P&C insurers must adequately prepare for seasonal surges in demand to minimize service disruptions and maintain policyholder satisfaction during peak periods. With proper preparation, insurers can allocate resources efficiently and optimize operational costs without overworking their teams.
Every industry experiences fluctuating demand throughout the year, including the insurance market. The unpredictability of insurance demand can be challenging and put undue pressure on insurers’ staff and resources during temporary surges. However, by using best practices like outsourcing, cross-training staff or leveraging advanced technology, insurers can be well-equipped to navigate these peaks and valleys.
Below, we’ll explore some of the common causes of insurance demand surges, the difficulties they pose for insurers, and expert tips and strategies for overcoming these challenges.
What Causes Surges in Insurance Demand?
Insurance demand fluctuates throughout the year, driven by predictable seasonal patterns. For example, claims volumes surge during annual weather events like hurricanes Helene and Milton, which recently impacted Florida, Georgia, North Carolina, South Carolina, Virginia, and Tennessee. With hurricane season winding down, winter storm season is approaching, poised to drive another wave of claims calls and policy adjustments. Whether for claims processing or issuing new policies, these shifts in demand require agile, responsive solutions to keep pace with the changing needs.
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Some of the most common causes of demand surges for P&C insurers include:
- Natural disaster seasons (i.e., hurricane, wildfire, flood, and tornado seasons)
- Storms or severe weather (i.e., blizzards, hail storms, etc.)
- Home-buying season in the spring and summer
- Holiday travel season
- New vehicle releases when new car models hit the market
- Construction season as projects ramp up in the warmer months
The Challenges of High-Demand Periods
Insurance demand surges means an uptick in claims processing and policy inquiries, which require extra attention and resources from P&C insurers. If insurers aren’t prepared, peak periods can pose significant challenges, such as:
Slower Processing Times
One potential risk for insurers is that they don’t have the proper resources to handle the increased demand with the same efficiency. This might result in slower processing times and a growing backlog of claims or policy inquiries, which could detract from policyholder satisfaction and lead to lost business.
Let’s say a prospective customer is buying a new home during the spring season. Eager to finalize their new homeowner’s policy, they might expect a quote from an insurer within 48 hours. However, during this period of heightened demand, the insurer’s team might take more than a week to prepare the quote, causing the person to seek coverage elsewhere.
Increased Staff Pressure
If insurers aren’t properly prepared for a demand surge, the temporary spike could put pressure on their staff, as they’re expected to complete more work without any extra resources.
This might lead to employee burnout, poor service quality, and lower efficiency, which can have ripple effects throughout the organization even after demand normalizes.
Greater Risk of Error
In a similar vein, when an insurance team is stretched thin during peak demand periods, it increases the risk of error, which could be costly for the organization. It could also make it more difficult for insurance professionals to detect fraudulent activity. If they’re focused on processing claims as quickly as possible to get through the backlog, they may not have as much time to examine the more nuanced details that would normally raise red flags.
Compliance Risks
While slower processing times during demand surges can frustrate policyholders and staff alike, additional risks, such as non-compliance, are also on the line.
Most states in the U.S. have regulations dictating how quickly insurers must respond to or pay out a claim after it’s been filed. Depending on the state, certain exceptions or provisions may give insurers more time to respond after a natural disaster, like when an emergency has been declared. However, this may not always be the case, and insurers should understand the legal requirements for where they operate.
5 Best Practices to Prepare for Insurance Demand Surges
Despite the challenges of insurance demand surges, there are expert strategies and best practices insurers can employ to maintain service quality and efficiency, including:
Develop a Contingency Plan
One crucial step in preparing for demand surges is having a contingency plan in place. An insurer’s contingency plan will likely include more than just the protocols for dealing with demand surges. However, it can be important to review any existing plans and ensure there’s a section covering surge management.
The surge management strategy should outline the steps your team will take in response to events disrupting your normal operations. In this way, it provides a structured plan to help you quickly respond to changing demand levels. It would likely include a pre-arranged agreement with an insurance BPO (an outsourcing partner) or communication protocols to provide employees and policyholders with timely updates as necessary.
Use Predictive Analytics
Insurers might consider using advanced data analytics to predict demand surges more accurately. This way, spikes in demand are less of a surprise, and insurers can prepare more proactively.
Data analytics programs might look at historic claims patterns, real-time market trends, or weather data to anticipate when spikes in claims are more likely to occur. In turn, insurers can adjust staffing levels and allocate the appropriate resources to maintain efficiency even as demand rises.
Leverage Automation
It can also benefit insurers to leverage advanced technology like automation and artificial intelligence (AI) where possible, without detracting from the policyholder experience. This can help streamline time-consuming and routine tasks so staff have more time to focus on complex issues during demand surges. For instance, they might use an automated document processing system to minimize manual data entry.
Even in normal demand levels, automation and AI systems can enhance efficiency and free up resources for more strategic work. Then, when a temporary surge arises, it’s less of a challenge for insurers to scale operations.
Cross-Train Employees
It’s typically not practical for insurers to recruit, hire, and train new employees when they need temporary support during demand surges. However, insurers may be able to draw on their existing resources to navigate periods of heightened demand.
Through cross-training, staff members can learn the necessary skills to complete other roles or responsibilities in the organization. So when the insurer needs extra support on claims processing they can draw on staff members from other departments for a few days to get through the growing backlog.
Outsource Non-Core Tasks
Insurers that already leverage outsourcing services for day-to-day functions like (FNOL) and claims processing or call center are better equipped to handle temporary surges in demand when sudden events or shifts occur. Having this infrastructure already in place enhances the flexibility and scalability of insurance operations with the added peace of mind that teams can quickly access expert support as demand levels increase.
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When disasters strike or seasonal events cause call volumes and claims to surge, insurers can fall back on their outsourcing partner to meet policyholder needs without overwhelming in-house teams. Then, once levels normalize, outsourced teams can seamlessly scale back to maintain efficiency levels.
Optimize Staffing Resources for Demand Surges with Covenir
Insurance demand surges can occur for a variety of reasons. Regardless of the cause, insurers need to be adequately prepared for temporary demand surges to avoid potential compliance risks, lost business opportunities, and operational inefficiency.
If you’re looking for a reliable, onshore outsourcing partner to help you easily scale operations with surges in demand, look no further than Covenir. Our team of expert insurance professionals seamlessly integrates into your operations, offering daily or surge support for claims operations, underwriting, customer service, and more.
We’re proud to combine the best of human expertise and advanced technology to help you deliver on your brand promise—even during peak demand.
Contact us today to learn more about our custom outsourcing services.