Catastrophes come in all types and sizes, and each one brings specific challenges to the insurance industry. The widespread property damage caused by natural disasters requires foresight and planning by insurers and their policyholders. The planning should take place long before the event occurs, or the insurer will fail in its management of the claims arising out of the catastrophe and its duties to its clients. The failure will lead to:

• Additional emotional and financial stress to the policyholders who are already trying to endure extremely trying times.

• Inefficient work by adjusters and the insurer's vendors that results in poor outcomes at unnecessarily high costs and further delays resolution.

• Loss of future business when policyholders move their business to competitors because of poor claims service and they complain to their neighbors and friends, which discourages them from considering your company in the future.

Some of the decisions that will impact disaster response also affect the operational efficiency and effectiveness after the event occurs. Corporate philosophies and structure will also affect how the situations are handled. Here is a look at the steps insurers, independent adjusting firms and policyholders can take to reduce the terrible impact of natural disasters, and the coaching they can provide to their policyholders to prepare for such events.

The insurer's philosophy and its impact

Some of an insurer's decisions which affect outcomes following natural disasters depend on the lines of insurance that it favors, the concentration of its business, and the philosophy of claims handling. These will affect its:

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   1. Need for on-site claims personnel in a particular geographic area.

   2. Willingness to rely upon independent adjusters (IAs) and other vendors or contractors to perform parts of the claims handling process.

   3. Attitude toward training and its related costs, which contribute to the expertise of its adjusters.

Let's discuss how the philosophy affects these three items.

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   1. Need for on-site claims personnel in a particular geographic area.