Battling natural disasters has been an uphill struggle for many over the last year. However, there is a new weapon in the armour, with the insurance industry turning to new technology such as predictive modeling to enable carriers and brokers to integrate proactive strategies that help mitigate issues when the worst happens.
“I’ve been in the industry for over 35 years and have seen a lot of challenges that have been overcome,” Ruth Fisk (pictured), the VP of insurance marketing at Smart Communications told Insurance Business. “It’s interesting as we see digital transformations coming in to play more, not only from the pandemic but from climate change and other environmental factors that have a significant impact on business.”
Fisk has noticed an evolution from insurance companies after a ruthless hurricane season, with carriers placing more focus on becoming proactive rather than reactive.
“I think of catastrophic events in that same evolution. Weather patterns are changing and shifting in new areas of the world that haven’t been exposed to them in the past,” she said.
Coastal locations are typically well informed and prepared on what to do in the event of a hurricane, but when locations like the east coast endure a natural disaster like Hurricane Henri, they’re not as prepared or educated about the proper protocols to mitigate losses.
Reducing potential exposures through parametric insurance and by creating education materials for clients are widespread knowledge, but insurers need to adapt to the growing need to enhance predictive weather tracking and tailor education towards specific geographies.
“There’s an opportunity for carriers to proactively provide advice about reducing exposure, emergency preparedness, evacuation protocols and claim procedures,” Fisk explained. “There’s an opportunity to help the insurer have a better relationship with the customer by providing that advice and guidance prior to storm season.”
Insurance companies will end up retaining more clients, she believes, if the relationship is more than selling a policy and interacting when a claim is filed. Communication capabilities that allow ongoing education are particularly valuable as natural disasters continue to grow in severity and unpredictability.
“Providing that frictionless claim experience is part of the conversational platform and contextualizing what clients’ needs are in advance, specific to their circumstance, will help not only retain the customer in the long-term but reduce the overall cost of handling a claim,” she said.
“Smart Communications is a significant player by providing an omnichannel experience to educate and provide advice throughout the entire lifecycle of a policy,” Fisk added.
There’s also an opportunity for insurance companies to adopt new roles and technology to prevent emerging risks. Predictive modeling tools have been improved over the last few years, but there are additional strategies insurers can implement for risk control.
Fisk noted that incorporating meteorologists as a part of insurance company’s staff is extremely beneficial as they can build out the recommendations about what needs to be done or how to address potential threats surrounding catastrophic events.
Insurers should also be looking into adopting technology platforms that allow them to respond to consumers in more effective ways. According to Fisk, by implementing proactive, digital first strategies, clients’ end to end journey becomes an optimized risk management experience.
“Leveraging modern technology and solutions that enable that two-way real-time communication is so important and a big part of that is looking at cloud-based solutions,” Fisk explained. “CAT and cloud fall hand in hand in today’s climate.”
Another factor insurers must think about is how modern technology can enable accurate data collection. The collection of data ultimately reduces redundancy. When coupled with the ability to extract data in real time, carriers and brokers can specify questions to the client well in advance of a catastrophic event.
“Insurance companies should provide research on quantum computing to increase modeling and accuracy as well,” Fisk mentioned.
In the event of losses, as seen during hurricane season, data and adaptive interviews can additionally create a sworn statement of loss automatically, so the insured doesn’t have to go through the process.
Reducing risk exposure through proactivity, technology, education, and good reinsurance strategies can help manage increasing premiums following a natural disaster.
“Reinsurance strategies will strengthen with more severity of these events,” she added
“Automating processes on the back-office side and providing agile cloud-based solutions for large catastrophic events makes processes easier to respond considering the circumstances being faced,” said Fisk. “These digital capabilities bring a cohesive solution and frictionless experience to help process claims so clients can get back to a normal life after a catastrophic event.”