Everyone expects hurricanes to hit Florida from time to time, and planning and preparation efforts reflect that reality. The state aggressively promotes hurricane preparedness well in advance of storm season, and television stations cover advancing storms with relentless regularity. Though not everyone complies with suggestions to get ready, at least they are forewarned. That’s not true everywhere, most particularly in areas of emerging catastrophe risk.
For example, in the 30 years prior to 2010, the Asia-Pacific region accounted for 13 percent of insurer dollars lost due to natural catastrophes, on average. Last year, earthquakes in New Zealand, the earthquake and tsunami in Japan, and flooding in Thailand and Australia helped bring that number to 61 percent, according to MunichRe.
Additionally, a study released in March by CoreLogic Spatial Solutions found that of the top 10 states with the highest number of tornado touchdowns between 1980 and 2009, only three of them were located in the Midwestern area commonly known as Tornado Alley. Tornado risk actually extends across most of the eastern half of the U.S., and at least 26 states have some area facing extreme risk, CoreLogic says.
The role that global warming may be playing in changing weather patterns and intensity is still a subject of debate. What does seem clearer is the effect of economic and population growth on catastrophes in developing regions. Deforestation and construction helped pave the way for last year’s flooding in Thailand. The same factors may well affect other areas unaccustomed to and unprepared for natural catastrophes.
These emerging risks also have a significant impact on the expectations insurers have for independent claims adjusting organizations and how those organizations need to prepare to meet them.
Claims organizations must train even more thoroughly. Like property owners in storm-stricken areas, claims adjusters have long made it a point to prepare for catastrophe season with training, conferences, and drills. If we are entering a period of more numerous and severe catastrophes, it is essential that we be more prepared than ever.
Adjusters and their organizations need to take advantage of available training, ideally year-round, but at least by attending major annual conferences commonly held immediately before storm season. Also be aware that more and more often, clients require specific training and designations. For example, the Texas Windstorm Insurance Association mandates that adjusters take and pass its own certification course.
Claims organizations must plan for international deployments. The global insurance industry is growing, and, as last year showed, catastrophes don’t just happen in the U.S. To remain a good partner to insurers, independent adjusting organizations need to respond to disasters no matter where they occur.
While planes and mobile communications have reduced the barriers to international catastrophe response, regulatory, cultural, and logistical challenges still exist. Immigration laws can delay or prevent adjusters from working in non-native countries. Cultural integration can be tricky, while language barriers are often insurmountable. With a population dispersed and unreachable by road, telephone, or computer due to a catastrophe, finding translators post-disaster is nearly impossible.
A claims organization must study where international clients have risks, understand all that is necessary for deploying adjusters in those countries, and plan to meet needs before catastrophes strike. A combination of local resources who can help navigate the terrain—literally and figuratively—and skilled adjusters brought in from other regions to augment existing staff should ensure success.
Claims organizations must use technology effectively. Technology—everything from online intake to cell phones, tablets, and laptops—leaves claims organizations with few excuses for slow claims closure. Unless adjusters are simply unable to gain access to a catastrophe area for an extended period of time, as occurred in Thailand, insurers expect speedy adjusting in every circumstance. Investing in equipment, software, and training for adjusters is critical to providing great service to clients.
That need has changed the model for a modern catastrophe adjuster. Adjusting experience used to be the key factor in hiring decisions. Today, customer service skills, computer literacy, and comfort with technology are weighed just as heavily. Experience is important, but so is the entire package. Unfortunately, this package is becoming increasingly difficult to find, and the industry as a whole is suffering from a shortage of catastrophe adjusters.
In this time of change, insurers and governments are working to better understand and mitigate emerging catastrophic risks. We need to do our part to attract and retain qualified independent adjusters through good communication and up-to-date training and technology. Only then will we be able to plan for and respond successfully to catastrophes, wherever they might occur.
Jeffrey T. Bowman is president and CEO of Crawford & Company, an independent provider of claims management solutions. He has been a CLM Fellow since 2012 and also serves on the board of directors of The Institutes, the organization that develops courses and confers the CPCU designation. He can be reached at info@us.crawco.com.