El Niño and Claims
by DMA Claims Services

El Niño is a warming of the Pacific Ocean that occurs every 3 to 7 years and impacts weather on a global scale. As the warming waters move from west to east along the equator, they bring moisture and rain to the Southern tier of the United States and the west coast of South America. Drier weather and warmer weather can appear in other areas (Australia and Indonesia are often afflicted with drought and related issues like wild fires).

A significant El Niño developed in 2009 and is predicted to last well into Spring of 2010.

El Niño’s impacts on weather include higher-than-average rain in California and the Southwest where the storm season can generate peak claims volume. The 1997-98 El Niño (the most significant El Niño measured to date) produced 230% of normal rainfall in San Francisco and 210% of normal rainfall in Los Angeles. This year’s El Niño is producing rainfall well in excess of normal, particularly in Southern California.

The Unhappy Insured – The Dreaded Side Effect of El Niño

Insureds seem to have virtually no tolerance for delay and are not soothed by explanations about massive claims volume. Most do not accept excuses and want fast service regardless of the broader situation.  Endless hold messages (“Your call is important to us…”) or busy signals when faced with a personal loss result In frustration and upset.

As noted in the J.D. Power 2009 Home Claims Satisfaction Study, “A positive claims experience that meets or exceeds expectations may foster long-term loyalty, while a negative experience may drive the customer to shop for a new insurer.” The link to the full study is 2009 Home Claims Satisfaction Study.

As a result, El Niño can not only Increase loss expenses, It can also negatively impact premium if the claims experience for the policyholders is not a pleasant one.

Taming El Niño and Soothing the Storm-Ravaged Insured

The elements that tame El Niño and sooth the storm-ravaged insured are:

• Speed of contact
• Speed of inspection
• Speed of report, which permits
• Speed of settlement

The rapidity with which a claim is addressed goes a long way toward bringing about a claims experience that “meets or exceeds expectations.” In the absence of speed, neither skill nor experience nor sympathetic demeanor stands any chance of producing a positive experience for the insured.

DMA Claims (David Morse & Associates) is fast - very fast. You don’t have to take our word for it, just inspect the metrics below based on Xactanalysis data.

Xactanalysis is a claims program that is part of the Xactimate family. One of the benefits of Xactanalysis is precise measurement of vendor performance in terms of response time. The program is used by many carriers, and thus it is capable of providing "industry average" metrics based on tens of thousands of claims per month handled by a great many Independent adjusting firms.

The graphic below compares DMA performance (based on hundreds of claims per month) to "industry average" and shows DMA to be significantly faster in the key areas of contact and first report. The measurements are in days/fractions of days.

"Red Flag” Fire Loss Fraud Indicators – Property Claims
by DMA Investigations

The following is a list of indicators that point to the potential of fraud in connection with a claim. This is a summary of the most common “red flags” for quick and easy reference, but should not be considered a complete list. Note: just because some of these indicators appear in a claim does not mean that any aspect of the case is fraudulent. These indicators are merely a tool to help isolate which cases might warrant further review. The greater the number or magnitude of the “red flag” indicators, the greater the likelihood that fraud may be present in that claim.

The cause of a fire is suspicious, for example, If:

1. There are multiple points of origin.
2. The fire exhibits rapid spread, intense heat, and signs of extensive destruction.
3. The fire occurs at a time of day when it is likely to go undetected for a longer period of time.
4. The sprinkler system is turned off, fire doors propped open, or fire or burglar alarms deactivated.
5. There Is an unusual presence of flammable liquids or containers from such liquids in or around the structure.
6. Premises that are normally locked and secure were unlocked at the time of the loss.
7. The fire starts in a closet or an area where there is no expected source of ignition.
8. There are signs of artificial draft or combustion aids, e.g., windows open, holes in the walls
9. There are timing devices connected to energy devices, e.g., hotplates, skillets or irons.
10. The fire loss claim does not include expected items such as personal papers, items of sentimental value, valuables not easily replaced, and the like.
11. Smoke detectors, sprinkler systems, or alarms fail to work.
12. Items are claimed, such as coins, jewelry and guns, that are not combustible, but no remains of the Items are found at the fire scene.
13. Photographs of the fire scene lack items that would normally be present at such a scene, e.g., clothes closets are mostly empty, no family photos are around, etc.
14. The property is up for sale.
15. The insured is calm and shows little concern while at the scene, or after the fire when he was told that the fire was intentionally set.
16. Only a short period of time elapsed between the insured's departure from the structure and the start of the fire.
17. The insured has an alibi that appears too convenient.
18. The insured is in possession of the insurance policy when it should have been destroyed in the fire.
19. Arrangements were made for the survival of irreplaceable items such as photographs, jewelry, silver, guns, expensive toys, family heirlooms, or tools.
20. The insured handles all business regarding the claim in person, thus avoiding the use of mail.
21. All items destroyed were allegedly top-brand merchandise.
22. The insured provides receipts with incorrect or no sales tax figures.
23. The insured provides two different receipts with the same handwriting.