2. Get specific: The scenario should give
specifics about this storm and address
questions including: What are the
expected wind speeds? What is the
storm’s average damage severity? How
far inland is the storm expected to penetrate? How many claims will the team
receive and in what timespan? What
types of policies are in force in the affected areas? What are the policy limits and coverages in the affected area?
Overall, what is the company’s potential exposure from this storm?
3. Solve staffing and resources: Once the
claims management team has answered
these questions, it’s time to ask the
claims adjuster team some key questions such as: How would you handle a
15,000-claim event given these parameters? What are the staffing and vendor
resources needed to service the claims
While the last few years have been relatively qui- et for major hurricanes and other storms, large
events like Hurricane Sandy and the recent storms that buried the Northeast in
snow demonstrate the need for claims
departments to be prepared at all times.
One strategic way to prepare is to stage
mock catastrophes. These trial runs help
claims teams become comfortable with
the types of decisions they will need to
make when a large-scale event occurs.
Moreover, mock catastrophes are valu-
able learning opportunities, as they rein-
force the need for best practices and the use
of the newest technology for catastrophe-
claims management. For example, geocod-
ing technology — which uses geographic
coordinates from policy data (e.g., street
addresses, zip codes, etc.) — is rapidly en-
abling insurance companies to improve
their catastrophe-claim response models.
How to Stage a
The potential benefits of running mock
catastrophes for claims departments are
clear. The following steps can help insurers design a scenario that works for them:
1. Set the stage: In each mock catastrophe
scenario, the claims management team
should hold an introductory meeting
to outline a specific catastrophe scenario. For example, the scenario could
be a Category 3 hurricane predicted
to hit Florida, Georgia, and Alabama.
The team participating in the exercise
should receive several days’ notice before the mock catastrophe starts, which
mirrors the advance notice provided by
forecasters predicting a weather event
of this magnitude.
How to Run a
By Heather Bolyard