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In cities and neighborhoods where residents have direct ties, they are more likely to help each other during a crisis.
By: Kate Stillwell
A revolution is taking place in the insurance industry, where the integration of machine learning and artificial intelligence is helping fill gaps in coverage by providing better, more data-driven products. Quotes are getting faster, easier and more accurate — improving the ease of access to emergency funds when policyholders need it the most: in the immediate aftermath of destruction.
With federal relief programs, policyholders can end up waiting months for funds, if they receive any at all. In Houston, Texas, thousands of residents have yet to receive aid, almost a year later, and some of the hardest-hit residents are unable to rebuild because they’ve been denied assistance. Government-mandated policies are often confusing and convoluted. We’re overdue for a tangible solution that combines technology with social capital to mitigate a disaster’s effects.
In post-disaster chaos, mobile technology is now helping insurance companies speed up both communication and payments, so that those affected receive funds faster. However, being able to communicate with your insurance company via your mobile device in real-time isn’t the only thing that will speed up the recovery process.
It turns out one of the most important underpinnings of a quick recovery is social capital — the fundamental relationships between individuals in a community. Yes, that includes your Facebook friends and Instagram followers. Fascinating research shows that, more than anything else, your degree of social connection makes the biggest difference between recovery and rock bottom. While sound physical infrastructure is critical for mitigating disaster, communities must also build strong social ties and invest time and effort in facilitating social cohesion.
Social connectivity builds resilience
Disaster resilience and recovery do not result solely from robust infrastructure, insurance coverage and federal relief plans. Resilience is a product of our connection to one another.
A leading expert in this work is Daniel Aldrich, a political science professor at Northeastern University, who discovered the “holy grail” of disaster preparedness. In this study, his team of researchers found that communities with higher levels of interaction and social trust had lower post-disaster mortality rates.
In cities and neighborhoods where residents have direct ties, they are more likely to help each other during a crisis. Examples of support include giving a neighbor a place to stay, carpooling groups of kids to school or simply checking on the elderly. When social capital is high, communities form stronger networks that implement self-sufficient resilience that fuels their recovery capabilities.
Some government agencies are implementing this research and integrating social connectedness as part of their preparedness strategies. Programs such as the Australian Red Cross, New Zealand’s Wellington Regional Emergency Management Organization and BoCo Strong in Boulder, Colorado, work directly with local residents to help them anticipate their own needs as well as the needs of the whole community after a widespread emergency.
Social capital is even more effective when it works hand-in-hand with technology that also enables faster recovery.
The exponential growth of artificial intelligence
One of these enabling technologies is Artificial Intelligence (AI). It is no longer a catchphrase — along with machine learning, it is transforming all aspects of our lives, including insurance. Claims, for example, are much more efficient with AI via automated review processes and disaster detection, which reduces the amount of time it takes to exchange information and make a payment.
In addition, data-analyzing algorithms now make it more efficient to track coverage trends, allowing for highly-personalized offerings and customer experiences. In turn, more people purchase coverage and remain loyal to providers. This is positive for both consumers and insurance companies: the more people who use AI-powered coverage, the more data is analyzed and the smarter the AI becomes. This drives variety and appeal of coverage offerings, which leads to more interested customers.
Instant data makes immediate impact
Another enabling technology is real-time data, which allows companies to immediately know who is receiving and responding to communications, exact customer location, damage verification, the hardest hit areas and more. This allows insurers to serve customers with agile response times and limited back-and-forth, which not only improves the customer experience, but reduces mistakes.
Parametric insurance is one example of coverage that relies on data. It analyzes real-time data to provide fast, fixed-amount payments based on pre-determined indexes. In the case of a natural disaster, data is used to objectively determine who needs immediate assistance. As an example, ground shaking from an earthquake is reported by the United States Geological Survey (USGS). This data can be used as the basis to make fast parametric payments that then accelerate the recovery process. The terms of parametric coverage are no substitute for a traditional policy, but it can provide immediate funds to cover initial or unanticipated expenses.