(Source: U.S. Air Force photo/Senior Airman Justin Weaver.)
Although the worst of Winter Storm Juno is behind us, the prospect of more winter weather looms and while owners and drivers are shoveling out, insurers have begun to weather the downpour of claims. So the real question is, are you ready and do you have the correct business strategy for these losses?
Top Claims Related to Winter Weather
In this case of last week’s weather in the northeast, local and state leaders required residents to stay off the roads. There will likely be more home insurance losses than auto losses simply due to the fact that fewer people are driving. Among the top weather-related property claims from last winter, often due to space heaters, fire places, broken pipes, roof collapses or flooding from snow melting, include:
Severe Weather Effects on Shopping & Switching Activity
We know that January is a busy month for shopping and/or switching due to calendar renewals, but winter weather can impact shopping. This often turns into a cycle—severe losses lead to rate increases lead to shopping and switching, which leads to new risks. Winter or not, proper customer segmentation is key. Make sure you are targeting the customers you want versus everyone who’s in the market. At the same time, if your customers are shopping, you want retention processes in place to continue to use their lifetime value to your advantage.
Innovate to Storm-Proof Your Book of Business
Post-storm, claims may be on the rise, but you can take this time to innovate and be even more prepared for the next storm:
- Expand your peril models and implement peril ratings to ensure the correct premium and adequate rate segmentations are in place. It is vital to control your book of business in catastrophe (CAT) and Non-CAT situations. This can be done by reduced exposure to perils, leading to better underwriting performance, increased sales and lower reinsurance costs.
- Keep an up-to-date book of business, which is equally important at all times of year, by automatically updating permit, roof and other property characteristics, as well as policy and shopping information to make sure you know what is happening on a day-to-day basis. Being able to view your exposure, you have the opportunity to prepare for an uptick in claims handling and the potential effects from a loss standpoint.
- Maintain your eye on fraud because weather can turn into a ‘perfect storm’ for suspicious activities. Where you want to assist customers quickly, there are new processes and data that can flag for added fraud risks and cut them off at the pass.
- Single point of entry benefits technology departments and is even more vital for the business side when preparing for a high influx of concurrent claims or shopping activity. You may already be ordering data and analytics to predict risk, but having the capability to add new data sets quickly through a single point of entry can make information easily digestible and speed up the claims handling process.
- Win on customer service by providing customers with information about how to prepare for winter weather. A simple mailer or e-blast alerting customers to remember to shut the water off outside and trim tree limbs close to electrical wiring, can have a huge impact. Consumers forget, and it can be in your best interest to keep reminding customers of these risks, and perhaps prevent them from happening in the first place.