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Right-size Your Claims Response with Advanced Weather Insights

Over the past decade, the US has experienced a record number of billion dollar disasters. At 119 disasters, this is more than double the amount of billion dollar disasters from the previous decade. 

Of those disasters, the costliest by far come from hurricanes. In fact, four of the five costliest disasters were Hurricanes Harvey, Irma and Maria in 2017, and Hurricane Sandy in 2012.

The insurance industry is prone to believe there’s nothing to be done about the weather. And while it is true that you can’t change the weather, you can change how your company both prepares for and responds to the weather.

As we’re heading into the peak of the 2020 hurricane season, there are a few ways that insurance companies can apply weather insights to optimize processes and right-size their claim response. 

 

Know the potential impact of severe weather to the risks you insure well ahead of time 

More severe weather events, means a higher economic impact, and with that comes an increased loss cost. The 2018 Home Trends report shows the loss cost to be up 19 percent, with catastrophic claims making up 35 percent of weather-related claims. 

Again, while it’s tempting to disregard weather as something out of your control, when 50% of received property claims are related to weather, it’s probably a good idea to not completely throw in the towel. Instead, make sure your company is ready for upcoming severe weather.

Do your best to incorporate tools that help you anticipate the weather conditions that will affect your   policyholders when severe weather features are first identified. Private weather companies like StormGeo place emphasis on the forecast impact to the specific risks you insure. These private forecasts tend to be much more reliable than broad, one-size-fits-all forecasts susceptible to media hype and government public safety bias.

A good example of this is 2008’s Hurricane Ike. Even 48 hours ahead of landfall, wind fields were not forecast to impact the Houston area, while StormGeo’s probabilistic forecast showed a 30% probability of impact. Ultimately StormGeo’s forecast proved correct when Hurricane Ike made landfall just southeast of Houston in Galveston, Texas, causing an estimated $30 Billion in damages. A science and business driven approach to forecasting allows for greater granularity and more confidence for decision making.[JC1] 

Advanced notice of forecasts gives insurers the opportunity to work with policy holders to ensure their homes and businesses are protected from major storms like hurricanes. As you begin to make business decisions related to the storm, your agents and customer experience teams have an opportunity to give advanced notice to policy holders, such as recommended actions they can take to increase their safety and reduce auto and property losses.

 

Seek out decision-making support on declaration of coverage suspensions/moratoriums     

When a tropical storm or hurricane is tracking toward an area, one of the first decisions you’ll need to make is when to declare coverage suspensions—sometimes called underwriting moratoriums--and to which areas. There is a fine line that must be walked between taking advantage of increased policy revenue driven by high demand due to the storm, and not issuing new policies or adjusting coverage limits for risks that immediately experience a loss.

Rob Galbraith, CPCU, CLU, ChFC, author of The End of Insurance as We Know It, recalls making this decision in 2016. Hurricane Matthew was forecasted to come up the entire eastern coast of Florida. It didn’t happen.

Instead, Matthew had a “wobble” that pushed it 20 miles farther east, landing ashore in the Carolinas and causing massive flooding 100 miles inland in North Carolina. At the time, Galbraith was leading a team responsible for actively monitoring hurricanes for a Top 10 P&C personal lines carrier to quickly respond to severe weather events. Before the “wobble” the carrier was strongly considering issuing a coverage suspension for the entire coastline from Miami to Jacksonville, which would have covered millions of people and preventing the issuance of hundreds of new policies. 

However, the carrier subscribed to StormGeo’s TropicsWatch updates on Hurricane Matthews from StormGeo. Through information gleaned from these updates, the carrier was able to avoid suspending coverage in Florida, and instead focused on the Carolinas well before the National Hurricane Center acknowledged the change in forecasted track. 

This level of support in coverage suspension decision making brought in thousands in additional premiums in Florida, while at the same time preventing losses in North Carolina by stopping new policies from being written. This advanced knowledge also helped them to quickly mobilize their catastrophe response vehicles to North Carolina to serve customers who were impacted by the storm.

StormGeo closely monitors tropical weather risks and disseminates warnings on average 58 hours earlier than other sources. For tropical storms and hurricanes, StormGeo’s forecasts extend out to 7 days, giving you a two day head start on the storm‘s track.

 

Become proactive in optimizing your claims response

First Notice of Loss is the best time to reinforce positive relationships with your policy holders. They have been through a traumatic experience whatever the damage, from fallen tree limbs to a total loss of property. They are looking to their insurance company to help them get their lives back on track.

Insurance claims processes can be quite reactionary. With weather intelligence data, there are a number of proactive steps that can be done to make the claims process more efficient:

  • Ensure call centers are fully staffed. A customer’s satisfaction with the claims process starts with the first notice of loss, and how secure they feel with the claims process moving forwards.  When you know precisely when the storm is going to make impact—as well as the anticipated severity of the storm--you can ensure that your call center is fully staffed at the appropriate time. Make sure your call-center staff are up to speed on wind and flood processes to ensure the customer both has a clear understanding of each step and feels at ease.
  • Optimize adjuster dispatch. Send your most experienced adjusters to deal with the more difficult marginal impact areas. You can compare the forecast track with your policy data well ahead of the storm to anticipate how many properties lie within these areas that can be more difficult to inspect.
  • Inform adjusters in the field. Ensure that adjusters and claims managers are prepared with Observed Storm Impact Reports. Each report aligns observed wind speeds and weather observations with PIF data to provide an analysis of maximum impacts at each location in your portfolio.

Ultimately, an efficient claims process comes down to the ability to right-size your response. You want to avoid spinning up resources and processes that generate expense but ultimately are unnecessary. At the same time, you want to make sure there is no impact to customer service and responsiveness.

Knowing where, when, and how many resources need to be strategically predeploy ahead of major storm events will give you the edge to respond to your customers’ needs when they’re needed, and to close out claims quickly. 

Take the Next Step

If you're ready to keep a lid on loss adjustment expenses and streamline your claims response, the team at StormGeo can help.  Our meterologists and decision guidance experts can ensure you have the most accurate weather data when you need it the most. 

Get in touch with us today to learn more about how we can help your business!

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