The Atlantic hurricane season begins on June 1, and from a catastrophe (CAT) perspective, the last two years have been relatively quiet for insurers, providing them with an opportunity to regroup following Hurricane Sandy.
Some of the most costly and dangerous hurricanes, wildfires and tornadoes have occurred within the past 10 years, giving insurers, their vendors and the Federal Emergency Management Agency (FEMA) plenty of opportunities to learn from past mistakes and prepare for the next “big one” to hit the U.S.
According to the recent J.D. Power 2015 Property Claims Satisfaction Study, insurers are making significant gains when it comes to customer satisfaction with property claims. This is important because customer loyalty is critical to insurers. Only 3% of “delighted” customers and 7% of those who were “pleased” switched carriers after their claim closed. Contrast these figures to the 9% of “indifferent” and 11% of “displeased” customers who switched carriers. In addition, 23% of indifferent customers and 42% of those who were displeased said they would be shopping for new providers over the next 12 months. That's a lot of turnover.
Gone are the days when insurers had several thousand full-time catastrophe adjusters. Today that number has dwindled down to several hundred with most companies supplementing their ranks with adjusters from a pool of about 1,500 CAT adjusters. This makes adjusting and managing claims more challenging following a catastrophe, especially because policyholders expect almost immediate service (and payment) thanks to technology and other vendors like Amazon who are able to provide instantaneous service. “Customers have a Walmart mentality,” says Tracy Bachtell, senior vice president of business development for Florida-based Paul Davis Restoration, Inc., who spent more than 20 years in the insurance industry. “They want everything faster.”
There are new tools and technology available to assist insurance professionals before, during and after a catastrophe. A number of vendors provide modeling to help risk managers prepare for catastrophic events. Other programs can determine where a hail or flood event occurred. Drone and robot technology are providing adjusters with views of damage in areas that previously may not have been reachable immediately after a catastrophe.
Social media plays an important role in keeping customers apprised of what's happening with a disaster, too. From educating them on how to prepare and minimize risk to getting onsite reports after an event, social media is fast becoming an effective means of communicating with customers. It also can be used to tell residents where a carrier will be set up after a disaster so customers can file claims. Emails and text messages can update insureds on the progress of their claims.
With all these technological advancements and the lessons learned from previous events, Claims asked some industry professionals how to improve customer service and satisfaction following a major catastrophe.
Start with Education and Training
Rarely is one disaster like another, and insurers and their vendors would do well to keep this in mind. Although there may be similarities, each event requires its own disaster plan. “Winter events are different than summer events due to factors such as mobility, the number of hours of daylight, crew productivity and the like,” says Bachtell. “Hail events are different than wind events. Water events are different from snow and freezing events. Earthquakes are different than all of the others.”
“Education and training are key,” says Rod Harden, head of catastrophe claims for Farmers Insurance. The company provides continuing education and training for employees and agents through its University of Farmers. “We conduct mock events and drills on a consistent basis to ensure that team members are ready to react and respond as a cohesive unit. Locally-based Farmers agents also share safety information and helpful tips with customers throughout the year, while consumers are also able to access a series of smart tips via Farmers Inner Circle.”
“Take a few classes,” advises Dave Robbins, vice president of Sharp & Robbins Construction based in Tennessee. “Understanding the fundamentals of restorative drying and remediation will pay big dividends when discussing the recovery process with restorers and policyholders alike.”
Solidify Vendor and Adjuster Relationships
The reality is that after a CAT, any challenges are magnified. Getting basic supplies like gasoline and plywood are harder because of the demand, everyone in a large area that's been impacted is trying to access the same services and provisions, and collaboration by all first responders is critical to meeting the needs of residents and insureds.
“No restoration contractor has enough equipment sitting idle waiting for a Katrina or a Sandy or any major catastrophe to come along,” says Ken Rothmel, director of strategic accounts for Sunbelt Rentals, Inc., a national equipment rental company. He recommends that companies responding in the wake of a catastrophe make sure they have a strong relationship with an equipment rental supplier. “During the 2004 hurricane season when four hurricanes hit the state of Florida, we had a billion dollars in original equipment cost mobilized to the state of Florida from as far away as Seattle. For Katrina and Sandy the amount of equipment was even greater. To just depend on equipment from within that state of impact is being shortsighted.”
The same can be said when it comes to establishing relationships with vendors who will be working for the insurance company and its team after the catastrophe. Determining the insurer's expectations up front is crucial, whether it's for an independent adjuster, an engineering firm, a restoration company, a temporary housing company or any of the other firms supporting an insurer's efforts with its insureds.
“If a carrier knows there is going to be a CAT situation, they should contact their independent adjusters and work with them so everything can go smoothly and discuss what is expected of them,” says Toby Bell, an independent adjuster with Professional Claims Service, Inc. in Allentown, Pa. “The carriers know what type of concentration of insureds they have in a particular area, but as independents we don't have that information.” Bell adds that companies “know exactly where their insureds are located for CAT models and reinsurance purposes.” Sharing this knowledge helps any vendors working in a particular area know where to put the most resources so the greatest numbers of insureds can be served in a timely manner.
Bachtell concurs. “Many catastrophes do allow for a few to several days of preparation prior to the event. The ability to dispatch both crews and equipment along with more efficient loss distribution can be enhanced. These serve to significantly improve customer service and will likely reduce overall costs.”
