GAB Robins has developed a system that could eradicate fraudulent weather claims. Michael Faulkner reports
The weather is one of the UK's favourite topics of conversation. Along with the prowess of England's sporting teams and the latest tale of woe in EastEnders.
And it is not just the general public who have reason to talk - and complain - about the weather. So do insurance companies.
According to the ABI, flooding of domestic properties cost the insurance industry £156m in 2001 and £242m in 2000. And storm damage was even greater: amounting to £266m in 2001 and £394m in 2000.
Insurers need fast access to good quality weather information if they are to swiftly and accurately verify claims. But until recently, the means of obtaining this data was slow and outdated. That is until the launch of an IT system called WeatherEYE.
WeatherEYE is the creation of loss adjuster GAB Robins. It allows instant access to Met Office data. Claims staff simply enter the incident date and the location's postcode on to the system, and in a matter of seconds the weather conditions prevailing at the time are displayed. This enables call centre staff to make an informed decision about each claim as soon as it is notified.
It is based on GAB's award-winning EYE system, an e-commerce business intelligence tool. This introduced `cube' technology, which allows online manipulation of data held in data warehouses and networks.
The development of WeatherEYE began in July 2001 following a meeting with the Met Office.
GAB Robins UK sales and marketing manager David Germaine says: "The Met Office had the world's best data on weather, but it had old-fashioned ways of disseminating it to insurers: emails, faxes and downloadable files. It needed an integrated system and WeatherEYE technology could facilitate this."
In September 2001, GAB brought in major client Churchill Insurance as a development partner. The insurer had also identified issues arising from weather related events. One such issue was fraud, or claims leakage.
Churchill home claims manager Nick Warmink comments: "There were only eight days last year when storm claims were not lodged - and we know that cannot be right."
A further issue related to customer service. "Policyholders expect insurers to have accurate weather data at their fingertips. They want to be told whether the claims can be accepted straight away," says Germaine.
"Insureds are reporting claims faster, and the insurer may not have the time to get the weather records from the Met Office.
"Inaccurate and slow claims decisions mean poor customer service, costly complaints and damaged brand reputation."
In April WeatherEYE was integrated into Churchill's claims management function.
The system has minimal infrastructure requirements. The Met Office data is piped into GAB's offices in Birmingham. And there is no need for claims staff to have internet access, merely access to an intranet. "The industry as a whole is not keen to give internet access to all staff," comments Germaine.
WeatherEYE is also capable of interpreting the data so that the operator will be told whether the weather conditions constitute an insured peril.
GAB Robins supply manager Nick Smith says: "There is no standard definition of storm conditions. Each insurer has its own interpretation.
"We divide the weather conditions into a number of bands. The system is programmed to know which conditions the individual insurer considers to be storm. It will therefore make the decision for the claims handler. It will say, for example, whether a 36-knot wind constitutes a storm."
Smith says insurers are increasingly criticised in the media for making seemingly inconsistent decisions on weather claims - "people on one part of a street having their claims paid, others not".
"As WeatherEye can be programmed with the precise definition of insured weather perils, staff can quickly justify claims decisions."
Furthermore, as Met Office data is being used, rather than that of another supplier of meteorological data, there is no inconsistency between information given out by the media and the data used to determine claims.
To demonstrate the effectiveness of the system GAB initiated a Weather Claims Challenge. A sample of 100 storm claims that were paid by insurers was collated. Each claim was checked against the Met Office data using WeatherEYE to determine whether the claim should have been paid.
"The results showed that in 40% to 60% of paid claims there were no storm conditions," says Germaine.
This is very significant for the industry, he says. "Climatic changes are leading to increased numbers of severe weather incidents each year. Policyholders may therefore be making multiple claims each year - including multiple fraudulent claims."
"In a few years, chief executives will be wanting to know what cost control mechanisms are in place. The industry does not have these for weather-related claims. The system acts as a filter to weed out claims that would otherwise slip through the net."
At present GAB does not have any figures aggregated across the industry to show how many repudiations would have resulted from the use of WeatherEYE. But Germaine predicts that in six months there will be an incremental increase of 20%.
Since its launch six major insurers have begun to use the system, with over 70,000 claims verified using WeatherEYE. Several more contracts are also "in the pipleline," according to Germaine.
Brokers have also shown an interest. "They want to be able to give as much information as possible to their clients," says Germaine. "They want the information at hand to enable them to advise their clients better."
GAB has therefore developed a version of the system suitable for lower volume users such as brokers. It is less customised, which is reflected in its pricing structure.
Germaine is also keen to target non-insurance professionals, such as solicitors and police investigators who may need quick access to weather information.
WeatherEYE has prompted a number of areas of further research, one of these being a weather warning service.
"The Met Office currently relies on faxes to provide advance warnings. We may be able to provide an electronic solution. This may lead to ten days' advance warning."
"A forecasting system would allow insurers to help policyholders to prepare for any damaging events. This would not only reassure the policyholder, but help the insurer to save money as well," says Germaine.