Hurricane Dora was barreling through the Pacific over 700 miles away from the island of Maui, yet still fueled one of the deadliest and most destructive wildfires the island – and United States – has seen in over 100 years. Tropical storm Hilary delivered record-breaking flooding in
As the rebuilding process begins, it is clear that the nature of risks is evolving, and P&C insurers must evolve with it to effectively respond to severe weather events and meet policyholders' rising needs.
Here are five strategies insurance organizations can adopt to transform their event response from a reactive mentality to a proactive approach.
1. Prioritize the automation of your event response capabilities
With the severity and frequency of natural disasters rising, relying on manual processes can hamper effective response measures and delay vital communications to impacted policyholders. Insurers should upgrade their event response and use advanced geospatial analytics solutions that automate event alerts and analyses during a severe weather event. Geospatial analytics solutions that monitor portfolios against current event data automatically can reduce the time for evaluating claims exposure and accelerate response.
2. Understand new trends impacting claims
As seen with the Maui wildfire, the potential impact of hurricanes and severe weather on communities is escalating. Recent events have highlighted the growing trend of billion-dollar events occurring in concentrated areas of wealth. It is estimated that it will cost well over $5 billion to rebuild the sections of Maui destroyed by the wildfires. In 2022, Hurricane Ian was responsible for a staggering $50-65 billion in insured losses, constituting up to 49% of all global insured losses. A majority, 75% of all global insured losses, were notably concentrated in the U.S. Insurers must understand these wealth concentration patterns in order to reframe how they address future risk.
3. Shift from a reactive response to a proactive approach with advanced analytics
Moving from a "react and respond" methodology to "prepare and serve" can significantly change an insurer's handling of natural disasters. Before a hurricane strikes, insurers should make sure their automated analytics capabilities are ready to roll, including syncing your policies-in-force to ensure you're getting the most up-to-date exposure information and customizing your threshold by perils to receive only relevant automated alerts. With rising policyholder and stakeholder expectations, utilizing advanced analytics ensures your organization is well-prepared for the next severe weather event.
4. Leverage historical data and conduct simulations
Given the unpredictable nature of hurricanes, insurers can better prepare by going back in time and using historical data to conduct dry runs and simulations to test the organization's response. Use past hurricane events to understand opportunities to improve your processes as well as your organizational triggers. Performing a "what-if" analysis to see how a historical hurricane would impact your portfolio today allows you to develop enhanced risk mitigation measures and better direct your response more efficiently.
5. Ensure seamless data licensing with third-party providers
During a major event, real-time data becomes invaluable. Ensure that licensing agreements are in place with third-party data providers and modelers. Quick access to event footprints from sources like NOAA helps insurers to better understand the immediate risk and structure their response accordingly.
The path to more effective hurricane preparedness lies in proactive planning, automation, and the efficient utilization of data and analytics. By transitioning from mere reactionary measures to proactive strategies, insurers can ensure that they're not just adequately prepared for hurricanes but also well-positioned to serve their policyholders better. Always stay informed and tap into the vast arsenal of resources available to remain a step ahead of Mother Nature.
