Learning the Lessons of Hurricane Andrew

I was still fairly new to the insurance industry in 1992, but I knew enough about the business to recognize that Hurricane Andrew was a transformative event – and not only for the property/casualty segment of the industry. Because Hurricane Andrew, which at the time was the most costly natural disaster in U.S. history, showcased everything insurance companies did well or poorly in the critical areas of risk management, claims administration and customer service, it raised the stakes for all insurance companies, regardless of the line of business.

In 1992, insurance systems were mainly proprietary and almost entirely IBM-based. Laptops were just starting to be explored as tools for agents. Although there had been some pilots involving imaging technology, the industry was still heavily paper-based in all its transactions and information gathering. Staffs were bigger, data centers were larger and less efficient and processes were slow.

It's a significantly different industry today, not least in that technology is now strategic and customer-facing, rather than restricted to the back office. Interoperability, scalability and flexibility are requirements for today's open, standards-based systems. Processes are increasingly automated and digitized. Customers call the shots and control interactions with their insurers in ways that carrier executives could never have imagined 20 years ago. An array of technologies that were only a promise for insurers in 1992 – including but not limited to analytics, mobile, Web-based applications, geographic intelligence – have transformed those core functions of risk and claims management, not to mention customer service. Some of this transformation may have occurred without Andrew, but the costs and fallout from that terrible catastrophe certainly spurred much of the investment and new thinking that characterizes the industry today.

But the legacy of Hurricane Andrew shouldn't just be about spending on advanced technology and upgraded systems. As risk modeling firm AIR Worldwide Corp. wrote in a 2002 report on Andrew's 10th anniversary, "Will another event take the industry by surprise?" What did the insurance industry learn from the experience of Hurricane Andrew, how has it applied those lessons and is it doing a better job in 2012 of serving policyholders affected by catastrophes than it did in 1992? That will be the focus of Insurance & Technology's special coverage of the 20th anniversary of Hurricane Andrew, which we will present over the next few days. As we analyze the industry's response, I welcome your thoughts and recollections about the impact of Hurricane Andrew – let us know on Twitter at @insurancetech or @kathyburger.

[Continuing Coverage of the 20th Anniversary of Hurricane Andrew: 5 Reasons Why Hurricane Andrew Still Matters.]

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio