What the industry learned from the costliest catastrophe of 2018

The sheer volume of claims following the windstorm that swept through southern Ontario and Quebec last May led to critical service disruptions, after so many consumers called at once to report their claims to their insurers.

“I’m not sure people truly understand the impact [of the event],” Ron Biggs, national claims director of RSA Insurance Group, said Tuesday at the CatIQ Connect conference in Toronto. “From a claims volume, it is the largest catastrophe event our insurance company has had in their hundred years in Canada. Not from a dollars perspective, but from a claims volume or intake perspective.”

A fallen tree lays lays across a road after a windstorm in Toronto on Saturday, May 5, 2018. Environment Canada said wind gusted at close to 120 kilometres per hour on Friday in the wake of a cold front that moved across Ontario and Quebec.THE CANADIAN PRESS/Chris Young

The event occurred on May 4, 2018, a Friday night. With winds of up to 126 km/h, 600,000 people lost power. The May 4-5 event was the costliest insured loss event of 2018, totalling over $622 million, said Laura Twidle, director of catastrophic loss analysis at Catastrophe Indices and Quantification Inc. (CatIQ), in a separate presentation.

“The storm ramped up so rapidly that for the vast majority of insurance companies and our after-hours service providers, we had critical system failures,” Biggs said during the session, Lessons Learned on Recent Events. “Which means there were so many customers phoning in, they couldn’t get through. Phone systems were basically shutting down.”

Biggs said the insurer didn’t know how many customers did or didn’t get through. “There was no redundancy that could have taken on this type of volume this rapidly.”

Whenever there is a cat event, the industry tends to look back and figure out where it could do better. One key component of this, Biggs said, is a flexible capacity plan.

“How do we flex up and provide adjusting customer-facing resources?” he asked. “How do we all support our contracting partners and skilled trades to make sure that customers are taken care of as quickly as possible? We will try to do that internally by cross-training people in other departments. We also reach out to external providers to help support us in that process.”

Obviously, resources need to be available when a client calls in. “If we don’t get them on that first phone call, they’re liable to phone back two or three times,” possibly creating a massive bottleneck. “So, understanding our capacity plan and being very flexible in our capacity plan is a primary focus for us,” Biggs said.

Another component is communication, including strong, open and honest communication with vendors. “If we run out of the ability to help customers, we need to know it before it happens so we can find other resources.”

Social media communication also plays a role. For example, it can be used to:

• educate consumers on general, basic questions
• tips/tricks for customers to mitigate their own damages
• provide information on things like what to expect from an insurance claim.

The final piece is technology. Better real-time technology with vendors to see their capacity is needed, as are assessment opportunities using drones and satellite imagery, for example. “How do we use these technologies so we can assess coverage… on a real-time basis, or do it from desk-based solutions, versus always having to go out to the scene, which is very, very difficult?”

Even smart home technology can be used “so homes can actually tell us they’re sick, so we don’t necessarily have to send somebody out there,” Biggs added.

Even as early as four or five years ago, a catastrophe was an “exception,” Biggs noted. Historically, adjusting was 85% business-as-usual and 15% cats. “I would tell you from our perspective, we are moving rapidly to 50/50,” he said. “[Now] it’s probably about 60% business-as-usual and 40% capacity. We need to look at our capacity, how we deal with everything, with a mindset that cats are now business as usual, they are not an exception.”