Vetting vendors ahead of time also is important to maintaining the customer relationship. In the case of restoration contractors, their employees are spending more time with the insured than the adjuster. “Know the restoration contractors in your area and only use vetted contractors who are experienced, staffed and equipped to effectively manage losses during CAT events,” says Robbins. “Also familiarize yourself with time and material pricing structures and the limits or discounts for multiple or larger projects.”
Tom Peters, vice president and owner of New Jersey-based insurance disaster restoration firm Insurance Restoration Specialists, a DKI-member firm, recommends asking restoration companies “if they will respond to claims for [the insurance company] and how many claims they can handle.” Carriers should ask how much staff and equipment a company has and what kinds of claims they will respond to — residential, commercial or both. “Many times contractors have commercial customers that need help first, like responding to schools or municipalities,” he explains. “This may then take away from the response time for the residential claims.” Peters also suggests that insurers keep in contact with the contractors in their area in case a local contractor is booked and can't respond, as was the case with Hurricane Sandy. The demand was so high that resources — adjusters, restoration companies, electricians, equipment and supplies — had to be brought in from outside the disaster zone.
Another area in which carriers should have partnerships in place before a catastrophe involves temporary housing. “Scrambling to find a housing vendor during a catastrophe without knowing the vendor is taking a chance during a time when you shouldn't be taking chances,” says Karen Schuster, vice president of sales with Klein and Company, a nationwide temporary housing company headquartered in Colorado. “Also, limiting yourself to one vendor is restricting insureds to only one avenue in the ALE (additional living expense) process and opening carriers up liability-wise.”
Maintain Communications After the CAT
When a hurricane, tornado, snow storm or other disaster strikes an area, adjusters know that everything seems to slow down and speed up simultaneously. Claims volume increases dramatically, making it difficult for adjusters to keep up with the influx. Following Hurricane Sandy, Bell remembers, “At one point we had so many claims from one client I asked if they could hold off for a couple of days.” Because he had no electricity or Internet after the storm for a few days, his company was able to operate only with cell phones and an iPad. “We had no capacity during the crisis,” he adds. “We only handled claims for our existing clients and if a new client came along we explained we were at capacity and couldn't properly handle their claims at this time.”
When carriers bring in outside professionals to supplement their staff adjusters, communication between the parties is imperative. “Independent adjusters at ground level usually operate under the supervision of a firm specializing in catastrophe claims,” explains Peter Crosa of Peter J. Crosa & Co., a Florida-based independent adjuster and private investigator firm. “Any communication with the ground-level adjuster usually comes from their immediate supervisors, who get the communication from the insurer. Regardless of how it comes down, there must be a clearly defined path of communication to the ground-level adjuster.”
Speed of Response Matters
Insureds want to see or at least speak with their carrier's representative after the loss. Anyone working for a carrier in any capacity represents the company to the insured and has the ability to impact the customer's satisfaction. “Having contractors in place to help the insured is a critical part of the claims service and, frankly, it's expected by the insured,” says Rusty Amarante, director of operations for BELFOR, an international disaster recovery and property restoration firm headquartered in Birmingham, Mich. He says customer service is far more than just handing a policyholder a check.
Harden agrees. “A good customer experience is key. Experiencing a [catastrophic] loss can be one of the worst moments of a customer's life. It's important that companies have well-trained staff ready and respond compassionately and professionally to customers when they have been affected. Training shows through in the customer experience and every touch point, from the agent to the claims handler.”
Part of improving the customer experience involves the flow of information between the carriers and their insureds. “Improving the experience almost completely relates to keeping the insured informed of the process, giving the insured an option to make inquiry at any time of day (which is critical in CAT situations), and making the policy benefits and limitations clear up front so that no one is blindsided,” stresses Crosa.
Peters believes that it's important for adjusters or other insurance company representatives to visit the sites so they understand the full scope of the issues involved and interact with their insureds. “Clients like to see the adjusters and address questions. Contractors like to see the adjusters out there to show them the scope of the cleanup and restoration.” Peters has seen so many times that “A job is done start to finish and nobody from the insurance company even saw the job. They question the costs or why it took so long to do the job. They don't understand the details when they don't see the jobs.”
For restoration companies, mobilizing after a catastrophe requires the precision of a well-oiled machine. Bringing in equipment and supplies quickly to a stricken area is mandatory, especially following events like tornadoes or hurricanes that impact an entire geographic area. Because of underlying conditions such as blocked roads, lack of power, gasoline shortages, curfews and other issues, it is an expensive and time-consuming process.
After Hurricane Katrina, BELFOR had more than 3,000 employees working in and around New Orleans for months drying out structures and working with other companies to rebuild the city's infrastructure. Following Hurricane Sandy, the company had 2,000 employees working in New York City and the surrounding areas; they even brought in technical experts from around the world to assist their restoration efforts. Because access to gasoline was so difficult in some places, the company brought in tanker trucks from as far away as Michigan to run their generators, vehicles and other equipment. Amarante explains that on large projects the company brings in their own nurses and security if necessary. It's not unusual for a firm to also bring in portable showers for workers, temporary accommodations and even their own catering so their employees are cared for and fed while they’re working to serve the insurers’ clients.
The Customer Experience Is Getting Better
The good news is that insurers continue to learn from previous events and are seeing improvements in customer satisfaction. “I certainly think we are all moving in the same direction when it comes to catastrophe responses and customer service,” says Harden. “I think speed of response and level of training for staff is what everyone needs to focus on in order to serve their customers better.”
With so many parties responsible for the customer's satisfaction after a loss, it's important that they work together to manage the claims efficiently, communicate among themselves and with the insured, and use the many tools available to provide the best experience possible under the most difficult of circumstances.