Insurers expect the catastrophe window to close with the official end of the hurricane season in November. But in February, many carriers found their catastrophe response mechanisms put to the test as they were inundated with claims following a high-wind natural disaster. On Feb. 2, three tornadoes twisted their way through central Florida, killing 21 people and damaging about 1,500 structures. By deploying mobile claims vehicles, P&C insurance provider Travelers -- a business of St. Paul, Minn.-based The Travelers Companies ($113.76 billion in total assets) -- was able to focus its response efforts and minimize claims adjustment lag time, according to Patrick Gee, SVP of auto and property claims.
Hurricanes can be seen from hundreds of miles away by anyone watching a weather report, but tornadoes are relatively unpredictable. For insurers, that means there's no monitoring where a storm will touch down or planning a response, as is the case with hurricane-related catastrophes. "Probably the biggest difference [between a hurricane and a tornado] is advance notice," explains Gee. Fortunately, "A tornado, once we know it has occurred, is typically easier for us to respond to, from the perspective that we can deploy a lot of resources to a small geographic area."
To handle claims related to the Feb. 2 tornadoes, Travelers dispatched its on-call catastrophe response team and three of its five mobile claims headquarters -- custom-built Winnebago RVs loaded with claims estimating and processing technology -- to the affected areas. One of the RVs already was stationed near the devastation, in Ocala, Fla.
A Driving Trend
The use of mobile catastrophe response vans by P&C insurers has become a trend, especially since Hurricane Katrina, according to Karen Pauli, a senior analyst with Needham, Mass.-based TowerGroup. "It is technology at its absolute best because it gets services right into the affected area without compelling adjusters to set up headquarters outside of an impacted area and travel back and forth," Pauli says.
Travelers' vans, which range in size from 30-feet to 40-feet long, enable staff to set up shop near the affected area to meet with policyholders, verify their policies, determine their needs and issue checks. According to the company, the RVs are equipped with computers, onboard databases, photocopiers, fax machines and printers. The carrier's adjusters use Audatex (San Ramon, Calif.) PenPro and Xactware (Orem, Utah) Xactimate estimating software for auto and property claims, respectively, and can issue checks -- as well as ClaimTM cards, personalized debit cards powered by Visa (San Francisco) for instant access to cash -- to policyholders on the spot. The company relies on cellular service from both Sprint (Overland Park, Kan.) and Verizon (New York).
Travelers first deployed the mobile claims vans after Hurricane Andrew in 1992, the company says. Since then, Gee relates, as the speed and reliability of the cellular networks improved, the catastrophe response team increasingly has relied on cellular technology for both telephone and data communication. That has enabled adjusters to connect to the necessary Travelers' databases remotely -- even when outside of a van's wireless network -- with their laptops.
"Previously, we probably used a little more satellite technology, when cellular was a little more nascent," Gee says. "We've had some fairly large events recently where we lost a cell tower here or there, but there were enough around that we still had coverage." Using the EVDO (Evolution-Data Optimized) wireless communication protocol to get online and then VPN technology from Nortel Networks (Toronto) to securely connect to the Travelers' network, adjusters can take their individual laptops to customers' homes and assess damage, provide an estimate and even write the customer a check before leaving, Gee adds.
"The customer can sign off and validate that all the metrics and all the valuation is correct," TowerGroup's Pauli says of adjusters' ability to manage claims on-site. "You don't have to wait until the adjuster packs up and gets back to his home base. So you shorten the claims life cycle by five days, and you've taken enormous amounts of expense out of it."