By Jeffrey C. Taylor
The rising number of claims resulting from hailstorm damage over the past two years makes a strong case for reexamining the way insurers process roof claims. Through the proper application of aerial data, insurers can transform property claims handling and distinguish their organizations from the competition.
Aerial technology has come a long way since Gaspard-Félix Tournachon captured the first aerial photo in 1858 while riding a hot air balloon above the French village of Petit-Becêtre. In the years following, cartographers and surveyors discovered they could use aerial technology to produce better maps and surveys faster than with conventional methods. In recent years, property insurers have similarly incorporated aerial technology into the claims-handling process.
Early adopters in the insurance industry first experimented with aerial technology by turning to third-party providers who dimensioned roofs on their behalf. Some insurers later adopted do-it-yourself methods that allowed them to use commercial imagery as a visual reference to scope property losses. Both approaches were safer and much more efficient than traditional methods that sometimes entailed climbing on steep, structurally compromised roofs and scoping with a tape measure and pad of paper. Property estimators who adopted aerial technology found it especially helpful when estimating repair costs from the tornado that ripped through Joplin, Missouri, in May 2011 — an event that reduced many structures to piles of rubble.
However, aerial technology has its limitations.
Throughout most of its history, aerial technology has been produced and calibrated specifically to meet the needs of mapmakers and land-use planners. It works quite well for such purposes but was never intended to fit the unique requirements of property insurers. In some ways, repurposing the technology for claims handling is akin to using a pipe wrench to wire an electrical outlet: It's possible, but it's far from the best solution.
The quality of commercial aerial images is one of the key hindrances. Most aerial images today possess a level of detail more than adequate for mapmakers dealing with large swaths of land. But an insurer examining a single home discovers that the amount of data the images provide is severely limited. High-end aerial data captured specifically for the property insurance industry to learn about individual structures allows insurers to overcome limitations and transform the way they handle property claims.
Oklahoma before: A neighborhood in Moore, Oklahoma, before an EF5 tornado struck in May 2013. High-resolution aerial images such as this allow insurance professionals to extract massive amounts of property data that can be used for more efficient claims handling.
Oklahoma after: The same neighborhood in Moore, Oklahoma, days after the tornado. Insurers can use high-resolution poststorm imagery such as this to validate storm damage after major catastrophes.
A key component of advanced aerial data is more sophisticated imagery that gives a clear view of exterior structural characteristics, such as rain gutters, corners, vents, chimneys, and even individual shingles — all of which are needed to scope property losses. The ability to capture this level of detail is impressive on its own merit, but it's the ability to extract large amounts of data that's truly remarkable. When working with the most advanced data, insurers can employ several strategies at key junctures of the claims cycle to achieve greater levels of efficiency, productivity, and customer satisfaction.
The Loss Site Inspection
According to the National Insurance Crime Bureau (NICB), insurance claims resulting from hailstorms increased 84 percent between 2010 and 2012. That trend is particularly disconcerting because claims involving roof damage can involve a large investment in time when handled through conventional methods. Even a seasoned estimator can take hours to measure roof dimensions, calculate slope, and document damage. When multiplied across hundreds or even thousands of property claims, that represents a massive operating cost that could be reduced through the use of a few time-saving techniques.
Access to advanced aerial data expedites loss site inspections by enabling estimators to automate the roof-dimensioning process. With a few clicks of a mouse, estimators can receive all the information and resources they need to inspect the loss, including a digital rendering of the roof, all dimensions and slopes, and a set of high-resolution aerial images that can serve as reference throughout the claims process. A key point to consider is ensuring that the data requisition process meshes with the claims workflow to prevent disruptions that can provoke policyholder ire. Information available from modern aerial data and analysis tools can be imported directly to the claims-estimating system that estimators already know and use daily, which cuts down the likelihood of service delays.
Delivering Effective Insight
As Xactware developers were advancing the technology of collecting precise data about roofs for the property industry, it soon became apparent that commercially available aerial images didn't have the detail needed to do the job right. Many existing images were collected for mapmaking or other purposes. But because the needs of the property industry were not considered when the images were collected, they often didn't have the detail or information required for precise roof and exterior calculations.
So Xactware decided to develop a database that compiled the information the property insurance industry needs. That includes high-definition, top-quality aerial images from a variety of angles that can be used to create the most accurate roof measurements available in the industry.
To do that, in 2012 Xactware created the Property InSight™ division, assembled a team of world-class aerial data collection experts, and commissioned a fleet of private aircraft to blanket the nation.
The result of this multimillion-dollar investment is the most comprehensive database of high-resolution aerial images ever captured, formatted, and stored specifically to meet the needs of the property industry.
It's important for insurers to remain vigilant against fraud as the number of claims from hailstorms and other severe weather events continues to rise. Often, the best defense against fraudulent or exaggerated claims is documentation that shows how the structure appeared before the damaging event. Aerial data that includes recent high-resolution images of the property serves that purpose.
Homeowners feel vulnerable following a property loss. And in the event of a massive catastrophe such as the tornadoes that swept through Oklahoma in May, tens of thousands of policyholders need the assurance and support they expect their insurer to deliver.
The Oklahoma Insurance Department reported that insurers have fielded nearly 34,000 homeowners claims and that insurance payouts for the tornadoes reached $437 million as of June 26. Even for the most experienced professional, that can be an overwhelming number of claims to handle. Insurers can take some of the pressure off their catastrophe response teams by employing aerial data to process more claims in a shorter amount of time. By streamlining site inspections, estimators can focus more effort on addressing policyholders' questions and concerns, which can have a positive effect on customer satisfaction and retention.
When civic authorities restrict access to neighborhoods following a massive catastrophe, as is often the case, insurers can use aerial data to scope claims before they're allowed on-site. Not only does that approach reduce cycle times, it helps estimators prepare to discuss the loss in detail the moment they meet with policyholders, which can also have a positive effect on the claims experience.
Those are just a few of the strategies insurers can employ when working with strong aerial data and analysis practices to transform their claims operations and achieve higher levels of efficiency and productivity while better serving customers. Applying such principles will also help insurers continue to succeed in the face of rising hailstorm and severe weather trends. In addition, such strategies will enable insurers to remain competitive and set themselves apart from their peers.
Jeffrey C. Taylor is vice president of Property InSight™, the newly formed division that oversees all of Xactware's data capture and process services.