Handling CAT claims with agility, configurability, and efficiency

Nothing tests a company’s processes like a crisis. And there are few events that test insurers and third-party administrators like a punishing hurricane season.

All types of damage, from lost lives and well-being to destroyed homes, cars, business continuity and government property occurs simultaneously, across widespread geographies that can be only vaguely predicted. And, in any weather catastrophe, social media has the ability to outrun any business, raising the stakes for engaging quickly and effectively with policyholders.

The 2018 Atlantic Ocean hurricane season, which can impact the Gulf Coast of the U.S. in particular, began on June 1 with predictions of a “typical” season with as many as nine hurricanes among as many as 16 named storms. But with the recovery still underway from last year’s cataclysmic storm season, which also began with a toothless forecast, insurers are smart to take a hard look at their processes with an eye to streamlining intake, routing and adjustment to boost efficiency.

The imperative to add sophistication to the first notice of loss intake while also cutting complexity is even greater for insurers that offer several kinds of policies through hundreds of offices across the U.S., and also provide services such as banking and investment services.

Related: Hurricane season drives mass adoption of insurance drones

The agility imperative

To illustrate, one such company we worked with found that in 2017, as storm after storm hit regions where its subsidiaries had clients, relying on diffuse legacy intake systems put too much of a burden on the company’s operations. Its intake systems didn’t foster the agility and accuracy the company needed to both serve its customers and stay profitable when overwhelming circumstances arose.

That company wasn’t alone. In fact, it is emblematic of a particular type of victim of large-scale weather events — the business that has been accumulated through a series of mergers and operates well enough as a single unit during normal conditions, but is overwhelmed by the inefficiencies that lurk between acquired parts of the organization when a large event occurs.

Reading the situation correctly, the company consolidated those hundreds of offices onto one intake system, and to make sure the effort of shifting those processes created true value and efficiency they chose a system that featured configurable customer-facing intake, automated integrity checks and smart automation. That ensured the right information was collected and routed to the right place almost instantly. This created not only the foundation of responses to individual claims but also instantly populated the data sets that fueled further analysis.

Related: Hurricane prevention reduces business loss exposures: $1 spent saves $105

Unlocking technology’s power

By carefully tracking metrics on the issues that slow down claims and create errors, such as missing customer names, errors in addresses and other personal information, the company gained the capacity to identify where automated quality checks deliver the biggest improvements and allow adjusters to do their jobs quickly and well.

And leveraging people who are both skilled in the best practices of claims intake and equipped with the smartest digital tools to leverage their capabilities, the company equipped itself to truly unlock the capacity of machine learning, artificial intelligence, predictive analytics and other advanced computing tools that have the potential to revolutionize insurance.

Such tools are most effective when combined with human intake workers, and an effective, up-to-date rules engine to route that information efficiently.

Last year’s lessons

If the 2018 season matches last year’s, other companies will see their workflows and business rules strain under the load of incoming events and the need to scale. In the last season, very few understood the volume of claims coming, or the ways their systems would break after certain limits were breached.

Industry lawyers have pointed out the shortcomings have become evident as the plaintiff bar has honed in on missteps resulting from too much workflow being handled too fast by too few people. Even today claims from the last storm cycle remain in litigation.

What did we learn? First, it’s critical that your intake system is well-tuned for large events before they occur. If it’s not, in a crisis, resources can’t be shifted to cover weaknesses and this will lead to botched estimates, poorly routed inspection assignments, too many requests going to one adjuster team while another sits unutilized, and odd claims decisions based on poor intake information. Second, adding artificial intelligence and other advanced analytics tools to the mix to relieve the burden can introduce new glitches if they’re not based on solid intake information.

More consolidation of intake systems is likely to occur this storm season, but remember, consolidation alone isn’t sufficient. Systems that ensure the consolidated process has built-in quality checks, that can be configured as customers, events and lines demand, and that allows for overall agility in the face of volume are the key to consolidation done right.

Related: 5 key takeaways from Zurich on extreme weather events

Haywood Marsh is General Manager of NetClaim, which offers customizable insurance claims reporting and distribution management solutions.