Nothing tests the resolve of an insurance company's claims processing division more dramatically than a natural catastrophe.Typically, one natural disaster is enough to test the capabilities of the most competent claims units, but when four hurricanes struck the Southeast during a six-week period between August 13 and late September, it proved to be an unprecedented succession of disasters, insurers concur.
The Insurance Information Institute estimates that Hurricane Jeanne added $6 billion in estimated insured losses, bringing to more than $18 billion the total hurricane damage suffered in Florida this year. This exceeds the previous record of $15 billion for Hurricane Andrew in 1992.
Most carriers with business in Florida indicated that claims management efforts in the aftermath of Hurricanes Charley, Frances, Ivan and Jeanne were carried out in swift, thorough and decisive fashion. The coordinated efforts of catastrophe specialists, claims adjusters, agents and call-center representatives were instrumental in bringing policyholders quick claims response.
"There were heroic efforts to talk about here," comments Rade Muselin, vice president of operations for Gainesville, Fla.-based Florida Farm Bureau Insurance Co., which processed about 35,000 property claims over six weeks. "These storms proved to be a claims nightmare because unlike in 1992 when Andrew hit-where the damage was more concentrated in a few areas-claims were spread across the state."
To an insurer, the role technology played in settling claims was instrumental: Brick-and-mortar offices were assembled around impacted, supported by satellite transmission.
Closer to the front lines, insurers deployed satellite-powered mobile response units-high-tech recreational vehicles-where adjusters could work from PC desktops to process claims. Smaller and even more mobile satellite-powered units the size of a desk were deployed to impacted areas where mobile response units couldn't go. Adjusters were able to maneuver these smaller devices into tight spaces and then activate onboard technology, such as ports for wired and wireless transmission, to transmit claims data using laptops.
Team driven
Indeed, insurers have come a long way in their approach to and execution of catastrophe management.
Years ago, insurers might have charted a strategy for handling natural disasters where "top executives would huddle up in a room, turn on the coffee pot and get on the phone. It was very reactionary. Today, it's more proactive," says Michael Costonis, global claims solution lead for Bermuda-based Accenture.
Today, insurers are implementing more of a "team-driven strategy built on skill and scale," Costonis explains. "I think insurers are establishing several key guidelines and then leveraging business rules to support catastrophe claims efforts. Claim profiling and pattern analysis is being used to a greater degree. Overall, catastrophe claims management presents an opportunity for insurers to impress customers if they can execute properly, but it also places a challenge on insurers to leverage people and leverage IT infrastructure."
Insurers say past natural disasters taught them how to become better prepared for future events. Allstate Insurance Co., one of several large-size insurers with significant property-casualty business in the Sunshine state, has become adept at blending human competencies with technology to settle claims quickly and accurately.
"I think without question these have been unprecedented events," says Mark McGillivray, director of property-casualty claims services, for Northbrook, Ill.-based Allstate. "In response, we have a lot of resources. What technology has done is help us utilize people across the country, all serving in different roles to support claims management."
Fifteen years ago, an insurer would have had to send all their people to the impacted area to get the job done, says McGillvray. "Today, technology has enabled us to have people in remote locations and performing key roles," he explains.
Allstate assigned about 2,500 individuals, including people working from impacted areas as well as in remote locations across the U.S., to deal with the Florida disasters.
"We have a dedicated in-house catastrophe team in place that works year-round on the deployment and logistics of catastrophes. So when a storm hits, we have an advantage of setting up very quickly," McGillivray explains. "Our catastrophe team specializes in creating an office where an office didn't before exist. They can go in and set up the area and bring in the necessary technology-and do it quickly. They are experts in catastrophe preparedness and response."
Added support
Other large-size insurers that write a significant amount of business in Florida and the Southeast mobilized quickly, combining brick-and-mortar claims processing with mobile efficiencies.
Chicago-based CNA converted one of its existing branch facilities in Nashville, Tenn., into a "catastrophe operations center" for policyholders to submit claims by telephone relating to Hurricane Ivan. Katrina Parker, a spokesperson for CNA, says the company couldn't provide additional details. Amid the large amount of work still to do in Florida and the Southeast, CNA and other insurers contacted for this article were unable to provide access to claims supervisors to discuss claims-handling logistics.
