Urgent need to improve disaster modelling, disaster planning, and claims handling
May 04, 2005 – Lloyd�s Chairman, Lord Levene, will today highlight three important lessons from the 2004 hurricane season, in advance of what is predicted to be another tough season in 2005.
Speaking to over 100 insurance professionals in Miami, he will say that although the insurance industry has made a number of improvements in responding to policyholders compared with Hurricane Andrew, there is much work to be done. He will call for further improvements in disaster modelling, disaster planning and claims handling.
Lloyd�s, the world�s leading specialist insurance market, incurred the second largest loss from the hurricanes of any carrier with a net loss of $2.3 billion from the four storms. Lord Levene will say Lloyd�s was proud of its response to Florida policyholders, and that despite a hard year for catastrophes, Lloyd�s did not pull back from insuring risks in Florida, even though other insurers did.
Lord Levene will say that hurricane forecasting must be improved by investing in new technology and research to improve our understanding of risks and their impact. He will say:
“Although we have learned much since Hurricane Andrew, four hurricanes pummelling the southeast coast during just six weeks was an exposure that no modelling company or insurer had taken seriously ever before.”
He will also say that insurers and regulators must work more closely for better disaster planning:
“Given the apparent upward trend in catastrophe events, we are left in no doubt as to the need for robust, effective disaster planning for the future. That should not mean companies acting in isolation. Part of the process must involve insurance markets and their regulators working together more closely on an ongoing basis, sharing their respective knowledge and expertise.”
Lord Levene will say that the third key lesson is better handling of claims. Pointing to the shortage of adjusters on the ground during the 2004 season, he will say that the relationship between the adjuster and the insurer is critical:
“That relationship must be founded on trust and flexibility, and as the frequency and cost of disasters trends upwards, it will become even more important�The urgent practical need for speedy �help on the ground� remains the paramount concern in a time of crisis.”
Citing scientific evidence of an increasing incidence of natural catastrophes, Lord Levene will say that the industry needs to get to grips with these challenges quickly because “things will not get any easier”.