What we’ve learned from Hurricanes Harvey, Maria and Irma

“Never let a good crisis go to waste,” has reportedly been attributed to Winston Churchill, grandson of England’s 7^th Duke of Marlborough, regarding post Second World War conditions leading to the formation of the United Nations.

Whether Churchill actually said this or not, the observation can also be applied to the insurance industry following Hurricanes Harvey, Maria and Irma in 2017. The insurance community can begin to put these weather crises to good use by adjusting its expectations regarding catastrophe forecasting based on the following meteorological scorecard:

• Hurricane Irma became the strongest Atlantic storm on record — excluding the Caribbean and Gulf of Mexico.

• In terms of hurricane intensity, September 2017 is now recognized as the single most powerful month ever recorded in the Atlantic.

• With Hurricane Harvey dropping 60.58 inches of rain near Nederland, Texas, a new record for the greatest amount of rainfall in the 48 contiguous states from a single storm was established, according to WeatherBug.

• When you group Hurricanes Katia and Lee with Harvey, Maria and Irma, their “Accumulated Cyclone Energy” was recorded as the greatest amount of energy for any month on record, according to Colorado State University meteorologist Phil Klotzbach.

• The 2017 Atlantic hurricane season was the first season since records were first kept more than 150 years ago during which two Category 4 hurricanes – Harvey and Irma – made landfall on the continental U.S. in the same year, said Klotzbach.

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Insurance carriers can go further in not wasting 2017’s weather crisis through the following actions:

• It is no surprise 2017’s oversized weather events produced an enormous number of claims. Along with a trail of destruction, they left in their wake desperate business and homeowners who were anxious to begin putting their businesses and homes back together again.

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Carriers can better serve insureds in a timely fashion following future events, and anticipate potentially negative publicity from news organizations covering these weather events, by staffing claims departments at levels capable of responding to the large number of claims sure to follow. Even if it is not economically viable for this level of staffing to be permanent, plans should be in place prior to the event to deal with spikes in claims activity. Of course, technological solutions such as online client portals can also help to process claims quickly when the claims system is under stress.

• Insureds contacting claims personnel following significant weather catastrophes are unlike calls following everyday spills, breaks and losses. Insureds making these calls have been rocked to the very foundation of their lives. They may have seen all they worked for and much of what they cared about washed or blown away.

Claims personnel should be trained to recognize the difference, and to employ language and an empathic mindfulness appropriate to the situation. If the past is a prelude to oversized weather events, claims advocates will increasingly need to acquire the skillset typically associated with grief counselors.

• Claims following major weather events can potentially affect carriers’ financials. If hurricanes like Harvey and Irma become commonplace rather than once-in-a-century events, this recognition is vital to financial projections and meetings with analysts.

• Reserves held against claims must be similarly adjusted if weather-related catastrophes become uneventful.

• Significant weather events present an important opportunity for independent agents and brokers to demonstrate their value to insureds and it should not be wasted. Standard, cookie-cutter insurance policies simply will not suffice in a world where oversized weather events become frequent occurrences. These incidents call for carefully crafted, custom designed policies. Because skilled, experienced independent agents and brokers can better anticipate the consequences following severe weather catastrophes, they can be depended upon to add coverages to keep home and business owners whole following an insurable oversized weather event.

• Carriers, as well as brokers and agents, can begin to help insureds transfer the risks of catastrophic weather events to insurance products through communications outreach. Social media, newsletters, e-blasts, blogs, advertising, direct mail, websites and personal contact are only a few of the tools available to accomplish this task.

We spend all of our professional lives considering the consequences and mitigation of risk, while insureds are busy with their own personal and professional preoccupations. It is our duty as professionals to help insureds prepare for future storms.

Gerry Sorge is a claims advocate at KMRD Partners, Inc., a risk and human capital management consulting and insurance brokerage firm located in the Philadelphia region and serving clients worldwide. Contact him at gsorge@kmrdpartners.com.

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