The 2018 CAT season has started with a vengeance. Already, we are seeing damage from flooding, earthquakes and a volcano in Hawaii. On top of that, hurricane season will soon be underway, the potential increases for droughts and related fires, and we will remain ready for ever-unpredictable earthquakes and tornadoes.
What has changed since 2017, a year unlike any most of us have ever experienced in the insurance industry since the “Four in ’04” and Katrina, Rita, Wilma in 2005? Major hurricanes forced states to adjust losses and certainly put a strain on resources, especially human ones, to meet the demand and volume. California wildfires were the most destructive on record with the California Department of Forestry and Fire Protection (CAL FIRE) tracking over 9,000 fires burning a staggering 1,248,606 acres in the state. The 2017 Central Mexico earthquake caused significant damage, coming in at an estimated 7.1 magnitude. Are we better prepared to address what may come this year using the lessons learned in the midst of these disasters?
We certainly have learned that, to respond appropriately, claims management partners must have a wide range of skillsets ready to deploy that include but are not limited to:
- Personal and commercial lines adjusters (dwelling and flood)
- Forensic accountants
- Building consultants
- Structural, mechanical and electrical engineers
- Environmental consultants
- Emergency mitigation and restoration contractors
In the 2017 scenario, even organizations with these resources found the demand shifting so rapidly that many were unable to appropriately disperse them efficiently. How can we prepare for the worst cases of the year ahead and remain appropriately ready, nimble and adaptable when faced with chaos?
The one thing that stands out for me is that preparedness can’t be underestimated ever again for wide-scale catastrophes. We must be ready to accept that 2017 may become more of the norm than the exception. So what are some key areas to think about?
- Significance of pre-event CAT agreements
- Expectation of impaneled CAT firms
- Adjuster management challenges
- Performance assessment
Observations and lessons learned
As stressed, resources may be the greatest area to address. This includes field adjusting capacity balanced against a workforce faced with retirements and available seasoned workers. Two areas that bear greater examination are, first, how U.S. immigration policy is impacting the available labor pool for recovery efforts and, second, how adjuster licensing is hindering experts from freely moving to support those in need. We will once again face the law of supply and demand for skilled resources this year and for the foreseeable future; in 2017, the needs ranged from coast to coast and into Puerto Rico and the Caribbean. This caused extensive logistical challenges to move and assign adjusters where they were most needed. A movement is underway to create a national licensing initiative that fairly represents state interests, as well. This would help adjusters quickly relocate to areas where their services are in high demand and minimize some of the strain on locally licensed adjusters. There is also hope as we look at alternative approaches, especially with technology such as video and drones, to reach greater areas, even with fewer resources.
I can’t emphasize enough this final point. We must commit as an industry to attract and train new adjusters. Ours is a rewarding field of work and one that we know will grow in demand as more people retire. I see the intersection of technology and field work as an attractive way to reach the next generation of workers.
I will be discussing these lessons in greater detail next week as part of a panel at the California Earthquake Commission's annual Claim Manager Meeting in Sacramento. You may also find of interest a recent video interview where I share a brief overview of the 2017 Atlantic CAT season: https://youtu.be/7FIoOPK5xF0. If you have questions or want to share your own lessons learned, please add them here on the blog. I will be writing more in the near future, sharing additional strategies about how you can prepare for future CAT response.