More than three years later, and we’re still learning from Hurricane Sandy.
Thanks to a number of factors – from lack of preparation and education to outdated processes – many insurance claims still remain open. Last spring, the Federal Emergency Management Agency (FEMA) agreed to review all flood insurance claims (more than 140,000), and just prior to this writing, FEMA extended its latest deadline for homeowners affected by Sandy to request their claims be re-opened.
These massive delays, not to mention numerous investigations into claims reporting processes, set back recovery efforts significantly – to-date some areas have still not fully recovered. They’ve also forced homeowners, carriers and even regulators to re-think recovery processes.
Some local and state governments have taken an aggressive approach to reform. This past summer New York’s State Assembly voted on a bill that would regulate and expedite insurers’ claims processes following natural disasters. Such legislation, however, is more indicative of the change needed after Sandy than a move to more regulation. In fact, since Sandy, carriers and their technology and service providers have taken significant strides to become more proactive and efficient. Through a technology-enabled approach, we’re seeing earlier correspondence, faster adjusting and quicker settlement, which ultimately expedite recovery.
Below are three examples of how carriers are using technology to improve claims processes before, during and after natural disasters (and one to watch over the next few years):
Underinsurance and a general lack of understanding of policy terms affected many families following Sandy. Now, many carriers offer enhanced smartphone apps that enable policyholders to create a disaster recovery checklist and gain clarity into coverage for fires, floods, hurricanes and other scenarios. Carriers can also use these apps to deliver push notifications ahead of potential disasters, directing policyholders to review their coverage and disaster plan.
At the same time, these apps place the power of the field adjuster into policyholders’ hands. Many now include picture and video capability, allowing the policyholders themselves to chronicle damage and initiate a claim more quickly.
Following large-scale disasters like Sandy, local governments and agencies require more flexible payment options to cover food and water, generators, infrastructure repairs and other emergency services in short order. Not too long ago, many relied on cash for these purchases. Over the past few years, however, carriers have introduced more seamless purchase cards, also known as p-cards, to decrease time to payment while increasing purchase transparency for the administrators who oversee recovery efforts.
Big Data and Predictive Analytics
Carriers and technology experts have developed more sophisticated analytical solutions to not only predict extreme weather, but to plan and deploy resources. With unprecedented insight into global weather patterns, communities and carriers can plan months in advance of a potential disaster. Additionally, these solutions enable carriers to better identify areas most likely to produce severe or complex claims following disasters and allocate adjusting resources accordingly – catastrophe response teams, mobile adjusting units and expert adjusters.
Automation and Outsourcing
More recently, business process service providers on which many insurers rely to drive efficient workflow have explored how automating back-end tasks can reduce administrative time spent processing claims. For example, take robotic process automation (RPA), which entails teaching software to process and trigger decisions on multi-step, repetitive tasks like processing claims. RPA can complete the manual work of an adjuster in a fraction of the time. As one of the first service providers to implement RPA in claims processing work for Lloyd’s, Xchanging saw turnaround time and error rates significantly decrease. Another main benefit of RPA is its ability to increase capacity during busy periods, such as after a disaster.
Solutions like RPA are projected to take-off in the coming years, as service providers drive continued process improvement. The potential time and cost reductions for insurers and consumers could be far reaching – from claims processing and underwriting to policy administration.
Over the next few years, we’ll continue to see insurers and service providers enlist technology to better educate themselves and their policyholders, and further mitigate potential disaster damages.
Sean Allen is vice president for Xchanging Insurance Services in North America. He has more than 18 years of experience as a leader in the business process outsourcing (BPO) industry, working with some of the largest insurance firms to reengineer processes from billing to payment and reporting. Visit www.xchanging.com for more information.
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