The Savvy Claims Manager

Understanding imminent risk is difficult, especially living in the Southeast where coastal storms can have extreme impacts further inland.

Tue Sep 03 13:16:00 EDT 2019
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The following article is part of a three-part series: A Profitable Weather Strategy: Why YOU Should Care.

In 2018, over five million homes were sold in the U.S., according to the National Association of Realtors. For these millions of homebuyers, choosing the right insurance coverage for their new home is imperative. But understanding imminent risk is difficult, especially living in the Southeast where coastal storms can have extreme impacts further inland.

These challenges become apparent when a regional property and casualty (P&C) insurance carrier focused in the Southeast began to brace for a major weather-related event: a Category 2 hurricane that was forecasted to impact 80% of its policies for a net total premium exposure of $3.4B.

Based on the track of the storm, areas of obvious impact were regions off the Gulf Coast. Well-aware of the potential threat, policy holders in the storm’s track took the appropriate precautions and evacuated.

However, policyholders further inland were still at a major risk, despite the decrease in wind speeds and absence of storm surge. The hurricane was slow moving, moisture rich, and weather models projected rainfall totals topping 25 inches in areas as far north as Arkansas.

While coastal policyholders were aware of the imminent danger, it was likely the P&C insurance carrier’s 150,000 customers in Arkansas weren’t, resulting in reduced preparation.

While those policy holders may not have been prepared, their P&C insurance carrier was.

Based on the carrier’s preferred settings, any policyholder expected to receive more than five inches of rain over a 24-hour period is automatically sent an alert through the carrier’s mobile application. During the alert system, 150K customers were alerted to take necessary precautions, such as removing valuables from basements and sandbagging doors to mitigate flood risk. The notification also allowed two-way communication, enabling the customer to confirm their safety or easily submit a claim for enhanced customer experience.

Because of their proactive actions, the P&C insurance carrier was able to prevent risk exposure to 5% of their client base in the area, which resulted in an overwhelming $8.5M in savings.

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