Handling CAT Claims in a COVID-19 world
Social distancing, supply shortages and an overactive hurricane season are adding new complications to catastrophe claims.
According to the latest forecast from Colorado State University (CSU), it’s going to be a busy hurricane season, and we’ve already seen evidence of that along the East and Gulf Coasts. CSU is predicting 24 named storms, with 12 of them developing into hurricanes and five of them evolving into major hurricanes that will reach Category 3 or higher on the Saffir-Simpson Hurricane Wind Scale. Hurricane Laura left a path of devastation as the Category 4 storm ran across parts of eastern Texas and Louisiana on Thursday (Aug. 27).
In a world that has already been rocked by the coronavirus, the prospect of managing hurricanes, wildfires, riot damage and other major catastrophes takes on new significance with social distancing and so many unknowns about the transmission of the virus. Any insureds caught up in a CAT will already be sheltering in place due to COVID-19; if that safe place is lost or damaged, their resiliency will be shattered.
How will these changes and challenges affect insurers, vendors and other first responders to catastrophes/? More importantly, how can they protect their policyholders while still providing the service they expect? The short answer is: it’s complicated.
“Like most individuals, insurers have responded differently to the COVID-19 environment for a number of reasons,” said Scott Richardson, Sedgwick executive vice president, operations, in an email interview. “While some have become increasingly reluctant to send either staff or independent adjusters on-site in order to social distance and protect both their colleagues and insureds, others recognize it is part of doing business and supporting their insureds during these critical times of need. This can vary depending on the book of business and industry vertical they support.”
Allen Owens, CEO and president of Paul Davis Restoration & Remodeling of Greater Baltimore (PDR), shared via email that even before COVID-19, “the [restoration] industry at large adhered to safe work practices but did so behind the scenes and without much oversight. The pandemic has brought to light all of the steps along the critical path. Companies that were previously skilled/experienced with biohazards before the pandemic have separated themselves from the pack.”
In addition to ensuring employees wear masks and other appropriate PPE, companies are taking further steps to provide a level of comfort to policyholders so they are aware that companies are doing everything possible to keep everyone safe during the pandemic. Companies are observing appropriate social distancing from clients, providing health screenings for employees and regularly disinfecting high-touch areas.
“PDR has implemented a fully transparent TouchLess Service process for the consumer,” explained Owens. “Our experience enabled us to quickly maneuver, thereby allowing the consumer to be part of the process. Feedback from our clients has been extremely positive.” As part of the TouchLess Service, the company sprays and wipes down equipment on the way into and out of a job in full view of customers where possible so they can see the cleaning procedures.
InsurTech roles expand
Following a hailstorm, tornado or other major weather event, insurers are relying on InsurTech and other technologies to provide information instead of sending adjusters to investigate the damage. Drones, infrared cameras and cellphone apps are helping to fill some of these gaps.
“In the past, a policyholder would often physically meet with their insurance provider to investigate a claim, and that option suddenly ceased in March,” detailed James Brown, CEO of Smart Communications in an email. “This forced insurers to shift toward a digital-first business model and put more resources toward digital transformation initiatives such as offering digital forms and making it possible to start a claim on one device (such as a mobile phone) and complete it later via desktop, for example. While it may have started as a way to serve customers better during this difficult time, we fully expect this trend to continue. Consumers have been craving more convenient digital interactions for some time and now will remain loyal to companies who continue to offer this option moving forward.”
This observation complements what the analysts at J.D. Power found earlier this year. They concluded for the first time in over 20 years of insurance surveys that customer engagement and retention in 2020 hinged more on the use of carrier websites than on interactions with insurance agents.
Howard Altschule, CEO of Forensic Weather Consultants LLC, finds that insurers are reluctant to send adjusters out for hail or tornado damage inspections if there is a technology option available to obtain the same information. “We can look at the radar and storm reports and find that 1 ¼-inch hail fell. There is no risk of catching COVID-19 or falling off of a roof,” he said. “Hail swatch maps can be updated every hour, so insurers can see which houses were hit by hail according to radar. The analysis is very detailed and specific.”
Altschule added,” They can call us to do an analysis and summary via email to see if there was hail, a tornado, a high wind event or not, and we can send them a short report to document their files so they can pay or deny the claim.”