Allstate expanded its support capabilities beyond its call centers by setting up additional brick-and-mortar locations. The carrier selected 20 physical locations across the United States to extend the efforts being carried out at its call centers, which were being pushed to the maximum.
"During the first days of any catastrophe, the area that has to be dealt with first is the first notice of loss processing. To do this when a hurricane strikes, an insurer has to have the ability to expand call capacity based on the volume that a normal call center can support. You can't completely change your process, so you have to expand your process," says McGillivray.
State Farm Mutual Automobile Co. assigned a total of 3,000 people to Florida and the Southeast to handle claims efforts. This includes about 1,200 State Farm catastrophe specialists as well as 1,800 other individuals, most of whom were contracted claims adjusters.
With so many claims to handle and customers expecting quick turnaround time, particularly to receive funds for temporary housing, adjusters and catastrophe specialists had to rely heavily on mobile computing which gave them access to policy data.
Equipped with desktops PCs, MRUs were supported by satellite technology to enable field personnel to upload and download claims data to mainframe systems and estimating systems to process claims. The deployment of satellite transmission proved invaluable-particularly when power outages meant that sending data across phone lines using modems was no guarantee.
Allstate had deployed what its calls Mobile Response Units in late 2003 to handle claims in the wake of the southern California wildfires, and has moved them down to Florida to assist with claims support.
State Farm also relied on satellite-powered transmission to get the job done. "We have four satellite-powered mobile catastrophe facilities that can be positioned in areas of devastation," says Mark Winland, director of claims automation and procedures for State Farm, Bloomington, Ill. "We can pull up on a lot, point the satellite in the right direction and begin serving customers as well as providing workstations for adjusters to process claims."
Out in the field, State Farm adjusters were assigned laptops with wireless connections to transmit data to and from company databases.
"The laptops are loaded with estimation software to pinpoint insured losses," Winland explains. "One of the features of the software is that it has sketch capabilities where an adjuster can draw an image of a property being assessed for material damage. They can input the linear feet and dimensions as well as the various construction materials used. Once adjusters do the sketching, they're able to pull policy information in real time from our back-end data bases and proceed to turn a payment around to a customer fairly quickly."
Loss control
Carriers readily agree that the objective of managing claims efforts in the wake of catastrophes is first and foremost the degree of customer service they can provide policyholders.
Equally as important, insurers understand that controlling costs and their overall loss exposure is key. Having a strategy to handle catastrophe claims efforts goes a long way toward reducing overall financial vulnerability. Accenture's Costonis estimates that insurers can reduce loss exposure from a disaster by at least 5%--and that's regarded as conservative--if they take the appropriate steps and have catastrophe-driven strategies in place.
Costonis says that in the past, insurers had a disaster deployment strategy that was haphazard. The end result was a scenario where "five adjusters would be processing claims at five houses, and all might have been located on the same block," he adds.
This inefficient scenario has placed an onus on strategies that enhance logistics, adjuster assignments and overall scheduling. State Farm developed proprietary software, called catastrophe territory mapping, a tool that regulates workflow and makes assignments for adjusters.
The tool uses local ZIP codes to assign claims, says Winland. The company also uses global position satellite technology to provide detailed directions to a claim site. This is a valuable when an adjuster must travel to an area of significant damage and discover that street signs and landmarks have been destroyed, he says.
These solutions have been crucial for all insurers, including State Farm, which estimates its losses from Hurricane Charley alone to be about $1.3 billion. With Hurricane Charley, State Farm processed 88,000 claims, of which about 71,000 were homeowners policies. From Hurricanes Frances and Ivan (Jeanne totals were not available), State Farm settled, or is in the process of settling, 106,000 homeowners claims and 14,000 auto claims, says Winland. Allstate declined to provide specifics on the number of claims or insured losses it incurred.
State Farm and Allstate will weather the storm financially. But other smaller insurers might not be so fortunate. Sources in Florida indicated that the significant losses incurred from Hurricane Jeanne might push Plantation, Fla.-based American Superior Insurance Co. to the brink of bankruptcy. The company could not be reached to discuss its financial status.
