Claims systems upgrades were expected to be among the top three priority projects in 2012 for more than 40% of large P&C insurers and almost a quarter of midsize P&C carriers, according to a recent report from Novarica. That's why the biggest challenges insurance companies face as they work to resolve Superstorm Sandy claims won't be about technology limitations.
As we report in this issue of Insurance & Technology, insurers today have an impressive arsenal of tools and capabilities, including geospatial systems, risk forecasting tools, mobile payments and remote processing facilities, to help them adjudicate and resolve the complex claims resulting from Sandy. The scope of these claims -- likely to total around $25 billion in insured losses, according to Munich Re -- is huge, but the industry also has made huge investments to modernize its claims and risk management processes. The losses and performance problems stemming from Hurricane Andrew in 1992 drove a complete transformation of insurers' claims administration capabilities.
What perhaps haven't been as thoroughly transformed are popular attitudes about insurance companies, as well as corporate cluelessness about public opinion and expectations. Fair or not, it's become clear in the first few months following Sandy's assault that there are widespread expectations that policyholders will be screwed by their insurers, either in terms of coverage limitation provisions, extent of claims payments, time required to pay claims or all of the above. As is inevitable following a natural catastrophe, some of this antagonism is unjustified and uninformed, but some of it unfortunately is deserved.
For example, a recent Allstate commercial created to highlight the work the company is doing in responding to policyholders affected by Sandy featured the damaged home of a Staten Island couple -- who happen to think the $10,000 payout from their carrier is inadequate. Allstate responded to the customers' complaint in bland legalese. The company may be "right," but these actions are being viewed by the public as wrong and insensitive.
As is so often the case in our digital, consumerized world, the biggest challenges insurers face as they administer Sandy-related claims have everything to do with leadership, training, culture and flexibility, and very little to do with technology.