Editorial: Hurricane Takeaways

By Norma Carabajal Essary, CPCU, ARM

Beyond the path of destruction left behind Hurricane Harvey and Irma, evidence points to a paradigm shift that will quickly emerge over the course of the next couple of months and years.  Harvey provided the clearest images of needs and initiatives that can alter an entire industry, beginning with the consumer (buyers) to the agents and producer, and on to the insurer.  This includes everything in between. Irma has also validated the same.

To finger point serves no purpose.  Instead, the renewed focus on flood, or any other disrupted loss, are the approaches we take in encouraging innovative insurance products that are beneficial and cost effective for insureds, whether residential or commercial buyers. Assessing and reassessing the current system quickly shows us what allows or prevents cost effective solutions that ultimately safeguard buyers (policyholders).

The distribution runs two-way, three-way, four-way, vertically, horizontally, and from cradle to grave.  Given the various modes, the obvious strengths will be to enhance communication to educate stakeholders on solutions that may provide government-subsidized property incentives, along with a viable private insurance flood market, coupled with mitigation (loss prevention) services that make properties insurable.  Municipalities will be motivated to evaluate current restrictions that promote feasible building restrictions and codes, not to mention the daunting geographic remapping needs that will take shape to provide direction to the many property owners, builders, insurers, agents, appraisers, lenders, as well as political leaders.

Equally imperative is how we educate our government, political, and legislative leaders to ensure they receive clear-cut, accurate information for better decision making.  Leaders must utilize data management technologies for insight, comprehension, and future planning efforts. While white papers are effective, unfortunately, the vast majority lose the reader with “information overload” or fail to quickly summarize end points. As decisions are made at the state/federal level, rarely do we see or hear from the producer, wholesaler, and buyer, who can easily present necessary information to these stakeholders. Over the last few years, “depopulation effort discussions” have been suggested as an alternative that could benefit policyholders and organizations, such as the Texas Windstorm Insurance Association (TWIA) and National Flood Insurance Program (NFIP).  Even as we sift through Harvey’s rubble, the depopulation aim was and still is twofold:  provide alternatives in flood insurance for consumers and relieve financial burdens, deficits that these organizations have encountered for long periods of time.

Furthermore, as risks morph, the marketplace provides for innovation and designing of new policies and better terms and conditions.  The expertise for these policyholders lies directly with agents/producers and insurers. The agents/producers are well equipped to provide open lines of communication, specialty solutions, vendor sources, and policy terms that are better suited for buyers (residential, commercial, risk managers).  Much has to do with the relationships that manifest within the industry, and, ultimately, provide great benefits back to the consumer. It is here where the creative insurance minds occur: customer service, customer experience, policy development, manuscript policies, excess coverage, difference in conditions, exclusions, endorsements, add-ons, and the list goes on…

The lessons learned and, more importantly, the changes to come will be widespread from residential or commercial consumers, risk managers, local and state municipalities, government and political leaders, retail/wholesale/managing general agents, carriers/insurers, and the vendor services for supply chain resources we rely on day-in and day-out.

Harvey exposed us all to the need for assessment, exploration, re-engineered solutions, market expansion, clear cut communications, and a market that will continue to thrive in relationship management – all with the intent of creating consumer and marketplace stability.  And now, Irma is seconding Harvey’s demands.

Yes, yes, the time is ripe. #InsuranceStrong