Lexington's Catastrophe Advantage Program

Despite a slow start, this year's hurricane season is predicted to be particularly active. In an effort to help commercial policyholders recover from hurricane-related losses sooner and provide the appropriate resources to help adjusters manage claims faster, Lexington Insurance Company and the AIG Companies recently introduced the Catastrophe Advantage Program (CAP).

Designed to help forecast hurricane damage before it occurs, CAP aims to help commercial property policyholders recover more quickly from hurricane-related losses by securing vital claim adjuster resources prior to a storm's landfall. CAP uses Risk Management Solutions (RMS) modeling technology to project the path, size and intensity of hurricanes in the United States and aligns it with Lexington's proprietary databases to identify, pre-landfall, those customers in danger of property losses as a result of an oncoming hurricane. These projections are then used to deploy independent adjusters to severely affected areas immediately following the storm, when resources are traditionally scarce.

"This is one of the many tools we can use to enable us to better manage our catastrophe resources," says Dean Owens, vice president, property claims, at Lexington, an AIG member company. "CAP provides commercial property policyholders with timely inspection of damages, fast disbursement of emergency funds and faster claim resolution, all of which help to provide a significant reduction in down time for affected businesses."

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The program, automatically offered to Lexington's commercial property policyholders on a complimentary basis, was developed largely in response to the severe 2004-2005 windstorm seasons. In August 2004, Hurricane Charley, which devastated Florida's West coast, became the strongest and costliest storm to hit the United States since Hurricane Andrew in 1992. Just one year later, Hurricane Katrina wreaked havoc on Southern Florida, Alabama, Mississippi and Louisiana, causing more than $81 billion in property damage, making it the costliest natural disaster in U.S. history.

"Following the 2004-2005 wind seasons, many independent adjusters felt overwhelmed, due to lack of resources," says Owens. "We realized that we needed a way to help them determine how much capacity they needed, and where and when that capacity was needed."

Lexington examined the frequency of storms and vulnerability of commercial property policyholders based on the 2004-2005 windstorm data to determine where adjusters' resources would be most needed and what type of resources would be required.

"We married the account adjusters' databases with our own risk database to come up with a list of policies with assigned adjusters, prior to a catastrophic event," explains Owens. "We can then determine, 24 to 48 hours pre-and post-storm, which accounts have assigned adjusters, reach out to those adjusters to determine how much capacity they've been assigned, the number of claims they can handle and whether there are any additional resources they need."

The predictive modeling technology provided by CAP allows Lexington to assess risk on the front end and quickly service claims, should a catastrophic event occur. The program stresses Lexington's commitment to meeting clients' needs in times of crisis.

"The CAP program is part of the overall management of the claims process for our clients," says Owens. "We're sharing information with the adjusting firms in a positive way to help them manage their capacity for our business, which enables us gain a better understanding of where and when we need resources and from whom. Working hand-in-hand with our clients and the independent adjusters to streamline the claims management process is a significant piece of the catastrophe preparedness puzzle."

(The above piece is part of our continuing Insights series designed to highlight key products and services to our readers. This paid-for Insights was written and edited by Risk & Insurance® on behalf of our marketing partner. Additional Insights can be found on our Web site at www.riskandinsurance.com/.)

September 19, 2007

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