Catastrophes insurers' 'moment of truth'

Catastrophes are insurers’ “moment of truth”. That’s when they must deliver on the promise made at policy inception, Sam Said, IAG Commercial, national manager, short tail claims, told the AILA conference.

When nat cats occurred, insurers had to be “customer centric”, work with service providers and have clear, consistent communication with brokers and insureds, he said. Pre-planning was essential and all parties had to understand the state of play and the challenges ahead. “The immediate response is critical.”

The Insurance Council of Australia’s role was important and insurers relied on regional representatives to understand community impacts. Claims were triaged and insurers had to identify priorities and decide whether they could settle on the phone without quotes or required proof of damage. Claims processing guidelines had to be flexible.

Mr Said said insurers needed a visible presence in nat cat-affected areas, like vehicles near the heart of the disaster and people with expertise and communication skills on hand –“sometimes just to give customers a hug and let them know things are going to be ok”.

“Focus on external communications. The message must stand out, reflect the brand and be simple.” He said insurers were increasingly using social media, backed by traditional media, and community forums to give insureds access to the right people to ask questions and get feedback.

The 27 November 2014 Brisbane hailstorm was the first time IAG trialled a combined whole-of-group cat response. Vehicles were being assessed within three days of the event, with up to 1,000 a day being processed.

Marc Gibson, Victoria/Tasmania manager for Crawford & Co, speaking in the same session, said the industry had made “significant improvements” in how nat cats were handled, but warned the industry’s reputation was at risk when it failed to provide exceptional customer service. “Wi-fi and hand-held devices have increased our ability to do assessments, but have increased expectations, as well.”

While claims notification had progressed to online, traditional phone contact was sometimes more effective. He criticised the industry for having inexperienced people at the first notification of a loss. Claims could be processed faster if correct information was obtained initially.

There was industry debate about overseas adjusters being used in natural catastrophes, but Mr Gibson said he wondered whether the concerns were relevant, providing adjusters had the skills and experience to conduct inspections. They could then hand over to Australian-based adjusters. Costs involved in using overseas adjusters were “significant and impact on profit levels, but that’s outweighed by the need for satisfied customers”.

“Communication is the key to satisfaction for insureds.”

There was always a “honeymoon period” after a nat cat but, when that passed, and business-as-usual claims were impacted, insureds were unhappy. The usual post-disaster report card was “must do better/can do better”.

Mr Gibson said the high stress of a cat situation, including the volume of work and the sometimes remote location, affected insurers’ ability to proceed normally. Resources were sometimes unavailable and insurers had to delegate authority to builders and others to negotiate settlements.

“Claims are the basis of the insurance product. We need flexibility to agree settlements on a cash or fulfilment basis. The customer must be at the centre of the claims process,” he said.

Jimi Groom, head of claims for Swiss Re Australia, said post-loss reserving was getting faster, but there were still inconsistencies. The reserve dictated the resources able to be dedicated to an event.

Insurers and reinsurers relied on prior modelling, claims notifications and market insights from those at the frontline to assist.

Swiss Re had developed its initial loss estimate 10 days after the 11 March 2011 north-eastern Japan earthquake. On Monday 21 March 2011 it advised a net loss estimate of $US 1.2 billion, which was 10% off the final amount. But Mr Groom said that was: “Pretty good, I think.”