Preparation key to helping reduce losses from catastrophes, improving claims experience

The flooding in southern Alberta in 2013 has better prepared claims executives for another major catastrophe, speakers suggested on Tuesday at the inaugural Canadian Catastrophe Conference.

“You think you are ready, but you’re never quite ready for what was to unfold,” Mathieu Lamy, senior vice president of claims at Intact Financial Corp., said at the session, titled Claims Executives and held at the Toronto Region Board of Trade. “I don’t think we were quite ready to handle that from an adjusting standpoint.”

There was a lot of learning from that event, Lamy added. “Calgary was challenging,” he conceded. “We never prepared as much as we should of for water. I think now we’d be in a better place to do that.”

Preparing in advance for such events can help mitigate losses when they do occur and improve claims experience, the speakers suggested at the conference, produced by Catastrophe Indices and Quantification Inc. (CatIQ).

“We incorporate a process of what we call a ‘pre-mortem,’” Pat Van Bakel, president and CEO of Crawford and Company (Canada) Inc. told conference attendees. “Before the event happens, and before anybody is going to get blamed for anything frankly, you can sit in a room and throw scenarios at the wall of what could go wrong, what are all of the things that might happen here that might cause us a problem?” Van Bakel said. “And that gives you the forward-looking opportunity to build mitigation strategies to hopefully prevent some of those failures when they happen.”

Rissa Revin, general counsel and senior vice president, claims and compliance with Munich Reinsurance Company of Canada, said that “for me, it’s really about the role we play in the preparatory stage, in preparing for the event and how we can assist our partners in achieving the best results.”

From an adjusting standpoint, Lamy added, “water is the most complicated thing to adjust” because claims can be denied, while most other cats are “covered, it’s just a matter of scoping and adjusting. When there is a possibility of denying, you have to be really careful on how the wording is going to be.”

He noted that Intact spent “quite a bit of time” to establish what it called a ‘coverage guide’ for the 2013 floods. “We didn’t want to do it twice, we knew there would be appeals, but we didn’t want half of the claims appealing the way we did things,” Lamy said. As well, the company wanted a solid guide for anybody that would help adjust, either from Intact from other regions or outside partners. “That ended up being, I think for us, a saving grace,” Lamy said. “We didn’t have many appeals and we didn’t have to scope the thing twice.”

For Van Bakel, one of the biggest fundamental challenges of being an independent adjuster is working with multiple constituents for varied policy wordings and interpretations. “When you are working with different customers, we see varying degrees of preparedness and planning that goes into these responses and events,” he said, noting that the ideal time for planning out scenarios and how you are going to address them is important “when the skies are blue.”

From a reinsurance perspective, reinsurers have the benefit of a global view, what has been learned from this perspective and how it can be applied in Canada, Revin said. “We look at loss trends, significant data analytics to look at the differences in the way that the practices are undertaken,” she said, “what works and what’s the best practice and what perhaps needs to change a bit.” If the response is within the domestic boundaries of Canada, Van Bakel added, “you can pre-mobilize, you can have resources ready to go and ready on the ground to start responding, which is typically what we would do in hurricane-prone areas where we have lot of headway.”

Still, Van Bakel suggested that when talking about economic loss, insured loss and closing the gap, “a lot of what we’ve seen as an industry reaction to the floods of 2013 in Toronto and Calgary has been the exact opposite. We’re reducing coverage, reducing availability of coverage, increasing deductibles, putting in sublimits and charging more for it.”

More coverage of the Canadian Catastrophe Conference

New IBC flood model shows 1.8 million Canadian households at ‘very high risk’

Five of Canada’s six weather catastrophes in 2015 were out west: CatIQ