Quick claims settlement vital to customer and insurer well being
From hurricanes to wildfires, the number of catastrophic events is on the rise. Climate change and urban sprawl have been recently cited as the culprits, also influencing the frequency of secondary perils, such as hail, flash floods and landslides.[i]
As the number of insurance claims related to these catastrophes also continues to climb, insurers are left to worry over how they can expeditiously get loss funds into the hands of impacted residents and help them to begin rebuilding their lives.
Hurricane season hits hard
The United States hurricane season begins as early as April and runs a marathon stretch through the month of November. During this time, an increased probability for hurricane activity exists across a major portion of the country, from coastal states in the deep south extending up the eastern coast as far as Maine.[ii]
According to the U.S. census bureau, over 60 million people live in hurricane prone areas, increasing the likelihood of catastrophic insurance losses over the course of the season.[iii] Between 2000 and 2017 alone, 13 hurricanes that hit the Atlantic and Gulf of Mexico regions, racking up more than $10 billion in damages.[iv]
Continuing the trend, 2020 rolled out as one of the most prolific hurricane seasons on record with 30 named storms.[v] Hurricane Laura hit the Louisiana coast in August, stacking up over 128,000 claims by the end of September.[vi] Earlier storms brought damage to areas such as North Carolina, Texas and even the northeastern coast.
Beyond hurricanes to other catastrophes
Unfortunately, hurricanes aren’t the only catastrophic event to cause property damage and risk lives. Over 58,000 wildfires in the U.S. scorched more than 10 million acres of property in 2020, resulting in upwards of $7 billion in insured losses.[vii]
Moving across the world to Asia, monsoon season then hit with a blast, bringing heavy rains and winds from December to early March. In 2020, residents of Thailand battled flooded streets as water reached as high as 4 feet in some residential areas.[viii]
While not aligned to any particular season, earthquakes and tsunamis can strike at any time wreaking extensive havoc. In 2021, for example, a 7.1 magnitude earthquake rattled the coast of Japan’s Fukushima Prefecture, damaging as many as 4,700 structures.[ix] The quake hit near the area of Japan where a 2011 tsunami cost more than 15,000 individuals their lives and resulted in over $210 million in insured losses.[x]
Other events, while less reported in the news, also have a notorious reputation for causing property devastation in the impacted areas. Sandstorms in the middle east and Africa, for instance, have resulted in crop and livestock losses and can even disrupt future soil productivity. The impact from such an event can be felt for months across these regions.
When catastrophes hit, whether in the U.S., Asia, Africa or anywhere else in the world, insurers want to act quickly to settle claims and provide the funds that residents need to rebuild their lives. There is only one problem, funds need to be settled domestically, creating a challenging situation for insurers who must process funds globally.
Quick claims settlement vital to customer and insurer well being
According to a recent U.S. study, digital claims capabilities have reduced the average time to payment by up to 5.5 days in that country, resulting in record-setting customer satisfaction numbers in 2020,[xi] but what happens when an insurer needs to distribute funds globally?
Rapid global distribution of funds involves more than faster claims processing. Getting money into the hands of people who need it also requires insurers to revolutionize their entire approach to making payments.
Currently, the majority of insurers continue to rely on inefficient payment methods, such as producing paper checks. The process is slow, and in many cases, open to fraud as checks can be stolen and easily altered by savvy criminals.
Fortunately, it’s an area where technology and digital capabilities can speed time to settlement for insurers and their customers, while reducing risk. It begins with cloud-based technology where platform ecosystems are built.
Ecosystems are merely a fancy way to describe a community, in this case, all of the participants of the global payments process. Utilizing a connection layer called an application programming interface, all parties necessary for an insurance transaction, such as TPAs, independent adjusters, DCAs and digital payment providers, can unite on a single global payments platform, seamlessly sharing documents and information to speed processing of insurance disbursements.
If it all sounds complicated, we can boil it down to this: an ecosystem makes it possible for parties to engage with each other in real time, increasing visibility and transparency to support faster funding. And since a modern payments platform can support in-country processing and electronic payments, customers receive funds faster and more securely than traditional methods of disbursement.
Customers increasingly rate satisfaction with their insurer on the speed of claims processing, so joining a modern payment ecosystem makes sense, promoting the insurance brand’s reputation as a caring and transparent insurer of choice.
[i] Julie Steinbert. “Smaller but More Frequent Catastrophes Loom Over Insurance Sector.” The Wall Street Journal.” Markets|Finance, Jul. 22, 2021. Web.
[ii] Darryl Cohen. “About 60.2M Live in Areas Most Vulnerable to Hurricanes.” United States Census Bureau, Jul. 15, 2019. Web.
[iii] Darryl Cohen. “About 60.2M Live in Areas Most Vulnerable to Hurricanes.” United States Census Bureau, Jul. 15, 2019. Web.
[iv] Darryl Cohen. “About 60.2M Live in Areas Most Vulnerable to Hurricanes.” United States Census Bureau, Jul. 15, 2019. Web.
[v] “Facts + Statistics: Hurricanes.” Insurance Information Institute. Retrieved from https://www.iii.org/fact-statistic/facts-statistics-hurricanes#:~:text=Top%2010%20Costliest%20Hurricanes%20In%20The%20United%20States,%20%2031%2C960%20%207%20more%20rows%20.
[vi] “Facts + Statistics: Hurricanes.” Insurance Information Institute. Retrieved from https://www.iii.org/fact-statistic/facts-statistics-hurricanes#:~:text=Top%2010%20Costliest%20Hurricanes%20In%20The%20United%20States,%20%2031%2C960%20%207%20more%20rows%20.
[vii] “Facts + Statistics: Wildfires.” Insurance Information Institute. Retrieved from https://www.iii.org/fact-statistic/facts-statistics-wildfires.
[viii] “Disaster, 2020 Monsoon Floods.” Center for Disaster Philanthropy, Jul. 17, 2020. Web.
[ix] “Facts + Statistics: Earthquakes and Tsunamis.” Insurance Information Institute. Retrieved from https://www.iii.org/fact-statistic/facts-statistics-earthquakes-and-tsunamis#:~:text=The%20quake%20and%20tsunami%20caused%20%2440%20billion%20in,when%20it%20occurred%20%28%2419%20billion%20in%202020%20dollars%29.
[x] “Facts + Statistics: Earthquakes and Tsunamis.” Insurance Information Institute. Retrieved from https://www.iii.org/fact-statistic/facts-statistics-earthquakes-and-tsunamis#:~:text=The%20quake%20and%20tsunami%20caused%20%2440%20billion%20in,when%20it%20occurred%20%28%2419%20billion%20in%202020%20dollars%29.
[xi] “Surgein Digital Home Insurance Claims during COVID-19 Drives Faster Cycle Times and Improved Customer Satisfaction, J.D. Power Finds.” J.D. Power. J.D. Power Pressroom, Feb. 25, 2021. Web.
