You Can’t Stop The Hail; You Can Reduce The Claims
As another year of devastating weather losses comes to a close, insurers are searching for better ways to minimize losses and improve profitability. While defined catastrophes are responsible for many recent claims around the country, smaller storm losses quickly add up as well.
Throughout many areas in the Midwest and South, hail damage continues to plague insurers’ auto results. These losses commonly range between $2500 and $3500 per vehicle and depending upon storm frequency can result in significant comprehensive claims costs.
Studies from the Highway Loss Data Institute (HLDI) indicate that the number of hail claims more than doubled from 2010 to 2011, from 2.7 to 5.9 claims per 1000 vehicles. These numbers are drastically higher for insurers with a greater concentration of policyholders in the more hail-prone states and areas.
On April 28, 2012, two supercell thunderstorms hit St. Louis with hail up to the size of softballs. One insurer reported 5,880 comprehensive claims from these storms. Assuming an average claim of $2500, these losses alone would have cost that company $14.7M. What if a mere one percent of these vehicles had been under cover or out of the storm’s path? That would translate to nearly $150,000 less in paid claims. Now increase that to five percent of the vehicles and claims savings rocket to over $700,000.
As weather technology continues to improve and become more accurate, hailstorms have become much more predictable. Through the use of proactive hail alerting, insurers can reduce claims by providing their customers with advanced warning of approaching storms. These alerts give the insured ample opportunity to move their vehicles out of harm’s way. Not only does this result in direct savings for the insurer, but also provides a highly favorable customer experience, leading to improved customer retention.
Reducing claims and improving customer relations is a winning combination for any insurer, and such a solution is available today.