I have been on the catastrophe front lines. I have worked 12-hour days, seven days a week, for weeks on end estimating and paying for losses to ensure people had money to start repairing their property and lives. I shed tears for those who lost everything and celebrated with those who felt lucky for being spared a total loss. And I would do it all again. Unfortunately, due to climate change, many others will have to do it again—repeatedly.
Globally, we are experiencing an unparalleled number of weather-related disasters, according to the UN, including earthquakes, storms, floods and heatwaves. In 2017, natural disasters in the U.S. alone cost $306 billion, according to NOAA, and 2018 was the fourth-costliest year since 1980 in terms of insured losses. The $306 billion represents hundreds of thousands of families displaced, homes damaged or destroyed, and thousands of communities uprooted and interrupted.
In response to such catastrophes, the insurance industry has grappled with how to leverage technology with a human-based service model. InsurTechs are well positioned to drive technological innovation in catastrophe response by working with insurers to improve efficiencies and add a vital human touch while also freeing up insurance company employees to concentrate on important cognitive and service-based tasks, which require empathy and a personal touch.
Industry Pain Points
Insurers continue to face three main challenges when responding to natural disasters:
- While technology typically streamlines the claims process, it can be irrelevant after a natural disaster, as Internet service and power lines are normally down.
- Managing a huge volume of claims—in some cases, up to tens of thousands a day—still overwhelms insurers. Determining which policyholders have been hit, how hard and what their limits are quickly and efficiently is paramount.
- Perhaps most importantly, insurers need to determine how to mitigate the risks, because with most natural disasters, the damage gets progressively worse after the actual event. The faster you act to mitigate damage—by putting up barriers or covering a damaged roof, for example—the better the outcome and the cost of the claim.
Use of Drones & Chatbots in Catastrophe Response
Drones are one InsurTech solution deployed in catastrophe response as a way to safely assess large-scale damage and begin the claims-inspection process in areas otherwise inaccessible. While this service model is gaining some traction in the industry, it is prohibitively expensive for insurers to keep drone pilots on payroll and is not a sustainable option.
One service, WeGoLook, an on-demand global workforce of over 45,000 “Lookers” who specialize in capturing data and performing custom tasks in the field, allows for access to drone pilots during emergency situations without having to break the bank when they aren’t needed. WeGoLook provides insurers with the ability to create an elastic workforce, utilizing best-in-class professionals on demand.
There has been some insurer resistance to using third-party resources as carriers feel they might lose control over the service level delivered. Also, in a time of catastrophe with peak demands on all resources, including independent providers, how will each carrier ensure they get sufficient coverage?
Chatbots, which work through apps such as Facebook Messenger and are quicker to access than call centers, are another type of technology used after natural disasters. Guided chatbot FNOL (first notice of loss) or FAQ processes can help policyholders submit claims in minutes or get answers to burning questions, such as how to seal their windows to prevent storm damage or what to do with smoke-damaged property. While they don’t replace human interaction for policyholders who want to talk to a claims adjuster “live” on the phone, chatbots are a user-friendly, familiar tool that can offer some answers and reassurance right away, and they provide yet another way for victims to connect with their insurer during times of need.
Chatbots also provide service choice for consumers. Many insurers consider adding them as an option to the catastrophe intake process, allowing consumers to choose between waiting on the line for a long time to talk to a call center representative or going to their website and using a guided chatbot.
How to Optimize Use of InsurTechs in Catastrophe Response
While insurance companies have leveraged technology after natural disasters for decades, they haven’t had the right technology to achieve significant lift. Then came InsurTechs.
Betterview provides high-resolution data and images on risks (via satellite and manned aerial surveying) to provide better underwriting and claim handling. In last year’s catastrophes, like Hurricane Michael and Hawaiian volcanic eruptions, this imagery and analytics was used to pinpoint severely impacted properties. In some cases, insurers can desktop adjudicate claims with these high-resolution images. They can also proactively investigate risks before taking them on the book—for example, proximity to brush can be scoped out in advance using satellite or manned aerial imagery.
Kespry is another InsurTech that allows claims adjusters and roofers using their drone systems to quickly and safely inspect a roof. No joystick or piloting experience is necessary. Kespry provides the software and hardware, and the adjuster can appraise the property safely from the ground using an iPad.
Consider Livegenic technology, which captures pictures, videos and measurements of the loss, taken by either the policyholder or field adjuster, and makes these instantly available to a claims team to kick-start processing. Because connectivity can be an issue during a catastrophe, the user can switch to offline mode and sync later once connected.
And to ensure the right people and claims are paid, predictive fraud analytics can be run while FNOL data is collected or at any time during the claims process as new information is gathered. Examples of InsurTechs in this space include FRISS and Shift Technology.
How Collaboration Can Drive Continued Innovation
InsurTechs offer the mechanism and means to serve policyholders in times of need but act as a hammer looking for a nail, in a sense, by developing products and services for multiple use cases instead of addressing real-life scenarios. For their part, insurers know their industry and customers best but are unable to match the technological pace of startups.
By working together, InsurTechs and insurers can create tailored solutions to drive innovation, improve efficiency gains in the insurance life cycle and enhance customer service. Given the staggering costs of damage from natural disasters—and the ongoing spike in such weather events—insurers need to harness the power of InsurTech now to enable insurance workers to deliver more powerfully on the promise sold to policyholders by the carrier, in the form of a policy.
Disclosure: WeGoLook, Betterview, Livegenic and FRISS are Guidewire partners.