PCS, Cat Activity, Technology May 29, 2015 Joe Louwagie AVP Property Claim Services

PCS, Cat Activity, TechnologyMay 29, 2015

Joe LouwagieAVPProperty Claim Services

© Insurance Services Office, Inc. 2013, a Verisk Analytics company. Not for copying or distribution without permission.

Mission StatementPCS is committed to serving our customers and supporting the global insurance industry through the identification and provision of reliable, accurate, objective, and timely catastrophe loss estimates.

Core ValuesService

Integrity

Objectivity

Confidentiality

Transparency

Reliability

Consistency

Operating Principles We will achieve our mission by:

Exceeding service and quality expectations

Facilitating an ease of doing business

Consistently producing a high quality product

Innovating within a culture of continuous improvement

Providing value in corporate citizenship

Who We Are


U.S. catastrophe claim information since 1950

PCS formed at request of insurance industry

Loss development surveys started in 1998

Estimates based on retrospective claims review

PCS Canada since 2010

Continual improvement amid consistency w/past

Aggregating Actual Claims Data for 63 Years

PCS HistoryServing the insurance industry


Homeowners and the public

Primary insurance carriers

Independent Claims Adjuster firms

NOAA and governmental economists

Industry quarterly and annual reports

Catastrophe modelers

Reinsurers and reinsurance brokers

Capital markets

Providing a Service to Support the Insurance Mechanism

PCS Data UsersBroad benefit across industry and in various sectors


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

3.06

6.52

3.55

10.65

7.758.95

24.4

14.39

9.95

15.4

12

20

13

25

18

22

19 19 18

32

PCS Cat Activity 2014 Winter storms and thunderstorms

2014

Average

Thunderstorms Drive 2014 Activity

``

32 designated cats $15.4B in insured loss 6 winter storms, 1 EQ 25 Thunderstorms

27 designated cats

$21B in insured loss

More peril diversity

# of

Cats

(In $B)


Cat No. Period States Perils Status Personal Auto Commercial Total insured Loss

63 Feb 14 - 15 CT, DE, MA, MD, NH, NJ, NY, PA, RI, VA Freezing, Ice, Snow, Wind Open $327,230,000 $4,240,000 $134,730,000 $466,200,300

64 Feb 16 - 17 GA, NC, SC, TN, VA Freezing, Ice, Snow, Wind Closed $47,960,000 $3,718,000 $18,670,000 $70,348,000

65 Jan 26 - 28 CT, MA, ME, NH, NY, RI Freezing, Ice, Snow, Wind Closed $31,320,000 $2,119,000 $9,570,000 $43,009,000

66 Feb 1 - 4 CT, IL, IN, MA, MI, NY Freezing, Ice, Snow, Wind Closed $78,680,000 $1,607,000 $20,630,000 $100,917,000

67 Feb 7 - 11 CT, MA, NH, NY, RI Freezing, Ice, Snow, Wind Closed $187,850,000 $1,969,000 $37,603,000 $227,422,000

68 Feb 16 - 22CT, DC, DE, IL, KY, MA, MD, ME, MI, NC, NH, NJ, NY, OH, PA, RI, SC, TN, VA, VT

Freezing, Ice, Snow, Wind Open $1,074,700,000 $9,235,000 $268,150,000 $1,352,085,000

69 Mar 3 - 5 AR, KY, NY, PA, WV Flooding, Freezing, Ice, Snow, Wind Closed $96,600,000 $1,656,000 $20,850,000 $119,106,000

70 Mar 25 - 26 AR, KS, MO, OK Hail, Tornadoes, Wind Open $188,080,000 $58,860,000 $55,640,000 $302,580,000

71 Mar 31 - Apr 1 AL, AR, GA, MS, OK, TN, TX Flooding, Hail, Wind Closed $92,650,000 $39,254,000 $3,757,000 $135,661,000

1st Qtr. $2,125,070,000 $122,658,000 $569,600,000 $2,817,328,000

72 Apr 2 - 3 KS, KY, MO Flooding, Hail, Tornadoes, Wind Closed $105,800,000 $24,600,000 $51,800,000 $182,200,000

73 Apr 7 - 10AR, IA, IL, IN, KS, KY, MI, MO, NC, OH, OK, PA, TN, TX, WI, WV

Flooding, Hail, Tornadoes, Wind Open $529,590,000 $142,510,000 $107,850,000 $779,950,000

