Catastrophe management is not a specialty area where insurers can choose to offer boutique service; it is nothing less than the true test of the insurer's capacity to marshal resources to fulfill the promise that a policy implies. The anniversaries of the September 11, 2001 attacks and Hurricane Katrina remind us that these capabilities will eventually be put to the test. Changing weather patterns and events such as the BP Deepwater Horizon spill indicate the changing shape of catastrophe risk. While catastrophe claims may not appear to be the bread-and-butter of claims losses, they are in fact the second greatest source of insurance claim costs, behind medical claims, according to the Insurance Information Institute (I.I.I.).

Bad CAT Management, Good Insurers

Many insurers, including national, household names, are poor catastrophe managers, in part because they do not consider these events "routine." All too often, policyholders who are suddenly desperate for assistance can't reach a customer service representative at their insurer. They are often forced to hold interminably on phone lines and may wait days before initial contact. Follow-up steps are frequently laborious, and policyholders may feel that the insurer considers fulfilling its end of the insurance bargain as more of a favor than a service due. Poor, disjointed claim handling is a blemish on an insurer's reputation, and one that is multiplied during catastrophes.