Kansas Tornados Are Occasion to Hone CAT Management Skills

As Catastrophes go, the weather that hit western Kansas on May 4 was on a very small scale compared to a major hurricane. But the strength of the principal tornado -- the first ever EF5 -- ensured that the destruction was of a thoroughness seldom seen. The tornado destroyed 95 percent of Greensburg, Kan., and killed 10 residents.

The insurance industry's response to the event similarly was a case of strength rather than scale: Carriers' claims professionals, technology and processes weren't strained but rather given an opportunity to show how well they could perform. While Greensburg's scant 1.5 square miles rendered GPS technology moot for purposes beyond routine travel directions, mobile technologies played an important role in enabling a rapid response to Greensburg's policyholders.

Bloomington, Ill.-based State Farm ($5.32 billion in 2006 after-tax net income) deployed several catastrophe response vehicles, including two CAT Response Trailers (CRTs). Once Greensburg was opened, State Farm placed its bus-like MCF (mobile CAT facility) directly in the town. The MCF has a built-in diesel-powered generator and is equipped with phone and data connectivity via satellite connection.

State Farm adjusters are equipped with cell phones and laptops with wireless cards that run on cellular networks, according to Tom Kelly, State Farm's CAT Services Fire Team manager. And many of the adjusters operate vans fitted to serve as mobile offices, he adds. "Between having the cell phone, laptop with wireless card and van with office equipment, they can go pretty much anywhere without needing an actual office," Kelly comments.

Cellular Speed

St. Paul, Minn.-based Travelers ($113.8 billion in total assets) similarly dispatched a fully equipped mobile claims office, which the carrier refers to as its Mobile Claim Headquarters. However, Travelers relies entirely on cellular transmission, according to Ray Stone, the carrier's VP, catastrophe management. "We have found the cellular network to be extremely reliable," he says.

Newly installed Sprint (Reston, Va.) and Verizon (New York) Rev A wireless cards ensured optimal connection speeds. And the provision of the carrier's Claim TM card -- an ATM card that can be created at the Mobile Claim Headquarters with funds needed for immediate expenses -- sped relief to policyholders.

Speed and quality of claims service may be easier to achieve in the wake of an isolated tornado than during a widespread hurricane or earthquake. But the smaller events provide "the opportunity to test some of the things we're working on and hone our skills from both an equipment and adjuster standpoint," Stone says. "They provide a better opportunity to look at how your strategies play out."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio