(Hurricane Harvey making landfall in 2017. Source: NOAA.)
During a hurricane, communities are frequently devastated by inland flooding, wind, storm surges, hail, and even tornadoes. Insurance organizations are faced not only with a high level of loss exposure, but they must also must deal with operational and organizational strain. Hurricane season is when insurers need to start preparing early on for the possibility of the worst.
Here are five key steps P&C insurers can take to pressure test their hurricane readiness and perform a preparedness dry run before the worst of hurricane season strikes.
- Stress Test Using Past Hurricane Scenarios
Doing a full-fledged stress test using past scenarios can allow you to gain insight into the composition of a portfolio of risks to identify the location characteristics most likely to drive loss, and the impact it will have on your teams. This enables your organization to use past hurricane events to understand the deficiencies and strengths in your processes. A stress test also allows you to better know what constitutes an “event” and when you need to start pulling in other representatives, like claims adjusters, within your organization.
Using a geospatial analytics solution to visualize your portfolio against your past hurricane claims experience and exposure data enables your organization to then develop effective risk mitigation measures.
- Ask All the “What-Ifs”
Perform “what-if” analyses to see how a historical hurricane would impact your portfolio today. For example, what would have happened if Hurricane Irma had hit Florida’s east coast as predicted instead of veering to the west? Consider what would happen if another Hurricane Harvey hit. You should modify historical and active storm tracks to analyze possible exposures, as well as display any current storm tracks and wind speeds.
Additionally, you need to ask yourself the “what-ifs” when it comes to ensuring business continuity. What if a hurricane leads to closure of your home office? What if the power goes out for an extended amount of time and remote work is not feasible? What is the process for ensuring data redundancy and accessibility? What are your vulnerabilities for handling a sudden influx of claims? Will you be able to serve your policyholders effectively?
- Utilize Analytic and Geospatial Tools for Greater Insight
Assess what data and analytics capabilities you currently have at your disposal and determine if you need to strengthen them. Geospatial analytics are critical to maximizing your insights, and a geospatial solution should provide the ability to:
- Filter by wind speed, flood depth, and more
- Assess proximity with distance and radius tools
- View and filter highest value properties and associated building characteristics
- View before and after event satellite imagery to identify potential claims hot spots
- Visualize storm track and windfields
- Calculate potential exposure, net of policy structures
- Compare multiple modeler views of risk side-by-side
- Know the Fastest Way to Access Critical Data
Walk through your process for accessing time-critical data, including your policies in force (PIF) as well as third-party hazard and event data. It is critical that you know the steps to access external or third-party data approved and loaded as it becomes available, how often to expect third-party data updates, and how to estimate your actual exposure.
- Cover All Your Bases
Ensure you’ve thought of everything by doing a trial run. Access a current view of your PIF, trigger moratoriums, stage adjusters and claims vehicles, quantify potential losses to management, and practice sending mock notifications and updates to policyholders.
Even with the best technology and in-house geographic information systems (GIS) experts at your disposal, hurricanes can create a scramble. Now is the time to make sure you have the capacity to handle what Mother Nature throws your way this season. Performing a dry run can help your insurance organization quickly identify areas of improvement needed for hurricane response, and feel more confident in its ability to deliver exceptional service to policyholders both during and following a hurricane.
Insurers Transition from Data Collectors to Savvy Data Consumers