Catastrophes may be the single greatest challenge impacting theinsurance industry, affecting underwriters, adjusters, andpolicyholders alike. The shared risk that makes insurance such aviable industry can become financially devastating when thousandsof claims pour in following an event like a hurricane, flood, orearthquake. No matter how many horrific events the industry has hadto cope with — Atlantic storms such as Hurricane Andrew, floods inthe Midwest, tornadoes in metropolitan areas — each catastrophepresents new challenges that call for an evolution of techniques,tactics, and technology.

Few events in American history captured the essence of acatastrophe like Hurricane Katrina. The storm slammed into NewOrleans in the last week of August 2005, killing nearly 2,000people (leaving another 700 missing), and causing more than $80billion in damages. The immense financial toll and human sufferingforever changed the way our society, government, and insuranceindustry approached forecasted events like hurricanes. It alsochanged the way people in the path of storms reacted, as evidencedby the mass exodus from Houston a month later prior to the arrivalof Hurricane Rita.

Perhaps Katrina's most profound business impact was how theclaim cycle also changed as adjusters were prevented from enteringthe most devastated areas. Carriers had to find new ways to reachtheir customers just to initiate the claim process and mitigate anyfurther losses due to open and exposed structures andproperties.

A Wireless World

Turn the clock back 10 years. Imagine trying to cope with acatastrophic claim event on the scale of Hurricane Katrina minuslaptops, cell phones, global positioning systems (GPS), and lasermeasurement. Devastating events that used to take months to assessand quantify now take mere weeks. The insureds who were once forcedto the sidelines after filing claims with their local agent cannow, in some cases, witness the progress being made on their claimsand properties online. They can also participate by providingelements or data they view missing through a more automated andtransparent claim-processing system. The systems continue to evolveas carriers, adjusters, contractors, and even policyholders findnew ways to use rapidly-changing technology.

Today, the functionality, clarity, and coverage of cellulartelephone and wireless data networks, along with the increasedversatility of the Internet, have become crucial tools foradjusters, carriers, and policyholders alike. Insurance carriershave recognized the potential for faster processing of estimatesand settling claims. Adjusters are no longer tethered to a landlineto fax documentation for estimates. They can now call thatinformation in from the field to a central location that inputs itinto a carrier's system and advances the claim through the process.Adjusters in the field can now be reached easily by the carriers,should any questions or concerns arise.

In those early days of cell phone use by claim adjusters, thecontact information was only shared internally. But the expansiveuse of cellular technology increased the demands of policyholderswho wanted that contact information for their agents and theadjusters that were working their claims.

Today, anyone is reachable anytime via cell phones. This hasalso helped customer satisfaction rates, as policyholders can morereadily reach their assigned adjuster instead of dialing a callcenter.

The advances in wireless phones and other devices have alsoallowed adjusters and others working in the field to reduce theamount of equipment they take with them to a natural disaster.Today's smart phones are beginning to supplement and replacecameras — both still images and video — that adjusters were onceforced to lug. Static paper maps have been replaced by GPS unitsand turn-by-turn information provided through the handhelds. In anumber of cases, today's phones can carry out much of the work of alaptop: composing documents, sending and receiving correspondence,and allowing users to interact with both Internet and intranetapplications.

Hard Lessons of 2005

The advances in portable technology still were not enough toprepare the insurance industry for the monumental task needed toassess and compensate for all of the damage that occurred in 2005,the most active Atlantic hurricane season on record. The deadliest,of course, was Katrina.

Carriers and adjusters who arrived in New Orleans to begin toassess the damage were unable to travel to the most devastatedareas because it was too dangerous. Homeowners struggling toprotect their property and belongings were reduced to painting thenames of their insurance carriers on the rooftops along with theirown cell phone numbers in an effort to get adjusters to callthem.

Following the lessons learned and damage reputations from thatseason, carriers began to aggressively market their responsiveservices. They aired dramatic commercials featuring new mobilecommand centers, driving into the heart of a storm to assess damageand distribute settlement checks on the spot. Policies now comewith Web addresses and e-mail contact information that allowpolicyholders to file claims via the phone or Internet.

Should a catastrophe strike, carriers can use predictive dialingtechnology to send automated messages to their customers via landlines or mobile numbers, urging them to call back with their claiminformation. It is a way to get issues addressed in an effort tomitigate any additional damage that may result from having anexposed property.