Following a majoring hurricane, a wind event like the recent derecho in Iowa, a tornado and even wildfires, the use of meteorology is becoming a game-changer for insurers. “We’re using it to help them determine the weather conditions at a specific property,” described Altschule. “It saves time and allows them to redeploy their resources. More accurate weather information allows them to make more timely decisions.”
The coronavirus isn’t the only factor affecting the claims process today. “The vandalism, theft, arson and destruction of property from the riots in the midst of the COVID-19 pandemic has created a number of challenges,” added Richardson. “In addition to concerns around personal safety from possible infection, there is the additional concern over personal safety in some communities where protests have turned violent.
“In order to respond more expediently and reduce the safety risk, a number of underwriters have adopted video streaming technology to assist with assessment and documentation of the damage sustained in order to establish repair or replacement values. When coverage is affirmed, others are turning toward direct repair solution vendors to manage the repair or replacement of property covered. All of these are intent on driving increased customer service and assisting the insured.”
While there is no single “silver bullet” technology able to handle all types of claims, emerging technologies are expanding the tools available to adjusters and insurers. However, Richardson cautions that it is “critical that they are leveraged in the right way, in the right process and with the right level of talented claims professionals to assist along the way.”
He also recommended that these tools be used in a way that addresses soft spots like weak signal strength, a lack of familiarity with technology, or smartphones with IT security limitations or restrictions on transmission size. “There is a clear race right now within insurers to get this right, driving efficiency, reducing cost, maintaining accuracy and still keeping customer service exceptionally high.” Appropriately triaging claims assignments to ensure optimal handling will be critical to meeting customer expectations.
CAT response looks different
Traveling to a catastrophe will be a challenge with fewer flights available to some areas. As parts of the country begin to open up, access to gas stations, food service and other amenities is easing a bit. Masks, hand sanitizer, gloves and thermometers will be new additions to any responder’s toolkit, though.
Housing is usually a challenge for adjusters responding to a large catastrophe. “While a portion of their time is on the loss site, a large portion of it is in the hotel room, extended stay, apartment or campground writing estimates and reports,” shared Richardson. “Providing or enabling them to work remotely with strong connectivity to Wi-Fi and still being able to social distance is key.” He also highlighted the importance of taking a little extra time at the beginning of the claim to understand which experts are required to help reduce the need for multiple inspections at the same site and minimize the exposure to multiple contacts.
Since many hotels and vacation properties have excess capacity, Richardson said finding accommodations should be easier. However, because restaurants have limited capacity or some hotels may not have food service, finding meals could be a challenge for adjusters and other responders.
Customer communication is vital
Insurers should already have communication channels established with their policyholders well before a catastrophe hits. Brown recommends over-communicating with insureds about coverage limits, policy details, and the claims filing process and stresses that transparency is essential. “These storms can create catastrophic property damage, so filing for a claim is an emotional process and magnifies the need for an exceptional customer experience. The policyholders need to feel taken care of by their insurer, and the way they are communicated with will have an immeasurable impact.”
Utilizing technology as part of the claims process will reduce the need for in-person meetings, protecting both insureds and adjusters. If a physical visit is necessary for a claim, Brown advises adjusters clearly communicate their safety protocols to reassure customers that all necessary precautions will be taken.
While adjusters understand the factors comprising a CAT claim, the advent of the coronavirus may affect some claims directly or indirectly. “The COVID-19 impacts to business are unprecedented, due to many factors such as global government-mandated closures and travel restrictions, businesses operating at reduced capacities, furloughed workforces, and the list goes on,” said Danielle Gardiner, senior vice president of Lowers Forensics. “Insurance claims professionals should be prepared to identify how business operations were impacted by COVID-19 in the period preceding the hurricane or CAT, and whether or not those impacts would have continued during the ensuing period once the hurricane or CAT occurs, and if so, for how long.”
As information on the coronavirus continues to evolve, so will the steps adjusters take to handle claims in this new environment. Flexibility and caution will be two factors to add to an adjuster’s toolkit.
Patricia L. Harman (pharman@alm.com) is editor-in-chief of Claims Magazine.
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