How does this definition apply to claims professionals?
In claims, we have an issue with the “big picture” part of that definition. Usually, in our claims customer service courses, we ask claims professionals to use words or phrases to describe their jobs. They will say things like: “investigate,” “negotiate,” “answer the phone,” “handle mail,” and “complete diary tasks.” They may also relay that they “write estimates” and about a thousand other things. What is almost never uttered, however, is providing “customer service.”

Claims is a 100-percent customer service business. We don't build anything. We don't make anything. We don't fix cars; someone else does that. We don't mend wounds; someone else does that. We don't rebuild houses. We arrange for those things to happen, and that is the customer service component. Sometimes we pay people, and other times we don't pay them but at least explain why. Even doing that is part of the customer service we provide.

The very best claims professionals are those who are technically sound, but it the end, understand we are here to help people. An adjuster who doesn't understand this will say, “If you don't sign this form, we can't pay you.” An adjuster who does understand this will say, “If you can sign this form, we can begin paying you.” An adjuster who doesn't understand that will say, “It sounds like you're confused.” An adjuster who gets it, however, will say, “Maybe I didn't explain things clearly, let me try again.” This same adjuster will say, “let me help explain why we take depreciation” instead of “we're going to take depreciation.”

What are the 'three driving factors for improving claims employee performance' that you will discuss at the ACE conference?
Performance is made up of two things: attitude and ability. Attitude represents 80 percent, and ability is 20 percent. It's the Pareto Principal; the old 80-20 rule. Driving up that performance can have many avenues. I will be speaking on these three areas: Creating a culture of customer service awareness; setting a standard that improvement is part of the job; and providing the training and support for people to reach their potential.

Many claims organizations will say they do all this already, when in truth it is their greatest weakness.

In what tangible ways can these ideas be implemented back at the office?
Every interaction in a claims office is a potential training opportunity. Office meetings, break room conversations, and even  casual conversations  about procedure changes are all perfect times to create a culture. Declarations in newsletters, e-mails, memos, wall signs, and the like are very weak methods to garner support for a cultural improvement compared to an open discussion in an office meeting.

What is one key takeaway for audience members?
That improvement is possible, available, and much less expensive than not doing anything. You can hire all of the talented people you want, but in the end, if there is not a system in place to shape that talent, it's all a waste of time. In management we seem to accept that it is normal to have only a couple of exceptional performers, rather than believe we are in control of creating them.

After Sandy: Dealing with Superstorm Claims Issues
When: June 20 at 10:00 a.m.

Sophisticated financial institutions were among the many companies impacted by Hurricane Sandy, which is now ranked as the third costliest hurricane in U.S. history. Accurately figuring out loss of income, extra expenses incurred, and other factors involved in calculating business interruption (BI) claims has been particularly daunting. However, the claims management lessons gleaned post-Sandy will be invaluable in handling the next “superstorm,” as Douglas Dixon, senior VP of claims at Swiss Re explains below.

Can you describe Sandy within the context of other recent weather-related catastrophes and its relative effect on claims operations?
This event is similar to Hurricane Katrina when it comes to how it has impacted claims operations. While the average paid loss will not be as large as Katrina, the number of losses is very similar in size. So, the U.S. insurance industry has not seen an event of this size in seven years. It is difficult for an insurance company claim operation to staff and train for an event of this size since they do not happen with a lot of frequency. If the insurance company is large enough, it may have a national catastrophe team that travels the country to deal with events of this magnitude. At the other end of the spectrum are smaller companies that might have to ask underwriters, executives, accountants, and other staff to help the claims team when an event of this size strikes. 

What types of damages caused the most issues in terms of claims management?
The initial claims management issue after this event was dealing with the sheer number of properties damaged. ISO's Property Claims services [pegged] the number of resultant homeowners' claims at over 1 million, in addition to more than 250,000 auto claims. Couple that with some of the state insurance departments shortening time requirements for insurers to respond to their insureds, and it was a real test for insurers and their catastrophe plans. Insurers had to call upon all of their resources for triage claims so the most urgent situations could be dealt with first.

Commercial claims will present a whole different set of issues for claims management. The commercial claims arising from this event are proving to be very complicated because of the nature of the business suffering damages.

I see two categories of businesses that I am sure will prove particularly challenging. The first category is the infrastructure providers. Insurers of the entities that provide the trains, subways, bridges, tunnels, and utilities will be sorting through very complicated and unusual business interruption claims as well as property damage claims. The second category is financial service companies. Lower Manhattan is the most important financial district in the world. Many of the companies based here do very sophisticated transactions that may or may not be covered by business interruption coverage.

Discuss some of the main claims-related issues that were raised as a result of Hurricane Sandy.
First and foremost, insurers have to sort out the peril, either flooding or wind, that caused the damages. Both commercial and personal lines policies can respond differently to damages from these two different perils. Insurance policies contain different policy language in the insuring clauses, deductibles, exclusions, sub-limits and limits that apply based on the peril that caused the damage. In some cases, like homeowners insurance, there is no coverage at all if flooding caused the damages.

Second, I think business interruption claims will be difficult to adjust after this storm. As I mentioned earlier, many of the companies that suffered interruption are sophisticated financial companies. Figuring out the loss of income (if any) and the extra expense incurred by insured in this area will be very complicated. Some insureds may claim they suffered a business interruption (BI) loss even if they did not suffer physical damage. This can occur in areas where there was a government order to shut down an area, or if all the businesses around the insured were shut down because of physical damages. Typically, insureds who suffered no physical damage would not have coverage, but you can bet  they will be looking at all four corners of their insurance policies to find coverage.

Looking forward, how can we learn from this and better mitigate this substantial risk in the future?
Certainly, this was a wake-up call for the northeast. It had been a while since a significant hurricane or “superstorm” had made landfall in this area, and I think people tried to ignore the risk. I think the single most important thing to be done is for the insurance industry and the government to work together to update the mapping for flood zones.

The public needs to know if they own property that could flood. I also suspect insurers will reconsider deductibles and rates especially for property close to the coastline. I would hope that these efforts might discourage developing expensive property in flood prone zones, but I admit that is unlikely in such a highly populated area.

Much thought needs to be given to improving our infrastructure. Many people were without power for too long. Are there cost effective ways to protect or build a stronger electrical grid?

There are all kinds of things I think individuals have learned, from buying generators to getting a full tank of gas as a storm approaches. Businesses should have learned the importance of having a sound business continuity plan, making sure electronic data is backed up, and having a good insurance policy.

What do you hope the audience will take away from your talk at ACE?
I hope they will take away an understanding of what made this event unique, but a realization that it could easily happen again. I want the audience to have a healthy respect for the great job the insurance industry has done in dealing with this event. I want to shine the light upon a few claim issues and offer some suggestions for handling claims properly.

Finally, I hope I can trigger the audience to think about what we learned form a claims standpoint in this event, so we can apply that knowledge in dealing with future events.

About ACE

America's Claims Event (ACE) brings together senior claims managers and a wealth of industry practitioners & experts to examine tactical strategies intended to improve all aspects of claims handling. This year's event will take place in Austin, Texas, where more than 400 professionals and decisionmakers from midsized to large Fortune 500 companies will exchange ideas and foster solutions for the most perplexing operational challenges.