Personal Lines Carriers’ Catastrophe Planning Sound, but Room for Improvement Noted

December 21, 2015

Insurers can’t predict when catastrophes occur, but they can refine management plans to be better prepared for the next event, according to the Property Claim Services Personal Lines Planning and Response Report, a new benchmarking study published recently.

The report created by PCS, a Verisk Analytics business, determined that insurers have numerous pieces in place to launch effectively into action when catastrophes strike, most notably the near universal use of a catastrophe plan manual. In many other respects, execution of catastrophe claims management varied widely, and the industry needs to strengthen several areas.

The PCS Personal Lines Planning and Response Report is the second report in the benchmarking series. The first report was the PCS Catastrophe Compensation Report published in August.

PCS surveyed 53 property/casualty companies across the United States, with the overwhelming majority writing personal lines of business. The survey asked about home office catastrophe management, catastrophe event management, vendor management, settlement authority, equipment and technology and post-event assessment.

The catastrophe management and response-related findings included the following:

Proactive approach: A majority of the companies surveyed have developed catastrophe plan manuals that they review annually. These organizations take a proactive approach to catastrophe preparedness, which can include the identification of catastrophe coordinators and permanent field teams.

On-site management: Most companies set up a remote catastrophe site selected by a regional or catastrophe site manager and staffed by deployed employees who make their own travel arrangements.

Reliance on outside services and staff: More than 70 percent of companies use agents for both the catastrophe process and client outreach. The majority of companies rely on multiple vendors, including property and auto vendors and independent adjusting firms.

Role of independent adjusters: Independent adjusters are relied on for both field adjusting and inside adjusting, and many companies assure quality by requiring them to be certified.

“This new report is designed to provide personal lines claims management information about trends in catastrophe planning and execution as well as offer direction for possible future improvements,” said Joe Louwagie, assistant vice president, Property Claim Services,

The report found that insurers overwhelmingly demonstrate concern for catastrophe preparedness by using a catastrophe plan manual; developing predetermined personnel lists, call center scripts, and preexisting vendor contracts; and establishing catastrophe coordinator positions.

Opportunities for improvement for catastrophe claims management was noted in the following areas:

  • Currently, about 50 percent of companies deploy IT personnel to some catastrophes. Insurers may wish to increase that number because future technology applications in the claims-handling practices will likely make IT personnel a necessary part of the catastrophe team.
  • Companies overwhelmingly do not have SIU field support, even though fraudulent claims have the potential to be widespread after a catastrophe.
  • Many companies should consider additional follow-up after catastrophe events, both in terms of making adjustments to catastrophe plans and manuals and improving individual staff performance.
  • The role of independent adjusters and the use of automated payments can be expanded to reduce cycle times and lessen overtime costs.

Source: Verisk Analytics

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