost escalation
Business Impact Framework
Technical metrics · Business interpretation · Recommended actions
| Technical Metric | Business Interpretation | Recommended Action |
|---|---|---|
| Composite Risk Score (1–100) | Enables clear separation between chronic, frequent, shock, and standard claim patterns | Apply tier-based policy rules instead of uniform coverage |
| Tier 1 Concentration Index (2.81x) | Chronic members control Rp 2.31B in predictable annual cost | Apply premium adjustment and assign case management |
| Tier 2 Population Share (18.1%) | Cost growth driven by visit frequency rather than claim size | Introduce moderate co-pay and annual visit caps |
| Tier 3 Shock Index (3.13x) | Small group creates high volatility through rare large claims | Apply individual stop-loss above Rp 50M |
| Tier 4 Population Share (57.8%) | Majority of members are stable but at risk of escalation | Fund preventive care and annual medical check-ups |
III. The Scoring Model Methodology
Composite Risk Score (1–100) · Three‑factor weighted model · Interactive explorationThe system assigns every member a Composite Risk Score from 1–100 using three weighted dimensions. Adjust the sliders below to explore how each factor influences the final score.
Utilization Score
35%Measures claim frequency relative to the population baseline.
Severity Score
45%Ranks total claim cost; higher costs receive higher scores.
Chronicity Score
20%Uses ICD-10 codes matched against the Charlson Comorbidity Index.
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Risk Tier Thresholds
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This transparent, weighted scoring approach enables underwriters to understand why a member is classified in a particular tier—supporting both automated decisions and human-in-the-loop review.