Feast not famine: Catastrophic loss impacts insurers’ ability to service
Over the last two decades, the number of natural disasters has increased, according to the National Oceanic and Atmospheric Administration (NOAA). It is devastating to witness earthquakes that demolish whole cities, wildfires that burn thousands of acres, cyclones and typhoons that cause mass flooding and property damage. These disasters leave behind people who have lost loved ones, whose property and belongings are destroyed.
The number of billion-dollar disasters is rising, as well. The U.S. averaged 2.7 billion-dollar disasters a year in the 1980s, according to economic analysis by TheConversation.com. In the 1990s that number climbed to 4.6 per year. In the 2000s, it jumped to 5.4 a year.
In 2018, we’ve already witnessed several global catastrophic events, including:
- Hurricane Michael: Insured losses could go as high as $4.5 billion
- The Indonesia earthquake and tsunami: Losses exceed several hundred million dollars
- Hurricane Florence: Losses will range from $2.8 billion to $5 billion
- Super Typhoon Mangkhut: Estimated losses between $1 and $2 billion
- California wildfires: The wildfires have yield $845 million in losses so far
This year’s catastrophes follow last year’s all-time high. Global insured natural catastrophic losses in 2017 were up $135 billion – nearly 4 times higher than the 30-year average. At no other time in human history has insurance played such a significant role. As natural disasters around the world continue to rise, that importance will only grow.
An unprecedented time of change
Amidst the storm, insurers are also navigating some of the most significant changes the industry has ever had. “The digital revolution is felt to be a threat by many in the insurance industry, especially following the increase of innovative new entrants and the rapid rise of comparison websites,” reports Deloitte, a multinational professional services organization
Even while undergoing unprecedented change, isn’t the real threat to insurers the inability to respond to customers in their greatest time of need? With increased events comes increased transactions. Now is the time for insurers to have the right technology platforms in place to meet the greatest demands for transactional processing they may ever see.
This was a common theme at the recent Guidewire Connections conference. Recent natural catastrophes have emphasized the critical role that the property and casualty insurance industry plays in society, Marcus Ryu, Guidewire CEO, told attendees in his opening keynote, leading to his conviction that society needs the largest and most efficient property and casualty insurance industry possible.
Ryu identified three ways his company is executing on its mission to make this happen:
- Delivering mission-critical software, meaning standardized applications serving every line of business and all sizes of insurers globally
- Providing the services to implement software and take on full post-production responsibility for delivering the software in the cloud as a reliable business service, rather than just an IT asset
- Providing an ecosystem of technology providers and data streams that can readily integrate into the shared insurance platform, lowering cost, effort and complexity
To that end, Hyland is committed to its contributions to be an integral part of that ecosystem, harnessing and driving change to provide the necessary tools for modern insurers to survive the complexities of today.
