Chris Ritter: We're seeing all kinds of new technologies. I'm wondering to what extent... I'm talking in general but to what extent are you seeing that arise in the claims area?
Stephen Johnson: It's very interesting. Technologies to assist in claims handling have been emerging for a long time. With COVID-19, in property claims, there are a couple of very specific technologies that I would just refer to by way of example.
Johnson: But I would be remiss if I didn't mention the drone technology that's out there, that so many people have heard about. Can insurance companies after a hurricane or a wildfire can they just send in drones with video recording equipment and go do all of the inspections, the measurements, and calculate the damages or call a structure a total? Is that the panacea? No, it has not proved to be that, but drones can be used but there are a lot of limitations there. It's not as big of an item as one might think.
Johnson: But there's something very cool and so I'll just grab my phone here, a smart phone. This is a technology move that has been in use for some period of time now. A lot of companies are trying to become as customer friendly as they can with their claims adjudication process.
Johnson: If you're a homeowner, a condo owner, even an apartment renter, let's say, you have a claim for burglary and you could show a video through your phone, an app that your insurance company has provided you, you may be able to provide enough evidence through that app to the adjuster who's sitting, what may have been previously back in the office of the company but now work from home situation.
Johnson: That adjuster, we would call that adjuster a desk adjuster, can see enough information, interview the homeowner. This can also work with business property claims, and see enough to go ahead and start resolving the claim. The customer really likes that because the customer, especially now in COVID, doesn't have to have an appointment with a stranger coming into the business or the home. “Will this person be masked? Will they be gloved? I have a pre-existing condition. Don't have to worry about that.” That's a plus.
Johnson: But even prior to COVID, it was a plus for other reasons. Again, the customer doesn't have to schedule that appointment, miss part of a day from work to be there, and just the speed. The speed is it's done instantly and that saves time. Without naming insurers, but we know from advertising campaigns “that saves time, that saves money” but those sound bites really are true.
Johnson: The customer felt empowered. "I get to own part of this. I did what I needed to do. Now we're on our way." There's less waiting around. There's a sense of that too. Customers really like it, is what carriers have found through their customer survey.
Johnson: I just offer that up as an example of technology that's been there that is now being used even more in the COVID environment and a couple of other things. Companies if they don't have to would prefer not to send their adjusting staffs into other locations because there is a risk that their own employees could contract the virus. That could be a little messy.
Ritter: I keep hearing on the news all this information coming out about the business interruption, businesses being closed, the effect that's going to have. How are you seeing the claims group handling that? How are they going to be able to handle what looks to be just a record number of claims in that regard?
Johnson: For those insurers that are seeing those large influxes of those types of claims, it really is incumbent upon them to scale up with their adjusting resources. Frankly, some of that may be dependent upon the kinds of policies that have been provided to their policyholders.
Johnson: What's important, I think for our viewers to know, is regardless of the outcome of a claim, what I'm talking about with the steps to investigate, analyze, adjudicate, communicate, all of those things, yes, at the state level through the state departments of insurance, or the state legislators, there are either statutes or regulations issued by the departments of insurance that do put these kind of requirements on insurers.
Johnson: What companies do if they operate nationally or superregional is they just adopt these standards that the states have for their geographic footprint and they just apply them uniformly or if they've looked closely and see some states are more strict than others and it's easier to operate from one model, then what a company will do, it will take the strictest standards and just apply that across the group so that it's more consistent, easier to manage and measure.
Johnson: For example, once a claim is received by an insurer, most of these timeline schemes call for acknowledgement of the claim within so many days. And then each communication asking the insurer a question, what's going on, or anything that a person would normally expect an answer and the answer is required. It might be ten days, might be fifteen days. We call that the regulatory overhang.
Johnson: But it's really a good thing because without it, we may not have the consistency and the good practices that are enjoyed today by customers benefiting from their insurers. It really helps direct insurers so that customers can have their expectations satisfied.
