INTERVIEW: Dr. Eng. Carlo TOZZI SPADONI Co-founder, Insurance Engineering Services

30 August 2018 — Daniela GHETU
Co-founder, Insurance Engineering Services
XPRIMM: Claims adjusting puts you in direct contact with the direct physical impact of  extreme weather events. How would you comment on the frequency and severity of these type of events in  recent years?

Carlo TOZZI SPADONI: We've always had weather-related losses, of course, even in mild regions such as Western and Central Europe which are not - or rather have never been before - exposed to extreme climate conditions in terms of temperature and rainfall. 

Therefore, I wouldn't say that we've been facing single losses that had never occurred previously. Rather, we certainly see a remarkable increase in frequency of events that are, albeit not perhaps extraordinary,  more than enough to trigger policy coverage. Leading Reinsurers provide statistical evidence showing that in the last quarter century, nature related losses have had a far higher trend than man-made ones. What we have noticed is that even risks located in mild areas, well-designed, built and protected areas have been impacted several times in a 10-year period - which is certainly beyond the expected frequency from historical data, let alone those on which premiums are determined. 

One specific type of event - the so-called water bombs, or sudden heavy rains in a relatively limited area - are perhaps the weather-related event that has become fairly common and was almost nonexistent until the end of last century. The immediate consequence is that in these circumstances, even state-of-the-art drainage systems prove to be absolutely inadequate and cause significant losses.

Furthermore, almost every European Country has suffered very significant floods in the last decade with impacts that, partly due to manmade factors, have severely affected the insurance market.

XPRIMM: How much are new technologies contributing to your activity improvement? Is claims adjustment a significantly more efficient process nowadays than some years earlier?

C.T.S.: Change is occurring continuously and at a pace that was unimaginable only 20 years ago. That was when the use of internet and e-mail became more or less a standard practice in every industry and ours is no exception. This means, for instance, that I - as anyone else within the company and beyond - can liaise with branch offices anywhere around the world anytime and exchange information, send or receive appointments, reports and any other documentation just about like my PA in my physical office. This allows for a lot more teamwork and exchange of know-how than ever before, it offers great opportunities as well as challenges. 

More recently, the use of drones, Google maps, SW, portable digital forensic equipment, combined with smartphones has radically changed the way we gather, analyze and process information and issue our output. 

In terms of efficiency, just consider that our Romanian office, with only one full time Adjuster, thanks to technology and company organization, we can utilize the skills of 70+ Adjusters based almost anywhere in Europe with senior expertise in nearly every technical domain and industry. 

XPRIMM: On the other hand, how much would you say these technologies may help property owners to mitigate risks? Are the technological means at hand at this time really efficiently used for risk control?

C.T.S.: Of course, technology can certainly be used to that end: just think of predictive maintenance through the IOT (Internet Of Things) which, in theory, should allow us to dramatically reduce machinery breakdown losses.

Moreover, chips in working suits may already allow us to monitor workers' health as well as sudden and unexpected events such as a fall even in remote and unpatrolled environments. 

Internet-based technology is being implemented to monitor exposed areas to the risk of wildfire (accidental or not) and allow for prompt reaction before they become uncontrollable.

Statistically, we are certainly noticing a reduction in the number of fire and related losses within industrial plants, much to the credit of organizational improvements but even more to how systems, notably electrical, have been designed and built since the mid '90s.

Technology is likely to continue this trend which partly explains why the Property market has remained soft for such a long time despite weather related losses.

XPRIMM: In your opinion, what are the most challenging aspects in dealing with weather related risks?

C.T.S.: These types of risk, and I would also include earthquakes, have a specific feature in that when they happen, often unexpectedly, they hit large areas affecting a plurality of risks of various kinds (civil, public, commercial, etc.).

Having the appropriate organization, financial, technological and human resources to put on the field and be able to liaise and cooperate with public authorities and services is a major issue at corporate level.

At local level, we need to guarantee that the local staff either has the required knowledge and experience to face these losses both, in the emergency period and beyond, or has immediate access to it either within the company or outside. 

Salvage and recovery best practice is indeed one immediate topic and working side by side with leading practices in this field is a key factor. 

XPRIMM: More often in the recent years, risk accumulation played a significantly challenging role - several extreme events occurred at very short period or even overlapped, leading to an increased complexity of claims. What are your comments in this regard?

C.T.S.: Very interesting question, thank-you. I can tell you that a leading UK Insurer appointed us early this century to work out a risk accumulation analysis on their entire Italian portfolio.

This meant designing appropriate models for different risks (e.g.: flood, storms, hail, quakes, wildfires, etc.) and processing a huge amount of data.

It took over 2 years and a remarkable effort from both sides, but the outcome was quite impressive and triggered a lot of changes and adjustments.

We believe that, since the technology is - or at least can be - available, Insurers should indeed move in this direction to improve their exposure, purchase reinsurance more consciously and in the end provide better performance to both Policyholders and their Stakeholders. 

XPRIMM: Acting as claims adjuster puts you in a very good position to provide a relevant feed-back to the risk underwriters. Is this competency well used by insurers?

C.T.S.: This is also an interesting question. Honestly, though each of our reports on claims has an opening chapter on the insured risk, my feeling is that the underwriting and claims offices do not always exchange all available pieces of information, nor exploit the lessons learnt from claims.

To their credit, losses are one off single events and UW need significant statistical evidence to ground their decisions upon.

Nevertheless, my feeling is that some data mining from claims and debriefing with loss adjusters could be helpful. This happens more in Countries in which we have Loss Prevention engineers.

XPRIMM: Finally, what would you say is the pivotal aspect in the claims adjusting field at this time?

C.T.S.: As always in the past, the traditional values of credibility, reliability, and professional know-how: in one word, trust.

Although, as we discussed earlier, the content and requirements to obtain them are ever changing in an environment which is rapidly becoming multicultural and global, something inconceivable only a few decades ago.

Interview conducted by Daniela GHETU
Editor: Alana MCKENZIE
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