When Disaster Strikes

It hasn't been an easy 2011 for insurance companies, with the earthquake and tsunami in Japan headlining a catastrophe-heavy beginning of the year that also included a major winter storm and several devastating tornadoes in the United States. Risk modeler EQECAT says the losses in Japan could reach $39 billion, and the losses from the tornadoes in the U.S. could top $5 billion.

Tom Larsen, SVP of product architecture for the Oakland-based CAT modeler, says that while these events occurred close together, there isn't evidence of a trend, and there's no way of knowing for sure what could be coming down the road. "We spend a lot of time trying to answer the question: 'Is this observed increase in the claims climate related, or is it something else?'" he explains.

"It seems to be a cluster of events, but at this point it looks like we were relatively inactive beforehand, and it seems to be coincidence," Larsen continues. "We haven't found any really conclusive evidence that there is an increase [in catastrophes]."

Catastrophe events, of course, mean an increase in insurance claims. According to the Insurance Information Institute (III), about 700,000 claims have been filed in the southern United States for the storms dating April 22 to April 28.

But when disaster strikes, carriers must respond to the sudden spike in distressed customers as quickly as possible -- with empathy for their losses. Several carriers spoke with Insurance & Technology about the ways they used technology to efficiently and accurately process claims in the wake of the recent disasters.

Chartis Japan: iPhones, iPads Bring Order to Chaos

The March 11 Tohuku earthquake devastated Japan. In addition to the tremors, a resulting tsunami washed away coastal cities and triggered a nuclear emergency that remains tenuous months later. According to the III, nearly 800,000 insurance claims have been filed so far in the country.

To help expedite claims processing, New York-based Chartis (more than $30 billion in 2009 direct written premium) ordered 100 Apple iPad 2s and iPhones for its Japanese field force immediately following the disaster. The company had received 31,000 claims as of April, Jose A. Hernandez, president and CEO of Chartis Far East Holdings, told the Wall Street Journal.

Chartis loaded the Apple mobile devices with Smart Attack, an app from Tokyo-based Going.com. "The use of these devices simplifies the claims adjustment process and enhances efficiency, allowing for a shorter timeframe for payment of insurance claims to the policyholder," Fumiyasu Sato, a spokesman for Chartis' Japan unit, writes in an email. "With the Smart Attack app, adjusters can conduct assessments and create reporting documents while consulting with specialists in the head office, sending the necessary photos and videos to the head office in real time."

This capability mitigated the need to bring forms to the damage sites, Sato adds. Chartis also took advantage of the front-facing cameras equipped on latest-generation iPads and iPhones. "That enables us to use Skype for communication," he explains. "Adjusters can conduct the assessment while consulting with specialists in the head office."

North Carolina Farm Bureau: Trial by Fire

North Carolina Farm Bureau (NCFB; $1.6 billion in assets) had just finished deploying a new version of CSC's Exceed claims system when the first wave of U.S. tornadoes slammed North Carolina during a mid-April weekend. The company had been training offices in Exceed's use from east to west in the state, figuring that the first major catastrophe it would face was likely to be a coastal event, relates Pam Hiovich, operations division manager for the Raleigh-based company. But the tornadoes hit the central and western parts of the state.

"The joke was on us," she says. "It was impacting the offices we were training."

NCFB didn't have an enterprise claims system previously, Hiovich says, adding that the carrier's goals in implementing Exceed were to unite disparate claims systems, take paper out of its process and make it easier for adjusters to be more productive on the go by enabling mobile access to the system via the web.

But Exceed also features workflow functionality that aided the company in responding to the tornadoes. NCFB developed a claims mass reassignment page, Hiovich explains: When its county-level offices picked up the loss notices, they were able to sort losses by a number of criteria, such as location or severity. Then they were able to drag and drop multiple claims into one adjuster's queue.

Nearly 7,000 claims came in to NCFB during the first three weeks of April. Information on all of these was more readily available to the many stakeholders in the organization, including agents and county offices, than it had been in the past, Hiovich insists. "Agents now got notified of claims in real time," she says. "Once the loss notice is submitted, we generate an email with the loss notice in a PDF."

USAA: Mobile Capabilities Pay Off

Another wave of tornadoes struck Alabama April 27, devastating parts of the cities of Tuscaloosa and Birmingham. With so many homes and banks damaged, many customers took advantage of the mobile services that San Antonio-based USAA (more than $18 billion in net worth) provided by both its insurance and banking businesses, according to company spokeswoman Nicole Alley.

"The difference in this storm is that we're really starting to see how smartphones and the tech capabilities can help people cope after a crisis like that," Alley says. "We noticed an uptick in people filing claims on their phones and using mobile banking."

USAA recorded a 21 percent increase in mobile claims in April compared to January, Alley reports. "The numbers that you get aren't going to be in the tens of thousands, but they will show the trending pattern upward," she says.

Farmers: Location Information Cuts Response Time

Paul Quinn, AVP of claims communications for Los Angeles-based Farmers Insurance ($16 billion in gross premium income), says the Alabama tornadoes are the worst catastrophe event he's seen in 34 years in the business. "A couple of things make this very unique," he comments. "One tornado went from Tuscaloosa to Birmingham and never left the ground. Others that hit northern Alabama earlier that day spread the organization pretty far and wide."

With so many policyholders to reach, Farmers decided to test a new technique to establish the location of losses so that it could best allocate its resources, according to Quinn. Concurrent with a helicopter flyover -- the usual way the company plotted loss locations -- Farmers procured a Google Earth image taken after the tornado and laid it over its plotted policy locations. The Google Earth data was just as good as the flyover data, Quinn says, so the carrier is entering into negotiations to get the data automatically and mitigate the need for flyovers at future CAT sites.

"We paid for it [in Alabama] because it was immediately valuable," he explains. "Technology is getting us to the point where our customers can be out of town, have a loss and they don't even have to wait until they get home to turn in a claim."

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio