Remaining calm in a surge – claims supply chain

We have nothing but sympathy for insurance companies when the surge hits. As premiums continue to rise with costs, everything possible is being done to reduce operational expenses. This means claims operations are sized accordingly, so when a surge event hits, it can hit hard.

If it is an isolated region affected, then you know your suppliers have a good chance of containment by redeployment, but if it’s national or at least wide spread then it’s bumpy ride.

The average consumer is not prepared to pay the level of premium that would be required to serve any surge seamlessly and so claims staff become stretched as does the supply chain.

Having dealt with a few in different organisations, here are a few of the best approaches that have been deployed.


Removing operational friction

This is key. Free your suppliers to do the job you need them to do. Would you rather your Loss Adjusters were out in the field helping customers or stuck at a desk reporting on how they intend to help customers?

  • Most obvious and most widely implemented is to increase Delegated Authorities.
  • Reduce reporting requirements. Short form reports or pre-agreed bordereau should suffice and in a claims staff are probably too busy to read anything in full.
  • Set up a supplier communication channel so that they are able to contact you. Claims phonelines are usually struggling to cope.
  • Reduce and modify your Service Level Agreements (SLA’s). How important is that answering a call in 20 seconds anyway? Help the field force by understanding that to be most efficient on visits it might be necessary to batch visits and miss a target appointment date.
  • First Notification of Loss channels get really busy but by getting as detailed an instruction to your suppliers WILL reduce incoming traffic seeking clarification.


Cash flow

Surge claims tend to be at a higher value than non surge, but equally they take far longer to settle and therefore invoice. Loss Adjusters will incur additional costs to serve surge claims such as overtime, travel and hotels. Consider paying a % of the final fee upon the first reserve notification to counter-act this.

Linear Process

Typically claims will follow a linear route – Disaster Restoration to Loss Adjuster to Surveyor to Builder to Contents provider.

Obviously there is good reason for this but the net result is that those suppliers further down the process do not experience the same increase in instructions that the front end suppliers do. In fact it is often the case that instructions down the line start to fall off.

  • Can your builder network be deployed earlier to provide quotations or strip out services?
  • Can your contents providers remove damaged items and start the repair process?
  • Can your commercial property salvage company be deployed to remove, validate and evaluate stock claims?

Non Surge Claims

Understandably the focus is on surge – customers need help, the media is watching, it’s the moment of truth.

Customers in a flood zone have first hand appreciation of the severity of damage in an area and therefore how busy their insurer may be. Someone suffering a theft claim in another part of the country will not be so understanding. If claims teams are struggling consider some of the above for non surge claims too.