Taking the pain out of managing surge claims

Surge events are a fact of life for the insurance industry.

From floods to fires, hurricanes to earthquakes, the insurance industry plays a critical role in providing financial protection and security to those impacted by what can be life-changing events.

In the UK there has been a steady increase in surge events related to the changing climate in recent decades, predominantly around flooding events.

One area that has recently seen a significant increase in surge events is subsidence. Subsidence surge events usually follow periods of particularly warm weather when the ground beneath a building shrinks, pulling the foundations down with it.

With temperatures hitting 40 degrees in the summer of 2022, the Met Office Rainfall and Evaporation Calculation System calculated that there was a two and half times increase in moisture loss compared to the same period in 2021 and that the ground was its driest since 2003.

According to the Association of British Insurers, this prompted 18,000 subsidence-related claims in the second half of 2022 or the equivalent of a new claim every 15 minutes.Nic Spoul, a director at I Love Claims, which organises specialist events to support the insurance industry, said this current surge was creating a perfect storm of challenges.

He said: “Surge events are not a new phenomenon but managing them to the satisfaction of their customers is becoming increasingly difficult in the face of a continually evolving marketplace.

“Subsidence claims often take time to remedy and can be incredibly stressful for all parties and so claims firms must ensure they have the capacity, skills and structures in place to provide the right customer experience.

“One of the biggest issues currently facing the insurance industry is that it doesn’t have the capacity to deal with surge events, having been hit particularly hard during the pandemic where many experienced sector professionals moved away from the industry for a range of reasons.

“This resulted in the loss of a huge knowledge bank and also means that we are seeing claims firms having to manage what are often complex claims without the talent that they might have been able to previously rely on.

“We have also seen disruption throughout the supply chain with significant increases in material costs and general skills shortages, creating real challenges around cost control in an industry where margins are already being squeezed.”

Emma Bazard, Strategic Client Lead for Pulse, believes that increasing automation can have a hugely positive impact across the claims process.

She said: “Within any surge event there is immediate stress and anxiety for the customer, and this is often elevated in subsidence cases when it is easy to fear the worst. There are lots of moving parts between initial testing and the required remedial work and customers want to know what is happening.

“Our Pulse platform has been designed to put the customer at the heart of the process, with regular communications triggered by milestones.”

Pulse can also support surge events by using AI to analyse data points to provide reasonable estimates of the time a claim will take to process, while also making decisions early as to whether a case needs to go to an agent, removing significant time and effort out of the process.

“This means customers are not having to continually call for updates, managing their stress as well as the stress that this can cause for the claims company,” explains Vanessa.

“Automation is about doing more with the same. When a surge event happens, it is often a case of all hands to the pump and this can create errors, inefficiencies and lots of questions to answer, further slowing down the process.

“This can mean that you may have highly specialised people doing inappropriate work, leaving them overwhelmed and at risk of leaving. Pulse can provide businesses with skills-based routing, meaning the task goes to the best person at the least cost and is only elevated to specialists as and when is necessary.”

The Pulse platform is also configured to manage the supply chain complexities associated with the current subsidence surge, as Kevin Drake, Innovation Director for Pulse, explains.

“Pulse has the ability to understand the capacity of specialists and suppliers and can then allocate work based on availability, taking into account considerations ranging from cost to distance to site while also ranking suppliers based on the quality of their previous work.

“This means that not only is the policyholder being kept fully aware of estimated resolution times and dates but it also updates the policy in real time, providing the insurer a clearer view of the potential size of the claim.”

Given the outlook for climate change-led events, dealing with one type of surge event or another is fast becoming ‘business as usual’ for insurers, and it would appear that effective automation has a central role to play in bringing efficiencies to the process and improving the overall customer experience.