Lessons learned from the 2017 CAT season

Last year we witnessed a particularly brutal hurricane season — specifically four hurricanes that caused some of the highest amounts of property damage on record. Each of these 2017 storms were Category 3 hurricanes or higher, and caused more than $200 billion dollars in damage.

Hurricanes Harvey, Irma and Maria swept through Texas, Puerto Rico, and the U.S. Virgin Islands, reaching speeds up to 155  mph and claiming the lives of more than 100 persons in the process. The storms also destroyed an immense amount of property, resulting in extensive damage to businesses, schools and private homes.

A recent survey conducted by J.D. Power, suggests that hurricanes Harvey and Irma alone created major challenges for business and consumers in Texas and Florida. The survey concludes:

• Hurricanes Harvey and Irma presented a unique opportunity for service providers to prove their worth when providing customer service during a time of distress for customers.

• Across the board, service providers and utility providers received a mixture of praise and criticism.
• In summary, home insurance providers scored significantly higher marks than auto insurance providers — both of which received ‘better’ praise than cable companies.

As J.D Power’s survey infers — insurers not only stepped up when policyholders needed them most, they likely had to scale up in a number of ways, two of the most important being customer service and increasing overall manpower.

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

Insurers respond to multiple disasters

After the 2017 Atlantic hurricane season, it is safe to say that insurers undoubtedly learned many valuable lessons, as did those in related industries. There were numerous insurance providers, adjusters and restoration companies on the ground, assessing damage and assisting with cleaning and rebuilding efforts.

Jarrod Murrieta, head of claims catastrophe response for Farmers Insurance says they learned three key lessons from the 2017 Atlantic hurricane season. The first is making sure to vet and pre-test your supply chain.

“During the hurricanes there were periods where many things we often believe will be in endless supply on a day-today basis, simply weren’t available at a moment’s notice — from rental cars, fuel and ladders to independent appraisers and engineers. While we work diligently to prepare for these types of events, it is a challenge to find ways to test the supply chain to the degree we experienced during the hurricanes. As a result, we are increasing our efforts to identify any areas to address and are exploring creative ways to help prepare for the next major event,” Murrieta says.

His second lesson focuses on providing supplemental training to adjusters so they can share information with customers about the multiple parties they might encounter as a result of filing a claim.

“The on-the-ground reality was that our customers were likely to work with additional organizations to help with their recovery. For example, the catastrophic Texas flooding customers with flood insurance would also experience a claims process with another carrier, in addition to Farmers. In certain locations, there might also be a third carrier involved in addressing damage caused by wind. By providing our catastrophe claims team members with additional information about other programs on the front end, we found this to be quite helpful,” Murrieta explains.

The third lesson underscores the value of training. Since Hurricane Ike, Farmers Insurance has conducted regular stress tests of its catastrophe response systems and Murrieta claims there were three exercises that have proven to be invaluable. He states that annually, Farmers works with all parts of the Farmers organization to prepare for a major catastrophes. The insurance giant currently tests the following elements:

• Communication channels.
• Resource planning.
• Logistics.

These simulations are performed using make-believe scenarios to create a sense of reality. Overall, Murrieta says the process takes a significant effort, but pays off when activated in the field.

Alex Kubicek, founder and CEO of Understory, a weather forecasting and data collection firm, says resources and adjudication times are two of the biggest challenges insurers faced when managing multiple major hurricanes in the short period of time.

Kubicek continues, “Crisis assessment and treatment teams are well-trained in deploying into areas affected by large-scale events like natural disasters, but quickly responding to customer needs and working in more than one location at once can prove to be a challenge. Natural disasters are one of the few ways you can interact with customers and get a chance to put your best foot forward. This alone can add lag time to claim settlement times, which can lead to frustrated customers and higher claims costs.”

Related:  Lessons learned from a painful year in insurance

Scale up technological capabilities

Snapsheet uses technology to help insurers expedite their virtual claims processing, and CEO Andy Cohen offers some insightful commentary and tips. Taking actions such as preparing adjusters with a detailed analysis of what they’re likely to see on-site before they step foot on the property is one of them. Cohen says insurers need to scale up their technological capabilities to reduce time spent on the claims process.

