Managing Claims Expenses Before the Storm
Tropical Cyclone Activity and Its Implications for Claims Expenses
As we move further into the 2024 hurricane season, the latest updates from the National Hurricane Center (NHC) provide a rare and reassuring forecast: no tropical cyclone activity is expected during the next 7 days. This brief lull offers a crucial window for the insurance industry to prepare, strategize, and optimize operations before the inevitable storms arise, particularly in managing claims expenses.
This period of inactivity presents a prime opportunity for insurance carriers to reassess their preparedness strategies, ensuring they are fully equipped to manage any potential claims and efficiently handle claims expenses when the weather patterns shift. Tools like VIP Software's Mimia™ and Bill Audit Pro (BAP™) are critical in this preparation, offering powerful capabilities to optimize operations and reduce costs.
Mapping Claims Expenses from Major Storms
We have taken a sample of pre-processed invoice data from Mimia™ and mapped the average claims expenses across major storms in the last 5 years including Hurricanes Ian, Idalia, Nicole and Dorian. This type of data allows insurers to better prepare reserves for major storms, and also shows us the outlier expenses that would be flagged by BAP. Invoices being generated in California for example, that have CAT codes associated with storms in Florida, will automatically trigger a review.
This interactive map lets you zoom in and explore average claims expenses across the country, using the legend at top left to activate the layers.
How to Use Periods of Inactivity to Get Ahead of Claims Expenses
1. Operational Preparedness for Managing Claims Expenses:
Insurance companies should seize this time to review and update their emergency response protocols, with a focus on the tools and processes that will be critical during a storm. This includes ensuring that claims processing teams are well-prepared and that all digital tools, such as Mimia™ by VIP Software, are fully operational. Mimia™ offers robust data analytics to track and benchmark claims expenses across various service providers, enabling insurers to forecast and manage future claims more effectively.
BAP™ plays a vital role in automating the audit of claims billing, ensuring accuracy, and preventing costly errors such as double billing or incorrect claim assignments. By automating these processes, BAP™ helps insurers streamline their operations, reduce manual work, and ensure compliance with contract terms, all of which are crucial during high-volume periods following a CAT event.
2. Data Analytics for Forecasting and Managing Claims Expenses:
This calm period is also an ideal time to delve into historical data on claims expenses. By analyzing past cyclone activity and its impact on claims, insurance companies can better predict and prepare for future events. Mimia™ provides detailed insights into previous CAT events, helping insurers identify trends in claims expenses and benchmark their performance against industry standards. This proactive approach to data analytics ensures that carriers are financially prepared to handle the claims influx when the next storm arrives.
3. Proactive Customer Communication:
Proactive communication with policyholders is key during this period of inactivity. This is the moment to reach out, offering tips on storm preparedness and ensuring they are aware of the resources available to them. Building a relationship of trust now can lead to smoother interactions during more turbulent times. By using this calm before the storm to educate policyholders, insurers can enhance customer satisfaction and readiness, which in turn can lead to more efficient claims processing when it becomes necessary.
4. Strategic Planning for Containing Claims Expenses:
With no immediate threats on the horizon, insurers can focus on long-term strategic planning. This includes assessing the adequacy of reserves, reevaluating reinsurance contracts, and considering new technologies like Mimia™ and BAP™ that can enhance overall resilience. BAP™ ensures that claims expenses are kept in check by automating the audit of invoices against contract terms and billing rules, while Mimia™ allows for continuous benchmarking of claims expenses. These tools are essential for maintaining financial health and operational efficiency during CAT events.
Prepare Now to Control Claims Expenses and Ensure Operational Readiness
While the current forecast from the NHC and other sources offers a welcome break, it’s essential for the insurance industry to stay vigilant. Use this time wisely to bolster your operations, refine your strategies for managing claims expenses, and ensure that when the next storm hits, you are more than ready to weather it.
