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Hurricane season began on June 1 and will last through November, with the National Oceanic and Atmospheric Administration (NOAA) predicting an active Atlantic hurricane season. Recently, these storms have become increasingly catastrophic and have caused costly damage, driving insurers to make changes in regions that are more likely to experience hurricanes.
As climate events continue to increase in frequency and severity, the traditional insurance processes for underwriting, pricing and risk mitigation may no longer be effective. Insurers will face the challenge to adapt, as well as innovate, creating new avenues to more accurately price and underwrite risks for policyholders across P&C coverage lines.
In a recent op-ed for Digital Insurance, Adam Denninger, Capgemini global strategy lead, writes that there are two ways insurers can update their underwriting process: Through better technology, and by encouraging customers to be proactive about risk. Today, drone photos help analyze the condition of roofs; digital twin technology virtually models structures and assesses the impacts of CAT events before construction; and geospatial analytics can more accurately determine if properties are more prone to wind, fire, earthquake, and even crime events. The goal of using more sophisticated tools and data is to help fix underwriting discrepancies, ultimately enabling pricing to mirror the risk. This will enable underwriters to not only price more accurately but also have more control over the amount and type of risks taken on.
Read more: How insurers are preparing for hurricane season
When it comes to risk, Denninger continues, insurance carriers need to develop a strategy to encourage insureds to take preventative measures and make more informed, lower-risk decisions around their property to reduce potential losses. This can be as basic as encouraging the installation of a fire-resistant roof versus a wooden one, or as sophisticated as a full-home smart network with sensors and video analytics. This involves updating and refining underwriting eligibility rules, discounts on pricing, and risk management programs that encourage insureds to take certain steps to reduce their insurance rates (or become eligible for insurance).
As many insurance agencies are local to their clients, they may be facing the storm themselves. Adopting additional technology within their processes can add more ways to communicate in the event of a natural disaster.
Embracing texting in a system that captures messages can be one of the most useful tools during a disaster, Mike Becker, CEO of the National Association of Professional Insurance Agents, writes in a recent column. It can be a way to give quick updates to your own team through a group text, and when phone lines might be busy, customers can text questions and get answers directly from your team. Texting customers information they need like claim numbers and adjuster names and phone numbers, provides a valuable service.
Read more: NOAA: Prepare for an "above normal" 2024 hurricane season
Additionally, social media can help provide information and answers quickly to customers. Insurers can provide updates on both social media and your website about availability, general claims tactics, and post-disaster steps they should be taking. Preparing a predesigned front page to the agency's website with all of the information a customer might need, including carrier contact information that can easily go live when needed can save time and direct customers to the appropriate channels.
Catch up on other hurricane insights and actionable tips from industry leaders and Insure Think contributors below.
