Hurricanes, Hail and Humans: Can Customer-Engagement Save Claims?

Tornado season has arrived and hurricane season will be following.  This follows a winter and spring of numerous weather-related catastrophic events.  From the massive snowstorms to the “winter cyclone bomb” that hit the Midwest in March that resulted in massive damage due to the rain, rapid melting of snowfall and the breakup of ice in the rivers that caused 100+ year flooding.  Homes, businesses, livestock, animals and infrastructure were wiped out in minutes.  Living in Omaha, Nebraska we were surrounded by the damage and impact.  Fortunately, we were personally not impacted, but knew so many that were … and it was devastating!  Many people had only minutes to get to safety – barely making it – highlighting the importance of readiness, awareness and communication.

As catastrophic events seem to be on the rise, methods for dealing with catastrophic risk are also on the rise. Insurers now have the ability to know more than ever about their overall level of risk, meaning that they should also be able to mitigate those risks by encouraging preparation among their insured individuals, families and businesses.  Can insurers keep the hail and hurricanes from doing major damage? Just how much can be saved through preventive communication? With GPS, property data and digital channels for two-way communication, insurers should be lowering risk and losses in dramatic ways.

But there is an issue. Humans!

Many people, unfortunately, don’t think that disaster can or will happen to them. When a hurricane is on the way, many won’t pursue loss-prevention measures, even if they seem to be in the direct path of the storm. Most policyholders won’t attempt to prepare until danger is imminent.

“Often, it’s the case that the storm is about to hit in 12 hours,” said Robert Meyer, co-director of Wharton’s Risk Management and Decision Processes Center, “and that’s when people pull out their insurance policy to figure out whether they’re covered and what to do.”[i]

FEMA is making changes to attempt to give better communication, but they are also urging that individuals become better informed and prepared to make the right decisions because hurricanes, hail, tornadoes, floods and wildfires can all be unpredictable. The clear message that FEMA is trying to send is that we all need to work toward educating and informing those who live these weather-prone areas that often result in CAT events.

The good news is that nearly any step that insurers can make in the right direction will help to mitigate CAT claims and there are some very specific digital engagement steps that insurers can take to educate, prepare and coach insureds through preventive and protective measures. To help insurers understand all of the options they have available to lower their CAT risks, let’s look at the insurance value chain through a typical CAT timeline: Pre-event preparation, Mid-event communication and Post-event claims and evaluation.

Pre-Event Preparation

 Lowering risk begins with understanding the status quo. Do insurers truly understand the properties and lives they are protecting? Do they know what claims have been made/paid in the past? Do they have a handle on the geographic risks, the structural components and the personal property that may be affected? The bookends of any risk event (pre- and post-event)  need clarity. This will help insurers to both avoid fraud and assist in predictive loss management. It will also help streamline the claims process with enhanced communication that will result in greater customer satisfaction. Front-end data capture and regular updating of property data is crucial to knowing what you and your insureds have to lose.

Prevention and communication are tightly-related in the pre-event process. Automation also plays a role. Preventive communication should be considered in layers. First, there is the education layer. Using well-established statistics and motivational language, policyholders should be educated on how much they have to lose by not preparing. Second, as much as it is possible, insureds should receive communications about impending danger and ways to protect themselves and their property. These communications may be as simple as a text or voice message. “Hail is coming. Place your car in the garage or move it to a safe location.” They may include a short list of to-dos, like: “Wildfires are within 20 miles of your business. Take these 3 steps to prepare your property and evacuate immediately.” Even re-communicating FEMA evacuation information may be helpful because the insurer may have better access to this information than insureds do.

Mid-Event Communication

When power is lost and televisions and computers are silent, cell service may still be operational. Insurance companies can help to direct confused and shocked victims to safe locations such as shelters, give them proper evacuation routes and helpful numbers to call for necessary resources, places to stay or information on likely times they may be able to return home. Even if customers are not displaced, they will feel comfort in knowing that their insurer is concerned about their care in the midst of an event.

Communicating effectively, however, doesn’t happen with a piecemeal approach or through traditional routes that haven’t been prepared ahead of time. Insurers need to make sure they have the technology in place, they have correct policyholder data (i.e. cell phone numbers, emails) that they have run the proper tests and scenarios and that they have automated the capability to select policyholders by region. A poorly-executed communication plan could be worse than no plan at all.

Digital technologies have many other possible uses in the midst of traumatic weather. Imagine routing at-risk vehicles to nearby parking garages, helping mass transit commuters find safe locations and getting watercraft and recreational vehicles out of harm’s way. All of these efforts will pay off by making customers feel directly connected to their insurer while simultaneously protecting themselves and their property, while also lowering the insurer’s level of risk. It could also potentially avoid insurance increases with proper prevention.

Post-Event Claims and Evaluation

Claims moments are crucial touch points – the moment of truth. The last thing an insurer wants to do is to pay a large claim, then lose the claimant because of dissatisfaction with the claims process. Savvy insurers are proactively improving their FNOL process to both streamline claims and save themselves from fraud. They do this by allowing policyholders to make their claims through their channel of choice and by paying close attention to routing processes. Effective insurers monitor and grade their own claims processes with an eye to continual process improvement. The more control that an insurer has over its claims process, the less likely that traumatized victims will see an opportunity to present a fraudulent claim.

Post-event data gathering is another area where digital readiness is saving insurers from costly legwork. The use of satellite images, drones and sensors will provide insurers with the clear data they need to make quick assessments. To be most effective, however, insurers will need to establish a platform that makes it easy to intake and analyze data. Today’s cloud platforms are better suited to plug and play both data sources and analytic tools than yesterday’s monolithic administration systems.

Is There a Best First Step?

Majesco’s Digital1^st EcoExchange^TM is a digital capability app store that can help any insurer fill CAT-ready capability gaps. Many of these apps are focused on giving insurers an opportunity to lower their risk. With EcoExchange, insurers can add property and personal data apps to their front-end underwriting process. They can add credit information and previous claims data. They can receive information on buildings and structural information.

They can also use EcoExchange apps as the backbone for preventive communication with policyholders before events occur, and for proactive communications to keep customers informed after a claim has been filed. Apps built for SMS, email and SMTP allow insurers to route relevant, timely information to their insureds, including confirmation that their claim has been received and a claim number has been assigned.

Digital1^st EcoExchange is just another way that insurers can bring improved engagement to customer journeys and digital methodologies to external and internal processes. To find out even more about building a business model that fits today’s uncertain climates and tomorrow’s digital journeys, be sure to download Majesco’s recent report, Building a Business Model for the Insurance Customer of the Future, and watch next week for the release of our latest SMB survey report, Building a Business Model for the Next Generation of Small-Medium Business Leaders.

[i] Wharton School of Business, “’It Won’t Happen to Me:’ Why People Don’t Prepare for Disasters,” interview with Robert Meyer, co-director of Wharton’s Risk Management and Decision Processes Center, July 13, 2018