The frequency and severity of natural events such as hurricanes, floods, and wildfires are increasing. At the end of 2021, Swiss Re Institute’s preliminary sigma estimates saw natural catastrophes account for USD 105 billion in losses for the year. Hurricane Ida was the main loss-making event, whilst secondary perils accounted for half of yearly losses. It’s predicted Nat Cat losses will continue to grow more than global GDP.
Commercial property insurers are typically set up for seasonal claims. However, a greater frequency of events means claims teams are processing more claims, thus operating at a higher capacity, than ever before. This leaves insurers vulnerable to higher costs.
This has detrimental effects on customer service. Those who are in desperate need will have to wait longer before knowing how they will rebuild. To cope, insurers will need to increase capacity through either:
- Retaining existing processes and increasing the total number of claims handlers in the business.
- Leverage technology to shorten the claims process and empower existing teams to make informed decisions faster.
Typically, when a customer experiences loss, they are the ones to notify the insurer. This means insurers process claims sporadically as they are notified. Technologies, such as drones and aerial imagery, are being used to try and understand what has occurred ahead of the customer. The processing of such imagery can often be manual, requires a skilled eye, and takes time.
The ad-hoc nature of claims initiation feeds through to the rest of the claims process. Adjusters are deployed on a per-claim basis at the time they are needed, requiring multiple visits to an area. Without access to imagery, adjusters have a larger volume of claims to respond to, increasing the total time a claim is open for.
The longer an insurer takes to process claims, the longer they take to source and deploy materials and contractors. This means that total regional demand can be higher, inflating prices and the total cost of claims.
Increasing capacity through additional hires may not be enough to sustain operations long-term as it manifests the existing approach. Those who can find efficiencies in their claims process today with gain competitive advantage by optimising:
- First notification of loss
- Analysis of new datasets, and
- Asset deployment
How technology shortens the claims process
Aerial imagery offers the best visibility, and therefore data, of an event once it has occurred. Data sources include satellites, planes, and drones. For an insurer to initiate the claims process, data needs to be processed and rated before the insured is aware of property damage.
Insurers across multiple sectors are seeing the benefits of artificial intelligence. It automates the process of analysing vast datasets to deliver actionable insight. Artificial intelligence offers the same benefits to the processing aerial imagery. For example, Quest Property’s damage assessment algorithms can detect and rate loss for a portfolio post-event in a matter of hours.
By understanding the severity of an event ahead of the customer, insurers can control the start of the claims process and automate a first notification of loss based on the rating provided.
Fast and automated analysis of event data provides several benefits for claims teams that feed through to overall service. By understanding the severity of loss, claims teams can not only inform the insured, but also provide initial payments promptly for a personalised, customer-centric service.
Whilst client dependencies diminish, so do those of adjusters. A view of severity across a portfolio means specific properties that require on site adjustment can be mapped. Mapped properties can be assessed in one visit, reducing repeat all outs and associated costs. A view of severity and associated data also means desk adjustments are viable for a greater proportion of properties. Desk adjustments are faster than on site adjustments, lowering administration costs whilst shortening the claims process for more insureds.
Knowing the relative impact on properties also means that contractors and materials can be acquired and deployed ahead of a rise in demand for local services. This mitigates the impact of inflation on the cost of claims.
Examples of how this technology has been leveraged using Quest Property are available. You can download an analysis of Hurricane Ida by clicking on the banner below.
By accelerating analysis an insurer can control the very start of the claims process. This means they can approach administration of claims post-event at scale. The benefits lead not only to better customer service, but lower overall claims costs and a strong competitive advantage.
Contact us for more on how we can help your commercial property insurance business today.