A recent World Meteorological Organisation report has revealed that weather disasters have increased nearly fivefold in 50 years, and as the UK gears up for another winter storm season, how to prepare for related surge and catastrophic events is a question increasingly on the agenda of insurers.
Speaking with Insurance Business Gallagher Bassett’s business development director, Gordon Vater (pictured) emphasised that evaluating the impact of surge or catastrophic events on clients’ business operations varies significantly depending on what incident has occurred. But focusing on climate-related surge events, he said, the challenges essentially always come down to the same thing – having the right resource at the right time to deal with the claims. That is always a challenge for the market, but especially at the moment with so much volatility in the global supply chain.
“Different events do require different approaches,” he said. “As an example, in the UK, storms are the ones that we always look out for as, while they can be widespread, they are high-volume and low-severity and insurers have different options [in terms of] automation and putting different processes and systems in place to just do the claim and move on.”
When it comes to claims such as widespread floods, however, he said, this becomes far more of an emotive area and exemplifies that it takes being equal part loss adjuster and counsellor to look after clients during a time of crisis. These more complex events present different challenges for insurers and the wider supply chain because a flood claim takes a long time to set to rights and throughout the process, people are displaced from their homes. Therefore, it’s required to balance managing customers expectations, while being seen to move as quickly and efficiently as possible, as well as ensuring that the property is made fully habitable.
It’s a completely different set of circumstances when it comes to these more complex claims, Vater said, particularly given the external pressure and visibility that comes with these events. But dealing with these challenges swings back to the need not just to have the right resources but also the ability to ramp up those resources quickly to deal with a high volume of claims and ensure a consistent response to customers.
“That’s a challenge for the sector, but I think we’ve got a lot better at that piece,” he said. “There’s more resource planning upfront but I'd like to see even more of that, where businesses and people are talking to their insurers and the insurers are speaking to them about what will happen if there’s flash flooding and how they will respond. And insurers [should] be looking at their resource models i.e. how they will cope with sudden influxes of work over a short period of time, which will mean claims are going to have to be handled six to 12 months afterwards.”
Exploring how insurers can proactively prepare for winter storm events and the like, Vater noted that a lot of the work he and the team at Gallagher Bassett have done over the years has been to encourage insurers to enter into conversations with them as early as possible. If there is a catastrophic or surge event, all that planning in terms of evaluating the kind and amount of resources required to complete a claim will pay off dividends, as those metrics will be pre-agreed.
“As an example, with one particular insurer, when a windstorm hit a couple of years ago, they gave me a call on a Thursday afternoon and said ‘we need 10 people and we need them by Monday morning’. Now we were able to deliver on that because we’d spent time in the planning phase with that insurer, probably a couple of years before the event. And during that we’d trained on their systems, learnt what their processes are and we’d kept up to date on those. So, we were able to deploy people straight into that household operation very quickly.”
It makes sense, Vater said, but the more planning time available, the smoother the transition will inevitably be if a surge or catastrophic event occurs. And several insurers have made the effort to cross-train a lot of their people – for instance cross-training motor handlers to operate in the household space which can also go a long way to mitigating the volatile and high-pressured environment that surrounds an event as significant as flooding.
“I think that’s still in its early days but it is ongoing,” he said. “But that has to be the step taken – that ability to deploy that resource very quickly in the early stages [of an incident] because, for the customer, that’s the point of pain. If they've got two feet of water through their house, they want to know somebody is moving forward with the response to that. So, the more front end planning you can do, the better you're able to give that response.”
