The Expert:
Taylor Davis
Partner
Clyde & Co.
As Hurricane Helene threatens the Florida coast with catastrophic winds and massive storm surge, CLM sat down with Taylor Davis, partner, Clyde & Co, to discuss tips for claims and litigation professionals on how to handle hurricane-related claims, the use of AI in storm aftermath, and lessons learned from recent Florida and Louisiana storms.
With hurricane season in full swing, and with the threat of Helene, what are some of the top tips that claims and litigation professionals should keep in mind? What are the best preparation tips, and what are some common mistakes they make that complicate claims and cases?
Taylor Davis: Some top tips would include getting the claims triage process ironed out before it’s needed. So, knowing what that looks like, who’s responsible for what, what the processes and procedures are, and clearly communicating that to everyone on the team who needs to know so that they’re ready to go when the claims start rolling in, if they start rolling in.
For tips on preparation, it’s about getting the stable of experts ready and on standby, from adjustment through to counsel and whatever else may be needed—engineers and so on—so that they’re ready to pick up the work as soon as it comes in and get to the loss sites as needed to start documenting the condition as soon as possible after the loss.
Another tip is being aware of the particular claims handling guidelines for the particular jurisdiction. There are some differences from state to state. So, claims handlers should familiarize themselves with the relevant and applicable guidelines or rules or statutes for whatever the relevant location would be.
Insurers [also] want to have escalation processes in place, in terms of when claims need to be escalated and who the appropriate person is to assign specific claims to.
Are there any challenges in particular you are looking out for during this current hurricane season that are different from years past?
Davis: One thing that’s a little bit different about this year, and may affect claims-handling professionals on a personal level, is we’ve got a lot going on in the world right now, from geopolitical challenges to a presidential election, and in combination with a very heavy cat season, there is the risk for burnout or just fatigue among staff. So, it’s important to remain aware that these folks are human, and it can be somewhat stressful—particularly, perhaps, for newer professionals who haven’t been through several cat seasons.
In addition, the legal landscape is a little bit different this year. There have been some statutory amendments in relevant jurisdictions, potentially for hurricane claims, and that could alter the landscape a little bit. Anecdotally, I have heard of a number of seasoned professionals retiring from the industry lately. So, just going back to what I was saying about newer professionals, there may be fewer resources of experienced claims handlers on hand. Companies should be prepared to navigate any challenges that their employees may be faced with when dealing with these claims.
Would you say there’s anything weather related that’s presenting a challenge? Forecasters have called for a particularly active hurricane season.
Davis: One thing we’ve seen is that the seasons can be active in the later half. So, I know that, sometimes, we get to this point in the season and, if it’s been relatively quiet, that may lull us into a false sense of security when the second half of the season could be just as, if not more, active than the first half. It’s important to remain vigilant.
And, yes, some experts are predicting that this is going to be a high-volume season. There has been a handful of storms so far—nothing on the scale of what we have seen in the past for some other seasons so far, but that could still happen. I think, in tandem with that, since last year was relatively light, people might not be as mentally prepared for a busy season this year, but it could still happen.
Technology has been playing an increasing role in evaluating property damage after hurricanes and other severe weather events. Now, it’s AI’s turn to fit into the equation. Can you talk about how AI is being used after weather events and how you expect that role to expand?
Davis: There are a number of ways that AI could come into play. Anything from using chat bots as a tool for customers reporting new claims or asking questions about the status of their claims, to Microsoft Outlook suggesting wording for emails. But I think where it has the potential to increase in use or productivity would be with collection and collation of data points to assist insurers with better predicting portfolio-wide impacts from large natural catastrophes.
Potentially, generative AI may start being used in drafting acknowledgment letters or other correspondence to insureds after a loss. There are a number of different uses that I haven’t personally heard of being used, but they may be in use or may become utilized, such as adjusting policy wordings and preparing reports or those sorts of things. And, of course, we’ve talked a lot in recent years about insurtechs, but those are becoming more and more sophisticated, so it will be interesting to see how this continues to develop.
Massive power outages pose a particular problem for property owners after severe weather events. Can you talk about some of the claims implications and how to mitigate them?
Davis: This could go a number of different directions in terms of different implications for insurers. One could be that after a loss, an insured is not able to properly dry out water damage, for example, because they can’t use electricity to power blowers or air conditioning…that would be needed to mitigate damages and try to prevent mold growth…so, that could have both scope and coverage implications under a property policy. It could mean subrogation potential depending on the circumstances of the situation. It could impact business interruption claims under commercial policies where insureds are unable to get their businesses back up and running—not because of physical damage to property necessarily, but because of these power outages, and that could have coverage implications under the policy as well.
With Helene threatening the Southeast, what lessons have been learned from recent activity in Florida and Louisiana as it pertains to hurricane season and claims? What are the main takeaways that claims and litigation professionals should keep in mind?
Davis: I think the former bad-faith schemes in those states were making it difficult, if not impossible, for insurance to continue writing property risks in those jurisdictions. So, we’ve seen legislative changes to try to address the impact that was having on citizens in those states, and that has somewhat shifted the dynamic, but I think there will still be extracontractual claims that get made against insurers in those jurisdictions.
So, as we talked about earlier, it’s important for insurers to know the statute that’s going to apply to a particular claim and be aware of timing requirements and deadlines so that they are not unwittingly running afoul of any handling requirements, which can be quite challenging in the face of these types of natural catastrophe situations.