The blog is a short summary of a cover story that appeared in the August 2013 of Claims Management.
A catastrophe, like the cluster of tornadoes that devastated Moore, Oklahoma, last May, is not only a tragedy, it can also be a major catalyst for change and innovation. In the Moore case, the learning curve was extremely steep because 86 more tornadoes swept across the Midwest from Kansas to Nebraska just one week later. “Thinking on your feet” under these circumstances takes on a life or death significance. Adapting to extreme claims circumstances is a challenge but the goal reminds unchanged: getting payments into the hands of claimants quickly and fairly.
Those of us from Enservio who spent time in Moore came away with several key learnings:
1) We needed to update our own safety and contingency plans.
2) Because no two tornadoes are alike, these perils offered opportunities to apply new claims strategies.
3) The intensity of CAT events forced innovation and creative thinking, including finding new uses for our technology, especially in the areas of predictive analytics and big data.
One of the most important lessons was that businesses need to do a better job with safety planning. We, insurance claims adjusters and the employers, have to get better at making safe decisions in hazardous environments. Buildings with structural damage and other unsafe working conditions present special challenges for adjusters and inventory professionals.
For example, many of us who were living in our RV’s suddenly had to run for shelter when the second set of tornadoes hit. No matter what sort of catastrophe we are investigating, we need to remain alert to developing weather conditions and stay in communication with authorities.
Another lesson came from our new application of predictive analytics and big data. We tested a new hypothesis where we could estimate the value of a property and its contents simply by entering a few variables. The underwriting function came up with an ideal insurance-to-value result. Our hypothesis was that this insurance-to-value function could be applied to claims, allowing us to predict loss and then make claim adjustment recommendations with actual findings. For the most substantial losses, our triage used this tool to be able to quickly separate claims that were likely to go beyond policy limits from those that were not going to exceed their limits. The net result was the ability to prioritize and process claims faster and expedite getting the appropriate settlement amount into the hands of the insured.
CATs work as little hubs of innovation, with learnings that can be applied to everyday, common property claims. And, as with almost every CAT event, those of us fortunate enough to work in the devastated areas are reminded time and again how resilient and strong people can be.