Watch Martin Bühler and Anthony Watkins discuss how claims teams navigate uncertainty, balance planning with judgement and adapt when circumstances change.

Prefer to read? Explore the highlights from their conversation in the interview below.

My team and I try to put a price tag on major loss events, whether hurricanes, earthquakes, large-scale fires or other catastrophes. A colleague of mine describes large losses as snowflakes. I like that comparison because they may look similar from a distance, but when you zoom in, each is unique.

The complexity usually comes from a combination of factors: technical and coverage uncertainties, incomplete or unreliable information, and significant time pressure. Events are particularly challenging when we lack a good historical precedent.

such as Russia's invasion of Ukraine and its impact on aircraft lessors.

These uncertainties create a wide range of possible outcomes. Our job is to narrow that range step by step, applying sound judgement to reach a reasonable conclusion, even when some uncertainty remains.

We have established processes and protocols that guide us when an event occurs. The first step is to understand what has happened, usually starting with publicly available information.

But you need to be careful with those sources. Media coverage often concentrates on the most severely damaged areas. You might see photographs of the same street corner from different angles, but that doesn't necessarily reflect the overall damage. The challenge is separating facts from noise.  

Take an earthquake, for example. We would look at its physical characteristics. How strong was it? How deep was it? Where did it occur? We might then examine population density in the affected areas. Depending on the country, power outages can also indicate how many households may have been affected.

At the same time, you start building a team around you. That includes local claims colleagues, underwriters who have written business in the region and catastrophe modellers who can provide a top-down assessment.

In that team you exchange information, consider what the different functions are seeing and start triangulating the data.

And throughout all of this, we must never lose sight of the human dimension. Behind the figures we analyse are people whose lives may have turned upside down. We must never allow our technical perspective to overshadow that human reality.

Confidence in any single number? Very little, usually. There's just so much we don't know at that stage.

But that's part of our job, to navigate that ambiguity. What we can do is develop an early range of possible outcomes that we feel comfortable with at both ends. We can be transparent, not just about what we know, but also about what we don't know, and about the assumptions and judgements we've applied.

For a very large event, we would normally provide senior management with a first rough range shortly after the event.

We deliberately keep those ranges wide because they reflect the uncertainty and complexity involved.

As the event develops, we receive more information from the affected region. Clients, loss adjusters or brokers may have shared first damage assessments, while catastrophe modelling colleagues can provide additional estimates.

It's about triangulating these different data points, understanding why they match or differ and explaining the relationships between them.

Where there are gaps, we have to apply judgement. And it's extremely important to consider different perspectives.

That's why our core team brings together underwriting, claims and catastrophe modelling expertise. It should never be just a single judgement. It needs to be a perspective developed collectively, with transparency about where judgement has been applied.

Consistency is also critical. If different teams are working with different assumptions, the combined estimate becomes much less meaningful. Ultimately, there may be occasions when a leader has to make a call because agreement hasn't been reached. But consistency and a proper exchange of perspectives are essential.

I think one pattern that clearly stands out, particularly in markets where clients haven't experienced a major catastrophe for a long time, is that they sometimes overestimate their operational catastrophe-handling capabilities.

Imagine an organisation that normally handles around one hundred claims per month. Suddenly, a major earthquake or hurricane occurs and that same organisation has to deal with thousands or tens of thousands of claims almost overnight.

Scaling up to that volume is extremely difficult and very hard to simulate.

At the same time, that's when policyholders need their insurers most. They may be facing one of the most significant crises of their lives, while having the impression that their insurer is struggling with operational challenges.

And it's not just about the number of claims. It's also about their value.

Most claims organisations have authority limits. If a claim exceeds a claims manager's authority, it gets escalated to their manager, and so on.

Following a catastrophe, the average claim may become significantly larger. Suddenly, the escalation of thousands of claims can lead to a massive bottleneck.

That's why investing in catastrophe claims handling protocols and operational readiness before an event occurs is so important.

Claims handling is therefore much more than settling a policy. It is an opportunity to demonstrate the true value of insurance, strengthen trust and build lasting customer loyalty.

I would argue it's a balance. If you have no plan, you're almost set up for failure. But if you're too rigid, you may become so absorbed in following your protocols that you don't recognise what's happening around you.

Coming back to my snowflake comparison, every event is different. That's why you need clear protocols to provide direction, but also the flexibility and judgement to adapt when circumstances require it.

We naturally gravitate towards situations we've encountered before and tend to assume that history will repeat itself. At the same time, we sometimes underestimate the probability of things we haven't experienced.

Think of COVID-19, the confiscation of aircraft in Russia or wildfires reaching a scale comparable to a major hurricane. These are scenarios that many people hadn't fully anticipated.

Experience is valuable, but it can also introduce bias into our judgements. Two apparently similar events aren't necessarily connected, and we need to be careful that previous experiences don't lead us to conclusions that aren't justified.

It's extremely difficult to distinguish between intuition and personal bias. I don't have the perfect answer, unfortunately. 

Latin America is fascinating. I think coming back from it, I probably take things a bit more with a grain of salt. Not always with the tequila!

As an example, we had a challenging claim where there was some friction between the parties involved. The client decided to bring everyone together for a meeting in another city, but without much of a concrete agenda or particular outcome in mind.

My immediate reaction was to question why we would fly someone to another city just to attend a meeting that could also be held virtually. Later, I realised that was a very European perspective.

Our colleague in Mexico saw things differently. She felt it was important to attend, simply to demonstrate our presence. So she went.

Afterwards, the client called us and said they really appreciated that we were there. We gained goodwill simply by showing up.

We have global standards as an organisation, and we try to do things consistently around the world. That's important.

But equally, every market is different. We must give people the space to adapt to those local circumstances. 

I wish I could tell you one thing and say that's what we really need to focus on.

In fact, I think the theme of this edition of Claims Perspectives, 'The Art of Adaptation', captures the challenge quite well. Adaptation isn't new to Claims. Claims functions have had to adapt to new technologies and new types of losses.

It's no longer just about the technical handling of a claim. It's also about the commercial relationship with a client, sharing lessons, developing insights and feeding them back to the functions where the business originated.

That makes Claims increasingly important to the wider organisation. But it also raises expectations of our Claims colleagues. As an industry, we need to invest in developing the skills and mindset required to meet those expectations.

Ultimately, I think successful adaptation is not just about adopting new technologies or processes. It's about remaining curious, challenging our assumptions and being willing to learn and evolve.