Property Claims: Lessons Learned in 2020
The Covid-19 pandemic of 2020 had many effects on the insurance industry.
Shortly after the Covid-19 stay at home orders began as well as the shutdowns of many businesses, most businesses filed claims for “loss of business income” through their property insurance policies. As of now most, if not all, claims have been denied due to the contract language that states for the loss of income to apply, the insured needs to have “physical damage” to the business or structure. This did not happen when: 1) The authorities restricted or shut down use of the businesses. 2) Most policies carry an exclusion for virus or pathogens. This is still an ongoing situation with businesses and insurance carriers that will take time to interpret the policy language per policy.
Another change to the industry occurred with how claims were investigated and paid. In the past, a claim would be filed over the phone or website portal. A claims adjuster would contact the insured and make a physical and in-person inspection of the claim or damage. As the authorities ordered shutdowns, the industry relied more on insureds to take pictures and submit estimates as well as independent third-party contractors. The third-party contractors adapted technology for a new “virtual claims” platform. This also included using drones for exterior inspections for new business and claims management. The adjuster would then manage the claim and review invoices as well as reimburse for payment to the insured and or the contractor.
Upgrades in technology for contractors was also needed to work efficiently with the insurance company. Some of the changes that happened with Covid-19 were detailed repair estimates, increased pictures, moisture readings, and detailed breakdown of labor and material costs.
Yes, there is good news! It is my opinion that the future looks more promising for an improved insurance claim process experience. Insurance companies need to continue investing in “virtualizing” operations to support agents and their insureds with data analytics and collection for more accurate pricing, claim phone applications, optimizing processes, reducing claims fraud, faster claims settlement and client satisfaction.
Real estate investors will benefit from a more optimized virtual claim experience by reducing the time spent during the initial inspection and the final payment settlement. The collected data will help efficiencies between the claim’s adjuster and the contractor. This should then expedite the claims process which will then minimize tenant inconvenience. The Agent will also have an integral role in also being the liaison between the claim’s adjuster and the insured. The Agent is needed to help collaborate and relay the insured’s best interests with the claim’s adjuster.
Overall, while no one could be completely prepared to deal with a pandemic, insurance companies adapted to the current situation and challenges. Carriers will continue to improve their virtual systems in order to keep client retention and safety.
Real estate investors should be asking their insurance agents about their current claims handling process as well as their current policy coverages.