Insurance for flooding

Bad weather – the role of the insurance provider after a flood

You might think that after their home or business premises have been flooded, things cannot get much worse for your clients. Untrue: if the aftermath of a flood involves wrangling with an unresponsive, disorganised insurer then their distress will go a notch or two higher.

The scale of the problem: flooding in the UK

Flooding has become a major issue in the UK. More than 15,000 claims for flood damage to property were made following the storms of winter 2015-16, including Storm Desmond. Insurers paid £24 million in emergency payments to families and businesses to help them cope with immediate needs: food, clothing and staff salaries.

As a result of flooding, 3,000 families had to move into alternative accommodation. The damage was not limited to property, either; 5,600 motor claims were submitted arising from flood water damage. As a result of recurrent wet weather events, Flood Re has been established to provide transitional support for those living in flood-prone areas who may find it hard to access insurance services.

For insurers, the increasing incidence of flooding provides many challenges. In the aftermath of Storm Desmond, 8,300 initial visits were made by loss adjusters to assess severely damaged sites. Insurance providers experienced much higher volumes of calls seeking information and claims for support. The ABI estimates that the total cost of the season’s storms will be around £1.3 billion.

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What your customers will expect from you

The most immediate support that customers will be looking for is temporary alternative accommodation or business premises. Being flooded is stressful and potentially traumatic, especially if children or the elderly are involved and it happens over Christmas. You can reduce the strain by providing ready access to an alternative property.

Customers will want a prompt and efficient service to handle their claim and help them start to get back to normal. This means that assessment of the claim and arrangement of remedial works should be as swift as possible, once the property has had time to dry out. Customers should be advised not to throw out damaged items before an assessor has been able to visit.

What should insurers do to prepare for floods?

You should have a plan setting out how you will manage a severe spell of flooding. You will need more staff to answer queries and process claims, as well as teams of claims handlers who can visit customers to assess damage. These teams should be ready to get started as soon as the floodwaters recede; a week of living in a filthy, water-damaged property without progress on a claim can feel like a lifetime to the insured.

Your plan should include understanding where these extra staff will be drafted from and how they will be managed and supported. It is also important to note that capacity is not only about extra people; you may need to increase your bandwidth, available phone lines and even claims handling premises in order to cope with the additional demand.

Having a network of skilled tradespeople who can step in to carry out repairs and remedial works will also be a vital asset in a time of crisis. Skilled people will be in high demand locally; you could consider drafting in contractors from further afield but you will need to plan the logistics of this around transport and accommodation.

Ways to deliver excellent customer service

If you can be pro-active in helping your clients, they will reward you with loyalty. For example, as soon as flood warnings are issued, contact your clients using their preferred method of communication to explain your role in the event of a flood. From a corporate reputation point of view, the more help you offer, the less likely you are to be featured in a media story about how policyholders are struggling to get the help they are entitled to under their insurance.

Prioritising help for vulnerable people will also mark you out as a reliable and high-quality insurer. You should be able to identify high-risk policyholders from your system: the elderly, the disabled, and families with young children. Finding suitable alternative accommodation for these groups can be a particular challenge, so extra resource should be dedicated to them.

Clarity of communication is also important in the aftermath of a flood. Policyholders may be upset and distracted, so you will need skilled communicators to provide advice and explain the claims process. Where an element of the damage is not going to be covered by the policy, it is best to be as upfront about this as possible to prevent unpleasant surprises. For example, it is wise to manage expectations about whether food in damaged freezers is covered, or whether the insurer will pay for cleaning and redecoration.

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