Storm season causes anxiety for homeowners, business, and insurers around the world. And, over the past few years, that anxiety has soared as high-impact extreme weather events have become commonplace. Floods and storms have inflicted major property, infrastructure, and environmental damage, not to mention the loss of human life. In fact, the World Economic Forum said environmental risks have steadily grown in prominence over the 13-year history of its Global Risks Report.
While treacherous, extreme weather also allows insurers to showcase their customer centricity and ability to scale their claims operations. The gaps of an unprepared carrier become glaringly visible when they do not proactively reach out to affected policy owners before, during, and after the event.
Claims processing inefficiency during catastrophic situations is high across the industry, as insurers typically act alone while policyholders may have claims with different carriers. There is no go-to method today that allows insurers to work together.
An opportunity for carriers to collaborate
As the popular teamwork quote goes, “together we achieve more.” Carriers could leverage today’s advanced technologies to collaborate without compromising their unique value proposition and deliver superior customer experiences. The first step is to take a closer look at two emerging technologies that are driving positive customer experience during extreme weather events.
The deployment of drones for high-volume claims management has picked up exponentially since the seven devastating hurricanes of 2016. One of the most critical factors in post-catastrophe claims processing is capturing and documenting the situation on the ground. Traditionally, this was done using on-the-ground claims adjusters supplemented by imagery captured from airplanes or satellites. Now, drones are using artificial intelligence to capture high-resolution aerial images from a few feet away to gather information regarding damages to the top and sides of homes, apartment buildings, high-rises, or stadiums.
Multiple drone companies often scan the same storm-affected area for their respective contracted carriers. Not surprisingly, the lack of data aggregation and collaboration among carriers often leads to inefficiency. With forethought and cooperation, a single drone provider could service claims from two different carriers in one visit to the policy owner’s home.
The ability to share data in a distributed trust environment and to execute business rules based on real-world events has propelled several insurance use cases for blockchain that have driven operational costs down. The complex and broad insurance ecosystem offers an opportune environment for blockchain to enable unprecedented levels of no-touch or low-touch claims processing.
Among the first questions most carriers ask during a catastrophe is which of my customers are impacted and are there claims to be initiated? This reactive thinking offers opportunity for improvement.
For example, a carrier learns that a home covered by its policy is devastated and that family cars were parked on the property. A different carrier covers the vehicles, so no action is taken until the auto insurer is engaged. Why? There is no platform for carriers to share impact information efficiently.
A blockchain-based platform would resolve this information-sharing challenge. With teamwork and efficiency in mind, blockchain consortia and industry bodies such as FEMA, NOAA and NWS could act as catalysts to spark carriers’ interest in collaboration platforms.
Now, let’s consider the possibilities if the capabilities of drones and blockchain were combined and the extended ecosystem engaged collaboratively to deliver claims service excellence. Carriers might even be able to create additional revenue streams through such innovative partnerships.
Drones + blockchain = a path to claims service excellence
The potential of these two technologies working together is enormous. Key objectives might include:
- A platform to share location-based impact and loss information
- A means through which insurers could share loss data
- A marketplace for drone companies to sell imagery
- A platform for catastrophe mapping service providers to provide geo code-specific predictions regarding the level of impact
- A means to enable insurers to proactively initiate claims and deliver a superior and seamless policyholder experience.
- Insurers leverage existing consortia or form a focused network for catastrophe management to co-invest and subscribe to the services
- Catastrophe-mapping providers share data on each insurer’s policy on the predicted level of impact
- Implemented loss control smart contracts trigger outbound campaigns to policyholders and agencies to minimize losses
- Carriers deploy their contracted drone companies to procure imagery and loss information
- Carriers can sell this information to peers based on geo location
- Drone companies can also sell the imagery and loss assessment directly on the platform; member insurers can avoid individual contracts
- Smart contracts can create no-touch FNOL based on loss information
- Policyholders are notified about the claim processing proactively across all of their policies with multiple carriers
- Further steps in the claims adjustment, restoration, and settlement are performed by the insurers flowing their proprietary systems and methods
Providers usually back up their order books during storm season, which makes it essential to get policy owners into the order queue as quickly as possible. A proactive claims management approach would help carriers achieve order queue efficiency.
Over time, this collaborative platform could extend membership to provider networks. Providers could be engaged directly by smart contracts based on loss information and registered claims of simple to medium complexity.
Realistically, this concept may be a few years away. However, it could come to fruition sooner than later thanks to the advent of consortia and insurers’ increasing openness to collaborate for bottom-line improvements.
At Capgemini, we actively pursue innovative ideas to deliver wider transformation throughout the industry. Being the market leader in digital insurance transformation services, we see great potential for blockchain and drone technology. To have a in-depth discussion, feel free to get in touch with me on social media.
 Earth Networks, “The Global Risks Landscape 2018: Extreme Weather Events,” August 17, 2018, https://www.earthnetworks.com/blog/the-global-risks-landscape-2018-extreme-weather-events