74 Apr 16 - 17 KS, OK, TX Flooding, Hail, Tornadoes, Wind Closed $42,480,000 $56,345,000 $3,330,000 $102,155,000

75 Apr 18 - 21 AL, AR, FL, GA, KS, LA, MS, NC, OK, PA, SC, TN, TX Flooding, Hail, Tornadoes, Wind Open $570,870,000 $164,938,000 $46,140,000 $781,948,000

76 Apr 24 - 28 AL, FL, GA, KY, LA, MS,TX Flooding, Hail, Tornadoes, Wind Open $434,480,000 $122,058,000 $75,600,000 $632,138,000

77 Apr 27 - 28 MD Riot; Civil Disorder Open TBD TBD TBD TBD

78 May 3 - 4 IA, KS, MN, NE, WI Flooding, Hail, Tornadoes, Wind Open TBD TBD TBD TBD

79 May 6 - 11 CO, IA, KS, NE, OK, TX Flooding, Hail, Tornadoes, Wind Open TBD TBD TBD TBD

2nd Qtr. $1,683,220,000 $510,451,000 $284,720,000 $2,478,391,000

2015 Total $3,808,290,000 $633,109,000 $854,320,000 $5,295,719,000

2015 PCS Cats OverviewDriven by Winter Storms and Thunderstorms


Challenging 2014 and 2015 CATSWinter storms

Heavy snow and/or low temps

Multiple fronts

Cumulative snow effect

Overview

PCS

The date range challenge

Reviewing past PCS

Aligning to our role

Winter storm dates & damages oftentimes don’t align


Cat Planning and New TechnologyProperty claim technology awareness

When I was an adjuster in Sioux Falls, South Dakota Camera Tape measure Notepad Dictaphone Calculator Estimating worksheets

When I managed a property claims region Digital camera to upload from home Tape measure Scoping notes Pre-mobile cell phone Dictaphone Calculator Laptop

20 years ago

6 years ago


Dimension rooms Diagram structures

Technology presented in 2014 as “years away” has become a reality by 2015

Cat Planning and New TechnologyProperty claim technology is changing the industry

Mobile Device

Thermal Imaging


Cat Planning and New TechnologyRemote diagramming and remote adjusting

Drone diagramming

Exterior and Interior remote diagramming available in 2015 or 2016; race then begins to apply and use it

Multiple companies racing to patent this

Will be combined with thermal imaging

Can record video and download to file

Mobile device maps interior for XACTIMATE

Video file created and downloaded to file

Estimate written and submitted to insured

Mobile diagramming

https://www.youtube.com/watch?v=I5xYqpy9aLA

https://www.youtube.com/watch?v=paTQcK25rK4


Cat Planning and New TechnologyExisting challenges

Drone diagramming

Exterior and Interior remote diagramming available in 2015 or 2016…..race then begins for how to apply and use it

Strict FAA issues for line of sight and airports

Unresolved privacy and civil liability issues

Drone training needs to be extensive

Significant cost to operationalize

Capability and willingness of policyholders

Changing skills needed for Adjusters

Mobile diagramming

https://www.youtube.com/watch?v=I5xYqpy9aLA

https://www.youtube.com/watch?v=paTQcK25rK4


Cat Planning and New TechnologyThe big question.....what is the impact to insurance carriers?

How will companies use the technology and how fast?

What will be the impact to staff field adjusters?

What will be the impact to IA field adjusters?• Drone operational skills

• Broad use of IAs instead of staff or less use?

• Centralized estimating with mobile inspection?

• Post-event cat site logistics and management

How will loss prevention and mitigation change?