Johnson: Now, I would note that sometimes in catastrophe situations, the states will relax some of those parameters knowing that there are so many claims to deal with in a short period of time, that they will give more time, but they will announce that. They'll put it on their website. The carriers know. Claimants probably know so less, but still the carriers are motivated to still perform well, maybe satisfying those timelines prior to the relaxation, because there's a big competition going on actually.
Johnson: Insurers are measured now in so many ways more so today than ever before and I think that trend will continue, so that brokers shopping for commercial insurance, they have information available, consumers for personal lines have a lot of information available, and DOIs sometimes gather this data and publish it to help consumers shop. That really is a big driving force for insurance companies to want to be timely and do the right thing.
Johnson: And then there's something else that I always enjoyed telling my claims staff especially people new to the business is no one impacts the brand more than claims people. The brand of an insurance company can be built up. But how is that brand defined? Is that brand very much defined by when you get your bill, how easy it is to pay for your premium? A little bit. But when you have a claim, that's the moment of truth, especially if you've been a long-term policyholder paying in premium for a long period of time and now it's your first claim.
Ritter: What can they take for the past, Steve? There have never been... We always keep hearing that this is unprecedented, unprecedented, unprecedented, and it may be unprecedented with respect to scope, but it's certainly not unprecedented with respect to the need to have to make changes, the need to have to accommodate, a spin on a dime, etc. What can they take away from prior instances that might be helpful for them today?
Johnson: I really think the industry was sitting in a good position already when this came and is really responding pretty well. I don't think you could say the sky is falling or insurance companies are falling apart.
Johnson: I think insurers are looking at this in a context, at least at the higher levels they are, of we will get through this. We will make some short-term moves. We don't want to just lay off everybody we could because in six, nine, twelve months, we're going to need those people again and it's going to be hard to fill up those ranks.
Johnson: I think the insurers are probably not as challenged as many would think. I think they've adapted pretty well.
Johnson: But when I talk about technology as saving some time and saving some money, it's probably good to just put out a reminder to people or those who may not be as familiar with the industry, but it's always okay to save money if you're an insurer in the cost of handling claims. We call that LAE, loss adjustment expense. Carriers are always focused on that. That's the reason that you don't see over staffing.
Johnson: That's the reason you don't see huge extravagant vacations where everybody goes for two weeks to Hawaii because we had a good year, just the next year may not be as good. That's policyholder surplus. That needs to be protected. You can't just spend it. You're always trying to manage expenses.
Johnson: Because I happen to be an expert now in lawsuits against insurers, if a company is ever viewed as trying to save off on indemnity payments, that's never good in that context.
Ritter: The cost savings you're talking about using the apps, using the drones, etc., that's okay for purposes of gathering information but the information still has to go through the same careful analysis…
Johnson: Yes, absolutely. There's another use of technology that is a double win, I'll call it. It's helped saving costs on claims delivery and it's helping with the customer experience, customers like the company better, and that is self-service.
Johnson: If a customer has a claim pending and wants to know the status through an app that they have or URL, if they can go look themselves on a secure login and just see the status of their claim, then they're not trying to call the adjuster to get that information back and forth there. They just get it instantly. The reason that can save money, the adjuster's time to inform customers of the status of their claim, how far it's coming, when payments should be expected, you don't have that extra time spent.
Ritter: Thank you very much. I appreciate the time you spent. It's been great talking to you. I'm glad you're here that you're doing well, your family's doing well, and it'll be nice to get through this rest of this COVID and hopefully, we'll keep our fingers crossed, no hurricanes and no wildfires.
Johnson: That would be great. For most. There's a small segment of society that when those things occur, for example, storm chasing adjusters thrive in those environments. But yes, on balance, it's much better not to have those events.
Ritter: I agree. Alright, Steve, thank you very much. It's always good talking to you.
Johnson: Thank you.