The impact of technology is certainly easing the filing ofclaims. It is also creating a greater expectation of service andtransparency for the policyholders. The immediacy of currentcommunications means that all customers — internal and external —expect to have the ability to reach whomever they need, wheneverthey need to reach them. That expectation extended from carriers tothe independent adjusters, who are essentially extensions of theirbrand and service attributes.

Technology Accelerates Claim Processing

Online and mobile communications continues to drive claims thatcome in faster and earlier than ever before after a catastrophe,requiring more coordination between claims and underwriting. Theclaim communication process now needs to be as strong as ever tohelp rapidly deploy adjusters to assess damage and contain losseson the ground.

Advancements in weather forecasting are also helping carriers toreview exposure in the regions of predicted landfall forhurricanes. Exposure profiling allows for the determination of howmuch of a presence is needed in the area of a pending event, andalso allows for more accurate and effective deployment of claimadjusters.

Today, dashboard technology affords carriers the capability toprovide real-time claim information to offer complete transparencyin claim processing. Dashboard technology provides a graphic viewof all open inventories and allows for the monitoring of real-timeclaim-handling performance. This performance can be measuredagainst first contact, first report, and claim closing. Monitoringcan be used to improve claim-handling performance for carriers andadjusters alike. It also brings the policyholder into theprocess.

In a catastrophe, dashboard technology enables better managementof the avalanche of nearly immediate claims that are being filedthanks to customer-facing technology. But technology is alsoevolving the typical workflow for claim adjusters. Years ago, thetypical adjuster would process roughly 100 claims over athree-month period during a catastrophe. Now, policyholders fileclaims almost instantly, resulting in a dramatic compression ofclaims being filed in a shorter time span. This cycle compressioncreates the need for a much larger adjusting force to handle thesame number of claims today than five years ago.

The reason is simple. Many insurers promise to contact theinsured within 24 hours of a claim being filed and inspect aproperty within 72 hours of a claim being filed. If 1,000 claimspour in today versus 500 that would have been filed on the same dayfive years ago, then it takes twice the number of adjusters. Eachadjuster may handle half as many claims over the course ofprocessing a catastrophe, but the affected claims will be resolvedtwice as fast, which results in a major improvement for victims ofcatastrophes.

Obviously, this new environment requires independent adjustingfirms to deploy many more adjusters to work an event than it wouldhave five years ago, putting an increased burden to recruit andtrain a larger workforce as well as handle the vastly more complexlogistical challenges of larger and faster deployment. In additionto the acceleration of the claim-filing period, carriers havelearned that rapid damage and exposure assessments also helpprevent the development of mold or exposure to additional damagethat frequently increases the costs of settling claims.

Moving Forward

Society continues to find new ways to communicate. New onlinetechnologies, social media platforms like Facebook and Twitter, andtext messaging have pushed carriers and adjusters to explore thisspace as a new way of communicating with each other andpolicyholders. Customers now have the ability to choose the waythey want to be contacted, and carriers and adjusters must complyin order to continue to provide the level of service customers areexpecting. All of this technology is forever changing the verynature of the claim cycle during a catastrophe.

Outside the online space, companies are developing newtechnologies that use satellite imagery and aerial photography toexpedite the claim process for roof damage. Keeping an adjuster offa potentially dangerous roof that he may have had to measure allowsan adjuster to move more quickly through those claims and keeps himfrom an injury that would slow down the process even more.

Hand-held mobile applications continue to evolve by capturingdata, producing estimates, and generally expediting the claimprocess. These tools can also help to comprehend the skills,workload, and distances adjusters must navigate so as to optimizevisits and adjust for agents in the field to maximize the number ofvisits.

Technology has not evolved to the point where adjusters aretaken completely out of the equation. It still requires skilledpeople on the ground who understand what to look for, know how tovalue the damage that occurred, and who are armed with the empathyto help deal with the human cost that results from a catastrophe.Those skills are augmented by the knowledge and understanding ofthe tools that are now at their disposal. It is imperative thatcarriers and adjusters alike continue to expand that knowledge andmake the most of available advancements in order to meet theevolving needs and expectations of all stakeholders affected whendisaster strikes.