Florida Farm Bureau's Muselin say that his company has been able to effectively use catastrophe personnel of about 250 individuals to handle about 35,000 claims from the hurricanes.
The company relied on software that features geocoding. The technology, developed by Troy, N.Y.-based MapInfo, helped adjusters organize their daily assignments.
"Our adjusters have used the technology and the geocoding to determine which ZIP codes are in proximity to one another. That way, an adjuster could avoid driving miles out of his way from one claim site to another, only to have to double back and return to an already-frequented area," says Muselin.
Florida Farm Bureau also uses software that can drill down and pinpoint loss ranges quickly. "If a home is constructed of frame rather than masonry and if the home is two stories rather than one, that paints a good picture for an adjuster in which to determine loss," says Muselin.
But overall, insurers understand that the key to controlling losses hinges on the efforts made well before disasters strike. "At our company, we don't have a formal catastrophe team to handle claims, but catastrophe management pervades everything we do-we have catastrophe planning that goes on literally all the time," says Muselin.
Going The Extra Mile To Quell Catastrophes
In the field, Allstate Insurance Co. deployed what its calls Mobile Response Units to handle claims resulting from the hurricanes.
Equipped with desktops PCs, these mobile units were supported by satellite technology to enable field personnel to upload and download claims data to Allstate's mainframe systems and estimating systems.
The Mobile Response Units, which are about the size of a recreational vehicle, have delivered a great deal of workflow efficiency for the Northbrook, Ill.-based insurer.
However, the company realized that when it comes to dealing with a natural catastrophe, it needed to go the extra mile to enhance IT support. As a result, Allstate in late August invested in a technology called Transportable Satellite Internet Systems (TSIS).
"The TSIS is about the size of a desk," says Mark McGillivray, director of property-casualty claims services for Allstate. "It's more mobile than an MRU and can be positioned even closer to the front lines of a storm to access damage."
Adjusters used laptops to process claims, and then used the TSIS to upload and download data to Allstate's claims databases. The TSIS, which supports both wired and wireless communications, is equipped with 48 wired ports and 100 wireless ports.
Adjusters were provided wireless cards to connect to laptops for the wireless communications mode.
"We were able to position the TSIS beyond where the MRUs could go-it can penetrate much deeper to ground zero than a Mobile Response Unit can," says Bill Mellander, a spokesman for Allstate who was part of the catastrophe support team in Florida.
Developed by a company based in Columbus, Ohio, TSIS was initially tested at Ohio State University. "We became aware of it when one of our independent claims adjuster partners purchased one for their people," McGillivray states.
Going The Extra Mile To Quell Catastrophes
In the field, Allstate Insurance Co. deployed what its calls Mobile Response Units to handle claims resulting from the hurricanes.
Equipped with desktops PCs, these mobile units were supported by satellite technology to enable field personnel to upload and download claims data to Allstate's mainframe systems and estimating systems.
The Mobile Response Units, which are about the size of a recreational vehicle, have delivered a great deal of workflow efficiency for the Northbrook, Ill.-based insurer.
However, the company realized that when it comes to dealing with a natural catastrophe, it needed to go the extra mile to enhance IT support. As a result, Allstate in late August invested in a technology called Transportable Satellite Internet Systems (TSIS).
"The TSIS is about the size of a desk," says Mark McGillivray, director of property-casualty claims services for Allstate. "It's more mobile than an MRU and can be positioned even closer to the front lines of a storm to access damage."
Adjusters used laptops to process claims, and then used the TSIS to upload and download data to Allstate's claims databases. The TSIS, which supports both wired and wireless communications, is equipped with 48 wired ports and 100 wireless ports.
Adjusters were provided wireless cards to connect to laptops for the wireless communications mode.
"We were able to position the TSIS beyond where the MRUs could go-it can penetrate much deeper to ground zero than a Mobile Response Unit can," says Bill Mellander, a spokesman for Allstate who was part of the catastrophe support team in Florida.
Developed by a company based in Columbus, Ohio, TSIS was initially tested at Ohio State University. "We became aware of it when one of our independent claims adjuster partners purchased one for their people," McGillivray states.
