Tag Archives: insurance claims

Managing your insurance claim after disaster

Lynne McChristian

By Lynne McChristian, I.I.I. Media Spokesperson and Non-resident Scholar 

If Hurricane Dorian left its imprint on your home or business, you’ve likely already started the claims process with a call to your insurer. Knowing what happens next will be helpful as the recovery begins.

The insurance claims process is indeed a process. There are steps involved and requirements from both the policyholder and the insurance company. Most people have never had to file an insurance claim of any sort. And if they had, it might have been an automobile accident claim, which can be far less complex that one that involves damage to something as large and costly as a home and whatever is inside it.

After a widespread natural disaster, insurers take a triage approach to claims handling, and that means those people who suffered the most damaging losses are seen first. Obviously, everyone with damage wants to be seen promptly, yet taking care of people in order of damage is what serves those most in need.

After you report a claim, someone will be sent out to appraise the damage. You might have more than one insurance claims professional visit, as there is separate expertise involved – depending on the damage you reported. You might have someone look at the structure, an additional claims adjuster for the contents damage, and then a flood damage claims expert visit your property, if you have flood insurance protection. Some of these insurance professionals may work directly for your insurer, while others are hired as independent contractors to give your claim faster attention. Tip: Get a business card and cellphone number for every person who appraises the damage, so you can follow up.

If your home is so badly damaged that you cannot live in it, you may get a check on the spot from your claims adjuster. This is not a settlement check. It is coverage that is part of a standard homeowners policy, called Additional Living Expense. It covers the extra expenses you’ll have if you must live elsewhere while your home is repaired or rebuilt.

Above all else, keep organized and retain all your receipts. Temporary repairs you made to prevent further damage are covered under your policy. You will want to keep the process rolling to return to normal – and insurers want that, too.

 

Is relief in sight for personal and commercial auto claims?

By Steven Weisbart, Chief Economist, Insurance Information Institute

 

 

About three years ago the Insurance Information Institute noticed a strong correlation between the number of people employed and the amount of driving done, as measured by the U.S. Department of Transportation’s monthly survey of vehicle-miles traveled. Of course, it is reasonable to expect that as more people hold jobs, most would drive to work. And as those who had been unemployed gained incomes, they would also logically be likely to drive more for leisure.

Further, we noticed another strong correlation between vehicle-miles traveled, on the one hand, and the collision paid claim frequency rate (as captured by Fast Track Monitoring Service), on the other—which is also a logical relationship. This, in addition to other factors, such as an increase in distracted driving, higher speed limits on some roads and other causes, helped explain the unusual spike in the frequency of auto insurance claims in 2015 and again in 2016.

However, lately these relationships appear to be weakening. For example, the year-over-year increase in vehicle-miles traveled was more than 2 percent in 2015 and 2016, and despite continued steady growth in the number of people employed, was 1.5 percent in the first half of 2017, just under 1 percent in the second half of 2017, and under 0.5 percent in the first five months of 2018 (the latest data available).

It’s possible that the rise in the price of gasoline is affecting vehicle-miles traveled. For most of 2016 the retail price of a gallon of gas (all grades) was less than $2.40, but for the first half of 2017 it averaged $2.50 and for the second half of 2017 averaged $2.65. For the first half of 2018 the average was roughly $2.85.

The collision paid claim frequency rate has also flattened, echoing the pattern of vehicle miles traveled. These new patterns suggest that the beleaguered private passenger and commercial auto claims might finally see some relief following a few years of combined ratios well north of 100.

Behavioral economics and the claims management process

How might behavioral economics apply to the claims management process? Maria Sassian, research manager at the I.I.I., investigates:

A recent edition of Gen Re’s Claims Focus contains a fascinating article that explains some of the key principles of behavioral economics (BE) and demonstrates their application to claims management.

BE theory asserts that individuals make irrational decisions due to cognitive biases they are not aware of. These biases are so common that Dan Ariely coined the term ‘predictably irrational.’  BE has been a hot topic in insurance for some time and interest in it is not fading.

Clio Lawrence, the author of the article, studied a group of self-employed income protection insurance policyholders in the UK. Several BE principles were applied throughout the claims process. She concludes: “While our observations and investigations are ongoing, the anecdotal evidence and feedback has so far supported a link between the application of BE principles and claims outcomes. “