If the benefits of this type of strategy are so apparent, why is this not the de facto standard for the industry? Until now, technology had not progressed to the point where you could manage a CAT event with this type of “strategic orchestration.” (Credit: Soho A studio/stock.adobe.com)It’s spring, so as we all know the storms are coming This past year had an especially busy storm season with more than 60 events across the U.S. and “Derecho” in the Midwest. What lessons did we learn that we want to institutionalize and ensure that we have in the playbook for 2021?
During CAT events, every property unit requests some form of temporary relief. This means asking for volunteers from other departments, seeking temporary employees or hiring for new roles. These reactions create challenges in delivering an impeccable customer service experience.
Having visibility within the organization to understand efforts needed in one area and leveraging capacity from a different part of the company is key to avoiding consistent re-invention of the same wheel. It is common for departments to retain their cross-trained talented employees due to fear of workforce loss.
Collaboration within companies is still lacking because of the mindset of “we never receive any help when our volumes are higher.” As Awais Farooq, CPCU, head of U.S. insurance practice at ActiveOps and former claims executive said: “Stepping out of this state requires collaboration and focus on bringing departments together to accomplish the goal of organizational success.”
Neighborhood adjustment
We also need to recognize that from an insured’s perspective, we want to have the concept of “neighborhood adjustment.” That means that we would love to have the same adjuster work as many houses in the neighborhood as possible. There are several reasons for this. One is that as an insurer, you want your adjusters during catastrophe events to be as efficient as possible so that your insured customers can receive the most expedient claims experience. Having adjusters spending 30% of their day on windshield time creates a major drag on your customers.
Second, many neighborhoods have common construction requirements and were built with similar styles and materials. When this is present, it allows the adjuster to quickly learn what to expect and how to properly estimate damages as the adjuster is not having to re-learn the basic construction of each home inspected, providing for greater consistency and a higher quality product.
When multiple adjusters are deployed to a single neighborhood to inspect and estimate losses, the inconsistencies between adjusters’ work can lead to serious customer complaints. Having a single adjuster work the entire neighborhood, or a vast majority of it, ensures consistency across the entire “neighborhood grapevine.” This is especially in today’s connected world of neighbors using the app such as NextDoor. Everyone is going to talk in real-time, so you might as well work to control the narrative to the extent that you can.
This goes together with the idea of consistent vendor experience as well. You can have your adjuster talk directly with your insureds and explain that you have a preferred vendor agreement with a roofer and that you have a discounted rate already in effect.
You can incentivize your insureds to take a picture or video of their new roof and share via their social media accounts and talk about how well their carrier and roofer partner took care of them. You can create “great claims experiences” that you can track to see if those neighborhood referrals result in new client acquisition when it comes time for renewal with their other carrier.
You can then populate address information for any PIF’s that you do not have in those areas, and send very targeted follow-up marketing materials, through a combination of digital, mail and direct agent phone calls that speak to how well you took care of their neighbors and how you’d love to understand how their carrier treated them to see if there is an opportunity to change. The consensus is that after a claim, an insured is open to the idea of change 50% of the time. This creates a large prospect pool that should provide a much higher conversion rate than simply cold reach-out.
Other than customer experience and for potential marketing/distribution purposes, are there any other benefits to the carrier of this type of CAT management? The answer is a resounding yes!
Neighborhood adjustment means faster cycle time and higher productivity. When you eliminate the drive time for field teams, you cut down on their “total time” and vehicle costs, which lowers loss adjustment expense, simultaneously giving them that time back to work their files.
Technology now meeting management needs
If the benefits of this type of strategy are so apparent, why is this not the de facto standard for the industry? Until now, technology had not progressed to the point where you could manage a CAT event with this type of “strategic orchestration.”
For instance, to expediently parse claims by neighborhood, you need more than ZIP code information, you must have geo-codes that define the neighborhood by the actual physical location. Then, in addition, you must also be able to “geo-fence” your vendors and the individual adjusters to specific, non-overlapping neighborhoods.
Once you have those, you must have the capability to use algorithmic decisioning tools to automatically match each claim as it arrives at the proper vendor and adjuster. This level of overall coordination, strategic management and real-time decision-making requirements to effect this at scale were not available until now.
However, with cloud connectivity, an InsurTech ecosystem and traditional vendor partners investing in integrated technologies, this dream is now a reality.
Tim Christ is a Vice President at Claimatic, a SaaS intelligent decisioning software that serves several P&C insurers. He is the author of two books on insurance, business, and technology, a speaker at industry events, and a frequent contributor to various insurance publications. Contact him at [email protected].
The opinions expressed here are the author’s own.
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