How claims teams can stay ready for hurricanes
High-exposure claims related to hurricanes continue to stretch the industry’s resources.
The 2024 Hurricane Season officially kicked off June 1 and has already caused approximately $8.915 billion in damages, with Hurricanes Beryl and Debby being the primary contributors.
And it’s not over yet: Colorado State University hurricane researchers are continuing to call for an extremely busy season, with a total of 23 named storms expected, 12 of them predicted to reach hurricane strength, and six of the 12 forecasted to reach major hurricane strength (Category 3, 4 or 5) with sustained winds of 111 mph or greater.
Related: 6 steps to prepare claims teams for hurricane season
Here are some steps claims teams should be taking to be prepare for efficient, thorough and orderly claims processing:
Ensure claims teams are adequately staffed. High-exposure claims related to hurricanes continue to stretch the industry’s internal and external claims resources. Properly managing outsourced services is challenging because when these massive events happen, they are taxing the workforce power of the industry. Carriers must ensure they have a crisis response team that is properly equipped to work in a remote environment and mobilize as needed.
Test new technology. From predicting storms to drafting claims reports, AI has the potential to add great value to hurricane management. Make sure your claims team, at all levels, is well-trained in utilizing all available tools, including new technology, to maximize efficiency.
Anticipate hybrid-workplace exposures. Since the pandemic, it’s rare to find a workforce that operates exclusively in a company-owned space. With a shortage of workers on site, some of the usual hurricane preparation activities — boarding up windows, applying storm shutters, sandbagging — may not be top of mind or feasible. Reminding customers to take steps to mitigate damage can help, but insurers should be prepared for the possibility that the customary mitigation measures will not be taken. This could raise a number of issues from both a coverage and damages standpoint. For example, if a property experiences water-related loss, will the insured take immediate steps to prevent mold growth? If not, and mold growth ensues, will that damage be covered? As with most losses, the policy language remains of critical importance in these situations.
Lead with empathy. Remember, a claim represents a loss the insured has suffered. In a hurricane management scenario, it is vital that claims teams are trained to provide a positive experience to their policyholders. Empathetic communication can build trust with customers and will reassure them that they will receive proper and fair service. Empathy goes a long way and could lead to a more favorable result in the event of a dispute.
Work with brokers to make sure insureds have adequate coverage that accounts for property improvements or changes. In recent years many companies have made changes and improvements to their physical and virtual workplaces. This may mean that the risk has materially changed since it was underwritten. If a property is underinsured because of improvements made since the policy’s inception, and there is no coinsurance penalty or limits are not capped at scheduled values, then the insured may seek damages far more than what may have been anticipated at the time of binding.
Sharpen investigative tools. Claims handlers now more than ever will need to be vigilant about making sure that claims are investigated, measured, and adjusted appropriately. With past hurricanes, there have been massive aid packages from the government and recovery from the Federal Emergency Management Agency (FEMA). These recoveries are often conditioned upon exhausting private insurance first or reimbursing the government if a private insurer pays the claim. Insurance carriers will want to confirm that insureds are not seeking a windfall by seeking recovery for the same damages from multiple sources (often called double recovery).
Beware of burnout and keep staff energized. Hurricane season is a stressful time for carriers and those handling claims. Management would be well-served by keeping the staff’s wellbeing in mind. This might be the time to recognize your team for its achievements and emphasize the good work you are doing helping people in crisis.
Use this hurricane season as a training opportunity for rising claims executives. With nearly 400,000 employees expected to retire from the insurance industry workforce within the next few years, according to the US Bureau of Labor Statistics, companies need to make sure the next generation of claims executives is well-trained to understand the nuances and challenges of managing catastrophic claims. Proactive education and training are critical, and carriers risk losing institutional knowledge without it. Hurricane season creates a perfect time for companies to invest in their newer professionals.
Regardless of the activity the prior season, it’s always important to stay on top of claims plans and processes. If you operate as if the season will be a busy one, you’ll be ready for whatever the season brings.
Taylor Davis (taylor.davis@clydeco.us) is a senior equity partner in the Atlanta, Ga., office of Clyde & Co., where she focuses on first-party property coverage counseling and litigation. She also advises third-party liability insurers and defends insureds in products liability and premises liability disputes. Her experience includes general commercial litigation and contract wording advice.
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