Oracle Insurance's director of marketing for EMEA, John Sinclair, recently attended the CII Spotlight on Claims event in London.
Bad weather and its implications for the insurance industry have become very topical as the frequency and diversity of natural disasters - including rains, wind and snow - has surged across Europe this winter. On England's wettest day on record, the county of Cumbria was flooded with 12 inches of rain within 24 hours. Freezing temperatures wreaked havoc on European travel, causing high speed TVG trains to break down and stranding hundreds of passengers under the English Chanel in a tunnel all night long without heat or electricity. A storm named Xynthia thrashed France and surrounding countries with hurricane force, flooding ports and killing 51 people.
After the Spring Equinox, insurers may have thought the worst had past. Then came along Eyjafjallajökull, spewing out vast quantities of volcanic ash in what is turning out to be one of most costly natural disasters in history.
Such extreme events challenge insurance companies' ability to service their customers just when customers need their help most. When you add economic downturn and competitive pressures to the mix, insurers are further stretched and required to continually learn and innovate to meet high customer expectations with reduced budgets.
These and other issues were hot topics of discussion at the recent "Spotlight on Claims" seminar in London, focused on how weather is affecting claims and the insurance industry. The event was organized by the CII (Chartered Insurance Institute), a group with 90,000 members. CII has been at the forefront in setting professional standards for the insurance industry for over a century.
Insurers came to the conference to hear how they could better serve their customers under extreme weather conditions, learn from the experience of their peers, and hear about technological breakthroughs in climate modeling, geographic intelligence and IT.
Customer case studies at the conference highlighted the importance of effective and constant communication in handling the overflow of catastrophe related claims. First and foremost is the need to rapidly establish initial communication with claimants to build their confidence in a positive outcome. Ongoing communication then needs to be continued throughout the claims cycle to mange expectations and maintain ownership of the process from start to finish. Strong internal communication to support frontline staff was also deemed critical to successful crisis management, as was communication with the broader insurance ecosystem to tap into extended resources and business intelligence.
Advances in technology - such web based systems to access policies and enter first notice of loss in the field - as well as customer-focused self-service portals and multichannel alerts, are instrumental in improving customer satisfaction and helping insurers to deal with the claims surge, which often can reach four or more times normal workloads. Dynamic models of the global climate system can now be used to better understand weather-related risks, and as these models mature it is hoped that they will soon become more accurate in predicting the timing of catastrophic events. Geographic intelligence is also being used within a claims environment to better assess loss reserves and detect fraud.
Despite these advances in dealing with catastrophes and predicting their occurrence, there will never be a substitute for qualified front line staff to deal with customers. In light of pressures to streamline efficiency, there was debate as to whether outsourcing was the solution, or whether it was better to build on the people you have. In the final analysis, nearly everybody agreed that in the future insurance companies would have to work better and smarter to keep on top.
An appeal was also made for greater collaboration amongst industry participants in dealing with the extreme conditions and systematic stress brought on by natural disasters. It was pointed out that the public oftentimes judged the industry as a whole rather than the individual carriers when it comes to freakish events, and that all would benefit at such times from the pooling of limited resources and professional skills rather than competing in silos for competitive advantage - especially the end customer.
One case study that stood out was on how The Motorists Insurance Group was able to power through one of the most devastating catastrophes in recent years - Hurricane Ike. The keys to Motorists' success were superior people, processes and technology. They did a lot of upfront planning and invested in their people, creating a healthy team environment that delivered "max service" even when they were experiencing the same level of devastation as the rest of the population. Processes were rapidly adapted to meet the challenge of the catastrophe and continually adapted to Ike's specific conditions as they evolved. Technology was fundamental to the execution of their strategy, enabling them anywhere access, on the fly reassigning of resources and rapid training to augment the work force. You can learn more about the Motorists experience by watching this video.
John Sinclair is marketing director for Oracle Insurance in EMEA. He has more than 20 years of experience in insurance and financial services.