Claims TechnologyEmerging SMART Homes - Convenience

House temperature

Ceiling fans

Washer / Dryer

Yard Fixtures

Watering of lawn

Water heater

Stereo

Security Alarm

Lamps and lights


Claims TechnologyEmerging SMART Homes – Loss Mitigation

Water detection

Doors opening

Motion detection

Smoke detection

Carbon monoxide detection

Wifi Cameras

Remote video monitoring

Refrigerator spoilage alerts

Freezer thawing


Claims TechnologyEmerging SMART Homes – Impact on Insurance

Data kings will be manufacturers of SMART items

New models needed for premium calculation

Significant discounts (25%) for SMART devices

Slow companies at a competitive disadvantage

SMARTER homes generate fewer claims

Claim frequency reduction impacts staffing needs

“SmartThings wants to eviscerate the Home Insurance Industry” – Forbes magazine 8/14/14


Cat Planning and New TechnologyLeveraging mapping technology

Quickly Identify extent of probable damage

Matching claim size to skill level

Improves accuracy, customer service

Reduces cycle time

Overlays claims to damage

Matches before/after visuals

Improves ability to quickly assess


PCS TurkeyLaunching service in Turkey

PCS Turkey aligns with IUC and PCS mission to serve the Turkish insurance market

Industry index supports reserving accuracy

Ability to use for risk transfer

Supports retrocession risk transfer

Calibrates and enhances cat modeling

Facilitates sharing of global best practices

Shares global trends with Turkish market

Benefits to Turkish Insurance Industry

Active for any catastrophe

after May 28, 2015


PCS CommitmentConfidentiality and document destruction

Restricted information to ten names at IUC and PCS Quarterly signed confidentiality agreements NDAs in place where requested

Confidentiality

180 days after event close Includes drives, email folders, and printed Audited to ensure completed

Document Destruction

Core ValuesService

Integrity

Objectivity

Confidentiality

Transparency

Reliability

Consistency


Residential: Building and Contents

Auto: Personal and Commercial

Commercial: Building, Contents, and BI/CBI

PCS Turkey purpose is to serve Turkish insurance market

PCS TurkeyDevelopment of an insured loss estimate after catastrophes

Categories

Includes entire country

Estimates by CRESTA zone

Geography



Includes all perils resulting in PD / BI

Natural perils resulting in insured loss

Man-made perils resulting in insured loss

Catastrophe designation threshold is $10M

Perils

Bulletin issued within 48 hours after event

Preliminary estimate at 30 days (asap w/eq)

First resurvey at 60 days

Every 60 days until finalized

Reporting timeframe




USGS alerts within minutes of all EQs

Cat designation bulletin

Survey / re-survey bulletins

Quarterly reports

Reports

Committed to free service for data contributors

Program maintained by international sales

Aggregated data used for loss estimates

Business Model



Cat Planning and ResponseSharing with Turkey industry prevention/mitigation trends


Commenced in April “PCS Benchmarking” Service

Launch/analyze/distribute catpay report in July 2015

Providing industry benchmarking data and reports to support informed decision making

Personal cat claims management (publish by 11/15/15)

Commercial cat claims management (2nd qtr. 2016)

Cat vendor management

Independent Adjuster cat management

PCS Turkey BenefitsPCS Benchmarking reports free to data contributors

2015-

2017

Reports


Earthquake claims handling Training best practices Loss development trends with earthquakes Earthquake pricing Earthquake catastrophe modeling Earthquake catastrophe mgmt.

Property claims severity Vendor Management Managing flooded vehicle salvage Business continuity after earthquakes Policyholder education/loss mitigation Managing an earthquake cat Claims technology

PCS Turkey BenefitsSupporting global speakers for local conferences


PCS Turkey Looking forward to serving the Turkish industry

Thank you for attending today

With any questions, reach out:

Menekşe Uçaroğlu at [email protected]

Joe Louwagie at [email protected]

We welcome your thoughts and suggestions

Questions and answers now or at any time


Objectivity Integrity Service Transparency Reliability Consistency

Documents

PCS, Cat Activity, Technology May 29, 2015 Joe Louwagie AVP Property Claim Services