The Key Technologies That Transformed Insurers’ Catastrophe Response Post-Hurricane Andrew
Catastrophe Models Provide Objective View of Future Risk
By Lynne McChristian (at right), ABC, Florida Representative, Insurance Information Institute (Tampa, Fla.)
Andrew revealed how history can be an imperfect guide for the future. Prior to Hurricane Andrew, insurers used “experience” data to predict future losses. But unprecedented events break historical records. That’s a reality reflected in today’s risk management strategy.
Catastrophe models before Andrew incorporated data from past storms, and they still do – but now they do much more. Cat models give an objective view of future risk. They generate thousands of sample hurricane events, track them at various wind speeds, assign probabilities to storm scenarios and incorporate this data over an insurer’s policy count. The models help insurers plan the amount of capital they should secure to pay anticipated losses.
Disaster response is digital now. When Andrew flattened Homestead, Fla., claims adjusters got lost on their way to policyholders’ homes because street signs and landmarks were gone. Now, with GPS and cell phones, connections are much easier. Adjusters can input damage information from the scene, rather than doing all the paperwork back at the office after a day in the field. Handwritten checks have given way to debit cards. These improvements ensure a better claim filing experience for the policyholder.
Policyholders are going digital with disaster preparedness, too. Today, there are apps for that, including free apps from the Insurance Information Institute (“Know Your Stuff,” a home inventory app; and “Know Your Plan,” disaster preparation checklists, tips and tools). Insurers have apps to enable policyholders to file claims as well, making it easier to prepare before disaster and speed the claims process afterward.