Texas Hail Damage
Could Cost Insurers
Insurance companies may pay as much as $2 billion on claims from the deep dents and broken glass to vehicles following a massive hail
storm in Dallas, according to the Southwestern Insurance Information Service (SIIS).
“From what I’m seeing—the claims that
are already coming in—the damage is just
so extensive,” says Sandra Helin, president
of the SIIS, a trade association for property
insurers in Texas and Oklahoma.
Claims payments could reach the $1.5 to
$2 billion range, according to the SIIS, but
Helin says she “hopes it doesn’t get that high.”
If the SIIS estimate is correct, then the
hail storm is likely to become one of the
worst ever for the insurance industry. According to the Insurance Information Institute (I.I.I.), hail causes about $1 billion
in damage to property and crops each year.
In 2011, Texas had the largest number of
major hail storms of any state, with 741.
Helin expects the industry to log
about 60,000 auto claims, based on the
rate of claims coming in since the storm.
Baseball-sized hail from several storm
systems slammed into vehicles and
homes during the late afternoon hours
June 13. The National Weather Service
says the storms were the worst in the
area in nearly a decade.
“Very expensive homes and historical
structures are included among the things
that got hit,” Helin adds. “Everything got hit.”
Shortly after the storm, Mark Hanna,
spokesman for the Insurance Council of
Texas, said he expected insured losses
from the recent hail storms to exceed the
estimated $400 million in losses expected
from tornadoes that struck the Dallas-Fort Worth area in April.
State Farm had already received more
than 11,000 claims as of June 15: 7,898
auto claims and 3,442 homeowners’ insurance claims. In comparison, days after the
April twisters, State Farm reported 8,610
auto claims. As of June 15, Farmers Insurance had received nearly 4,500 claims,
while USAA said members submitted
about 4,000 claims, with slightly more
auto than homeowners’ claims. —By Chad
Four lessons from iASA
By Robert Regis Hyle, PropertyCasualty360.com
The technology conference season for 2012 is offi- cially over. In the last four weeks IT leaders and software solution providers—and a few folks like me—spent about eight days together hashing over
old problems and speculating about the future.
I started at the IASA conference hoping that when it was all
over I could tell you that I learned four things. I’m not sure I
accomplished that; it seems, though, that I was able to reinforce
some beliefs, which is a way of learning as well.
First, I learned that innovation really is a relative term. As Great American Insur-
ance CIO Piyush Singh told a crowd at the CIO roundtable, young people don’t call
advancements in communication or information “technology” just as previous gen-
erations didn’t refer to “radio technology” or “TV technology.”
Insurers are often looked at as laggards in the world of innovation, but as SMA
partner Karen Furtado told the IT Town Hall, innovation can also mean taking exist-
ing tools and repurposing them. Analytics tools have been around for a while, but
now insurers can predict how things can happen.
There remain a great many unknowns, though. An unidentified person got up at
the CIO Roundtable and said, “I really don’t know how anyone could have predicted
that Hurricane Ike (in 2008) could have caused $6 billion damage in Ohio.” A point
well taken, but now a part of history, never to be forgotten by actuaries.
Speaking of analysts, there are people concerned about where the future IT leaders
are going to come from. The IASA awards scholarships to college students who are
majoring in areas that will lead to insurance careers. Since IASA has such a strong
technology base, it would be nice if at least one of the nine scholarship winners this
year was majoring in a technology field, but as Furtado—a member of the scholarship
committee—pointed out that as much as the committee wanted to find some worthy
IT students, it ultimately was unsuccessful.
The solution? There are people in the business world who have undiscovered skills
that can be used to become productive IT leaders and there are ways to discover those
hidden talents. Creative people are out there and they can be discovered. Insurers just
need to look for them.
The third thing I learned is that cloud technology is going to be an eye-opener for
small and mid-tier insurance carriers who need to find a way to compete with their
larger competitors. The next big move could come in the area of policy administration, long thought to be too big or too complicated to be taken to the cloud.
At least one vendor has announced that it’s policy suite is in the cloud and several
vendors—both at IASA and ACORD LOMA—are getting there.
Imagine getting a URL and starting to write policies in the cloud? It sounds scary—
and not as easy as I made it sound—but the investment in a cloud-based system can
save an insurer millions of dollars that can be spent to find new business.
Finally, I learned that insurers face difficult choices in virtually every technology
decision they make and that the options aren’t always good ones. Bob Skrzypinski, a
consultant on a panel I moderated, explained that in legacy modernization projects,
insurers face three options—good, fast or cheap—and can only achieve two of them.
I certainly hope everyone opts for “good” as one of their two. Fast or cheap involve
difficult decisions and much depends on an individual carrier’s situation.
Decisions like those are gut-wrenching, but leaders in this industry make them every day without knowing for months if their choice was the correct one. Sometimes,
things are learned the hard way, but the challenge to get things right is inspiring. K
G Robert Regis Hyle