Property losses from catastrophes are getting worse
Carriers who take an integrated and transparent approach are best equipped to help clients proactively mitigate growing property exposures.
Increasing intensity of natural disasters and more unpredictable weather has made managing property exposures more challenging than ever.
Climate scientists say the 2017 hurricane season — the most expensive in U.S. history — could be a harbinger of more severe storms to come. The slowly rising sea level is contributing to more frequent flooding, and NOAA predicts that severe floods are likely to worsen. Wildfires, fueled by parched forests and high winds, are trending up in size as wildfire seasons grow longer.
However, more sophisticated technology and data analysis tools can help risk managers more proactively assess and mitigate their exposures.
“The more you know about a risk, the better prepared you can be,” said Mark Evans, Head of North America Property Claims, AXA XL. “A growing volume of data and advanced analytical capabilities allow insurers and insureds to make better risk decisions.”
Better processes at the front end of the insurance transaction can also help companies better prepare for and recover from losses. Some carriers are bringing more of their internal resources to bear much earlier for clients to help proactively mitigate risk.
AXA XL’s three-pronged approach leverages engineering expertise, data insights, and internal teamwork to more proactively mitigate property loss.
1. Risk engineering consultants coach clients through mitigation recommendations.
Risk engineers are best equipped to evaluate a property’s vulnerabilities and recommend ways to mitigate them. It’s not uncommon for an insurer to send out a risk consultant or engineer to a new client’s site to do just that, but often these surveys are limited to once per year.
Companies need more than a single visit from a risk engineer to make the most of their feedback.
“Our field engineers have more touch points with clients than anyone else. They are out in facilities every day, meeting with clients throughout the year,” said Scott Ewing, Regional Director, Property Risk Engineering, AXA XL. “We did more than 5,500 surveys of facilities last year in North America.”
Spending more time with clients means engineers can adopt the role of risk coach, actively helping risk managers prioritize and implement new protocols. That includes everything from training front-line employees on new procedures, to helping to select new building materials for capital improvement projects.
“When a client’s going to embark upon a project, whether it’s installing fire protection or building a new facility, we’ll work with them on selecting the proper materials, making sure the roof is proper for their windstorm rating, for example,” Ewing said. “It is a full suite of services that we offer our clients to help them manage their risk from the ground up.”
2. Data transparency empowers risk managers to be proactive.
While risk consultants conduct site surveys, they are collecting reams of detailed information about the property, including both its strengths and weaknesses. Many carriers take an exception reporting approach, letting clients know only about the problems discovered, but keeping the full breadth of the report to themselves.
Some carriers withhold that information because they view releasing it as a competitive disadvantage. The client could take a full report, after all, and use it to market themselves to other insurers. Most carriers don’t want their competitors to see the data used to underwrite a risk.
“They’ll provide a risk score and a list of recommendations, but we think a more collaborative and transparent approach benefits everyone,” said Michele Sansone, Chief Underwriting Officer, North America Property, AXA XL.