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Catastrophe planning and response by a property/ casualty insurance company is one of the most important — and difficult — tasks to perform. Why? Even though 39% of the U.S. population lives in coastal counties, underwriters must ensure there isn’t a concentration of risk in CAT-prone areas. Within the context of the variables of climate change and catastrophe frequency, actuaries must price catastrophe risk accurately. And risk managers bear the responsibility of optimizing economic capital amid an ever-changing risk transfer environment and cost of capital.

And then there is the department most visible when catastrophe strikes—the claims department. When a CAT occurs, that’s the moment of truth for the claims department. Often a carrier’s success or failure after a catastrophe event lies in the hands of that small group of catastrophe claims professionals who manages the CAT claim planning and response. How it performs has consequences for a carrier’s reputation among customers and beyond. Independent adjusters often assess which company to work for based on a company’s reputation built after a catastrophe. A carrier’s management team anxiously waits for updates to respond to shareholders who are concerned about the impact of a big event. Every hour that passes is one more that customers might wait for a response after an event that has disrupted their lives. And employees may be motivated because the team responds well to a catastrophe, or they may suffer from low morale if they anticipate having to do damage control for many difficult weeks and months ahead.

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