Hurricane claims – five tips for proactively managing the 2020 season

Catastrophic losses related to hurricane claims in Latin America often result in complex claims. Martin Smith, Pro’s Head of Latin America, offers five tips for re/insurers going into the 2020 hurricane season to help ensure proactive and efficient claims management.

The US National Oceanic and Atmospheric Administration has forecast another active 2020 Atlantic hurricane season, with more named storms than in an average season – a range of between 13 and 19 named storms, including upn to six major hurricanes.

Catastrophe claims resulting from hurricane losses can often be complex in nature, but the need to support policyholders as quickly as possible with their rebuilding post event is vital. Proactive claims management is critical, so here are five top tips for claims managers as the hurricane season gets underway.

1. Local knowledge is key. There is no one size fits all approach to Latin America’s insurance market, with different regulations and cultural approaches to insurance businesses throughout the region. For instance, in Puerto Rico claims can be reopened and renegitated retrospectively– claims which had been agreed and settled, and therefore not reserved against, can in fact still be reopened which resulted in a lot of complexity, as seen following hurricanes Irma and Maria. Check the wordings in your policies adequately reflect local regulations, and be aware of potential loopholes.

1. Be prepared for remote claims handling. This year’s hurricane season is made all the more challenging by the COVID-19 pandemic and ensuing lockdowns. If they’re not already, your claims team must be set up to process claims remotely, securely and efficiently. This means having the right digital processes in place to liaise and share documents with third parties such as claims adjusters and legal teams. Now is the time to pay close attention to local system back-up infrastructure so that action can be taken and communication maintained in the event of a catastrophe.

1. Be proactive with claims audits: Throughout hurricane season, perform regular claims audits to understand exactly where your exposure and reserving adjustments are, and where they should be – audits should not just be performed when an issue arises.

1. Manage third party expenses: In some regions we have seen a rush to cash in on a crisis, with a culture of delay and overspend that has emerged post catastrophic event. We have seen examples of extremely high fixed monthly fees being charged from the outset for legal and loss adjusting services, arrangements which have relied on advanced claims payments with no clear incentive to reach a final figure or settlement. Make sure that all third party fees are negotiated properly from the outset.

1. Incentivise finality: Where disputes involving complex claims arise, fee agreements and arrangements with third parties should be structured around achieving finality rather than dragging out negotiations. Look to change the mindset of the legal and loss adjuster teams that work with insurers to place the emphasis on final settlements, rather than advanced payments which benefit insurers as well as policyholders.

If you would like any further information on how your claims teams can be better prepared and more proactive for this hurricane season, or if you’d like advice on automation and digitilisation of claims processes under remote working conditions, please don’t hesitate to get in touch – we are here to support you. Get in touch with Martin.smith@pro-global.com.