Claims management equals risk management
Having a real-time view of potential exposures from extreme weather and other such catastrophes is a critical advantage.
It is not even a year since Hurricane Harvey delivered catastrophic and unprecedented inland flooding across southeast Texas and parts of southern Louisiana. Most of the Houston Metropolitan area, with a population around 6.3 million, was significantly impacted as flood depths reached up to 12 feet (3.66 meters) in places.
When the hurricane dissipated, on Sept. 2, 2017, the Texas Department of Public Safety reported that more than 200,000 homes have suffered flood damage; around 12,600 of those were completely destroyed. In Harris County alone, around 156,000 dwellings were damaged by flooding, which is equivalent to more than 10 percent of all structures in the county, according to state officials.
Houston is still in recovery, but new stories related to the catastrophe continue to emerge, from residents raising house foundations to a surge in new flood insurance policy sales.
The claims management bar rises
Insurance carriers that provide flood coverage and with significant domestic and commercial exposure in Texas got into gear to do the job their clients pay them to do; to sort out the mess.
But where should they start in staggering situations such as this? In Harvey’s aftermath, claims department telephones rang hot while managers pulled in all possible resources, and a true picture of the damage unfolds through a patchwork of claims and anecdotal evidence from teams dispatched to the scene.
Technology’s new tools
What about if these insurance professionals could turn the situation around? Rather than wait post-event for clients and agents to start to create the picture as to the depth of exposure, insurers could generate insights on the impact before and during the event? Such a system could allow insurers to turn to risk and exposure management processes and systems first, before deciding on a plan of action to manage claims?
What was noticeable with Harvey, and with all severe flooding events, was that flood damage can vary wildly dependent on a range of factors such as elevation, closeness to flood plain, flood defenses in place, and so on.
To get a handle on the situation, to see which clients will be the worst affected, through to those where damage could be slight or not at all, would enable a carrier to quickly make an assessment of the situation. It also would provide reassurance as to how financially exposed your business is to such an event.
Where staff resources are tight, and clients are expecting their carrier to spring into action, having a real-time view on how an event such as Harvey affects your exposure will deliver a critical advantage.
Software-driven insights
As Harvey unfolded, Risk Management Solutions employed our software solution, Exposure Manager powered by RMS(one)®, to provide real-time information about the impact that the hurricane would have on client exposure and automatically seeded the Harvey hazard layer in the client tenant, to deliver quick access to analytic insights from the RMS U.S. Inland Flood HD Model. This models all sources of flooding across space and time, and can also be used to identify and differentiate locations at risk based on flood extent and severity.
This strategy enabled our clients to visualize the Harvey flood layer along with their exposures. There was no need for a large compute to render the data, and no fussing with data imports or exports. These insights were literally delivered to a client’s web browser.
Clients could also use the Exposure Manager accumulation engine with the built in financial model to define their own damage assumptions for flood bandings, and run analytics against their exposures. They could view total insurable value (TIV) and exposed limit at the portfolio level and can drill down into the location level output to identify contracts and exposures that are likely to be affected by this flood event.
This capability has now been enhanced to allow clients to understand their exposed limit metric gross and net of reinsurance providing them a more accurate view of potential losses.
Customized client communications
This insight is delivered on a browser to teams that need it, in a highly visual form.
This level of insight takes business agility to the next level because you now have more clarity to the question “what does this mean for us” and most importantly, the analytic insights to proactively plan how you can support your clients in their time of need.
Farhana Alarakhiya is vice president at RMS. To reached this contributor, send email to Farhana.Alarakhiya@rms.com.
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