The Approaching Storm Front
The insurance industry has a foundation with customers built on trust, but that trust is being eroded from several angles. The perfect storm of inflation, rising consumer expectations, and growing fraud is being accelerated as we navigate increasingly extreme weather.
So how will these things affect the insurance industry for upcoming weather-related CATs?
The Cost-of-Living Crisis Due to Inflation
Economies are hardening, and families and businesses are trying to cope with the dramatic increase in the cost of living. According to the U.S. Labor Department, the annual inflation rate in the United States is 7.7%. for the 12 months ending October 2022, while in the UK the CPI index is at its highest rate in 40 years at 11.1%.
As a result, families are looking for ways to cut costs by reprioritizing their expenditures, such as gym memberships and streaming subscriptions, and yes, insurance policies are on the list. “Do we need to renew that umbrella policy? Should we increase the deductible on our auto policies,” are common conversations at the dinner table.
For insurers, inflation has driven up the cost of labor and materials, forcing claims costs to increase. The fuel cost alone for adjusters traveling to inspect a claim is out of control in some states, such as California, where a gallon of regular will cost you $4.67. These costs also force insurers to increase premiums, not helping their cause during the dinner table discussion.
Rising Consumer Expectations
As mentioned in the article, 5 Ways a New Approach To Voice Analytics Accelerates Claims Payouts in an Era of Increasing Fraud, insurers continue to be under pressure from consumers and regulators to increase efficiencies by paying legitimate claims faster while simultaneously eliminating fraudulent claims.
Customer experience and trust are not put on hold during difficult times. In fact, it’s reasonable to assume that customer experience is even more important to consumers. During that long commute in the morning or two-hour Zoom call, your customer may be thinking, “If I continue to keep up with my current insurance premium costs, can I trust my insurance company to come through if I really need them?
Increasing Fraud
Adding to the pressures of Covid-19, which technically is still a pandemic, people are increasingly being exposed to fraud, a concerning trend that accelerated during the pandemic.
After hurricane Ian devastated many areas of Florida, the U.S. Department of Justice issued a press release with examples of disaster-related fraud based on over 200,000 historical complaints submitted to the NCDF.
The amount of disaster-related or weather-related fraud is not just increasing, the types of fraud are as well.
Extreme Weather
Is your company vulnerable to fraud from catastrophic events due to extreme weather? Storms have become more frequent over the past year and are predicted to accelerate. As an example, AccuWeather is forecasting a “Monstrous storm that could bring tornadoes, blizzard conditions to the central US.”
In addition to a dramatic increase in property claims following devastating weather events, new fraud scams continue to evolve. It’s a vicious circle and is likely to become more prolific as the cost-of-living rises, creating more fraudulent activities.
Unfortunately, many insurance companies cannot cope with the demand, and they continue to struggle with effective fraud controls while the customer experience and trust suffer.
Who Can the Customer Trust While Weathering the Perfect Storm?
While insurers and consumers have little to no control over inflation, there are immediate steps that insurers can take to help customers that are affected by weather-related storms maintain their trust.
Insurers need new and improved ways to automate claims during weather-related storms. It’s clear that current methods are causing insurers to struggle to manage the high number of weather-related claims and meet the needs of their customers at this vulnerable time. At the heart of the problem for insurers is the ability to confidently unblock the real-time processing of large weather-based demand at initial notice of loss or FNOL.
Want to maintain your customer’s trust in the moment that matters? Don’t let a weather-related event change the customer experience when filing a claim. During a CAT, customers have been conditioned to expect delays from their insurance company in processing their claim. Just having the peace of mind that their claim has at least been submitted and is in the process can be difficult to obtain.
Now imagine that during a CAT, your customer experience filing a claim is no different than submitting an auto glass claim on a quiet summer day. The customer has one less BIG thing to worry about.
Steps You Can Take to Ready for the Storm
To meet your customers’ needs during a surge event, focus on automation opportunities that can help you quickly process the spike in claims volume, while also making it as easy as possible for your customers to file.
-
- Step 1: Provide your customers with familiar digital tools. The last thing your customer needs in the aftermath of weather-related damage to their home, automobile, or property is to learn how to use a new tool.
- Step 2: Enable straight-through processing to fast-track low-risk customers and free up your skilled adjusters to focus on high-value and complex cases.
- Step 3: Use new technology available to detect opportunistic fraudulent claims at the initial notice of loss to help you confidently speed through your low-risk and highly valued policyholders.
In addition to maintaining the claims experience your customers count on during a CAT, you’ll be ready before the next storm hits.