“By giving adjusters information about where damage will most likely be sustained can significantly shorten time spent inspecting property while increasing efficiency. This will ultimately result in more home inspections per adjuster and create less stress for all parties involved,” he shares. “In the days leading up to Harvey, we knew we were about to receive an extreme influx of claims and needed an even faster way to process them. We realized the solution wasn’t in scheduling more staff in the call centers, but reworking our code to create a separate workflow for these claims.”

In order to keep up with the demand of claims, members of his company rewrote software to handle the volume of incoming claims. They also communicated with staff about the possibility of overtime in order to accommodate the influx. In the end, Cohen says the company did not need the extra human support due to the additional bandwidth their newly-created code brought.

This raises another point, the value of communicating with employees during times when claims are expected to increase at an alarming rate.

Details matter

In the case of natural disasters, details matter — and can have the biggest impact. For instance, the way people are paid for claims. In catastrophes, things like the postal service or even home addresses are not always operational.

Cohen says his company now works with carriers to offer a service that pays claims digitally. Looking ahead to the future and considering preparation, Cohen says tactics like this will be a big help moving forward.

Innovation and problem-solving go hand-and-hand, and have been implemented in a number of cases where insurers have had to scale up their resources on the ground.

Today, there are tools to help increase claims adjuster manpower and overall reach when assessing the damage. These tools often come in the form of apps for cataloging personal items for insurance purposes and drones that assess damage from the sky. In this instance, digital claims payments and virtual claims processes are merely the tip of the iceberg.

“Asking the right questions is a good starting point. For example, how can we make sure claimants get paid as fast as possible?” or “How do we process as many claims as quickly as possible?” Cohen asks.

Blending technology & human intelligence

EagleView CEO Rishi Daga shares that his firm also had a high-tech response. The company provides property image solutions and data analysis for property and casualty (P&C) insurers using its fleet of more than 120 fixed-wing aircrafts, drones and satellites.

“When you’re faced with catastrophes of this magnitude, it’s important to marry human intelligence and empathy with a set of tools that can speed up the claims process so victims can move forward. We saw that firsthand. During this period, it was (and remains) important to provide claims adjusters with technology that can assist in doing just that, considering they had to assess thousands of properties that were simultaneously damaged or destroyed by natural disasters.

An army of adjusters with flashlights and clipboards simply won’t get it done in that situation. For so many insurers, juggling multiple hurricanes was a ‘once-in-a-lifetime’ challenge that occurred twice in the same year,” Daga says.

This takeaway just might be what insurers need to hear. Gone are the days where simply sending a small team to the scene of a natural disaster will suffice. Today, we are dealing with large-scale weather events — 2017 even showed an unfamiliar side, producing mudslides and other forms of less common forms of natural disasters.

The future of storms

To confirm this conclusion, let’s dive a bit into research conducted by Florida State University climate scientist and geographer James Elsner and his collaborator Nam–Young Kang. The duo published research on the effects of climate change on tropical hurricanes in the past 30 years. Their research suggests the world is warming up and that we will have less frequent, yet more forceful tropical storms.

With this in mind, insurers will likely never be able to gauge how many contingency plans to put in place. They certainly won’t be able to predict the magnitude of natural disasters before they happen or even know what to expect from day to day. This is especially true when unpredictable weather forces companies to restructure the way an agency functions.

The key in many cases is just being there for policyholders as a resource. Providing excellent customer service is another component, and finally, executing regular stress tests on communication channels, resources and logistics can round out preparations.

This will help create a less stressful experience for all parties involved. When hurricanes occur, insurers have the potential to emerge not only having cultivated stronger relationships with policyholders, but with the feeling of providing customer service that goes above and beyond what policyholders might ordinarily expect from an insurance provider.

Moshe Beauford (moshebeauford@gmail.com) is a freelance journalist, copywriter and blogger. Beauford’s work has appeared in publications such as GeekTime Israel, PasteMagazine, Times of Israel, Property Casualty 360 and Claims.