By Dave Kaiser

June 6, 2005

Associations Warn Agencies:

The insurance industry’s response to the 2005 hurricane season has been noteworthy, with many professional associations emphasizing hurricane preparedness, urging members to have generators standing by for power interruptions and to install offsite computer backup systems. Independent insurance agencies in hurricane-prone states seem to be taking the threat seriously and preparing for whatever crisis the hurricane season brings.

FAIA agents using guidelines fared best

“From the 2004 hurricane season we learned that agents who implemented the practices outlined in Florida Association of Insurance Agent’s Catastrophe Guide (or something very similar) fared remarkably better than those that did not,” Jeff Grady, FAIA president and CEO explained.

The association’s Catastrophe Committee documented the lessons learned from Andrew and subsequent storms, resulting in a very comprehensive resource. After last year’s hurricanes, Grady said an even greater audience of agents knows the Catastrophe Guide’s proven utility which he expects help member’s preparedness.

“In reviewing our performance after the storms, we recognized FAIA could do more by providing members with additional resources for disaster preparedness,” Grady said. “As such, FAIA Member Services researched potential partners that could rapidly deploy critical business operations infrastructure for agencies if disaster strikes. After an exhaustive search, the association forged an endorsed relationship with Agility Recovery Solutions, an on-site disaster recovery firm, that will provide FAIA members with varying levels of service if the need arises. The association’s strength in numbers allowed an affordable solution for member agents of all sizes.

FAIA members pay Agility an up-front monthly fee to cover them in case of a hurricane, windstorm, fire, flood or other disaster. Agility guarantees to have its equipment in place within 48 hours. It bills the agency for all out-of-pocket expenses, most of which are covered by E&O insurance.

The partnership promises to deliver necessities an agency needs to keep running and stay connected to its clients: power generators, mobile office space; computers and services; satellite communications; phone and Internet service; printers and fax machines.

“Finally, FAIA continues to work with insurance companies to critically review how the claims response process can be improved,” Grady said. “On May 12, FAIA’s Catastrophe Committee hosted more than 30 insurance carriers, including Citizens Property Insurance Company, to evaluate the ‘good and the bad’ of last year’s storm season. From this effort, we have added even more useful information to the Catastrophe Guide and develop ‘best practices’ for companies to implement during the upcoming hurricane season.”

Cat Advisory Council activated

FAIA launched a campaign June 1, under the direction of Wilford W. Ghioto, chairman of its 21-member Catastrophe Claims Advisory Council, to prepare for the 2005 hurricane season and notify members about how to prepare for a hurricane.

The campaign included an effort to encourage FAIA-member agencies to tell policyholders about toll-free numbers they can call during a catastrophe to file claims directly with the companies holding their insurance policies.

“During a catastrophe the average agent can’t handle the volume of claims,” Ghioto said. “If you drop 10,000 damage claims into the lap of an agency with five employees, they can’t begin to handle them all.”

Ghioto explained that a claims agent can handle about 50 claims a day. He calculated that an agency with five employees can tabulate 300 claims a day, or at least put them on paper. During last year’s hurricanes many agencies found out the hard way that it was an impossible task.

“Direct reporting eliminates people waiting at the front door. If they can’t phone you on the first day, they come to visit you on the second day to report their claim, just slowing everything down,” Ghioto said. “With direct reporting, the claims are reported from the insured to the company.”

According to Ghioto, direct reporting works well in most cases. When FAIA asked insurers if they liked that method, they said they did and in fact would prefer having that system than an agent faxing them claims-it works better and the company has contact phone numbers they can get to right away. FAIA is encouraging agents to send information about claims telephone numbers to insureds. Ghioto said FAIA’s catastrophe Web site lists direct-claim 800 numbers. He said an agent can go to the site, print out the information and give it directly to policyholders.

“This has been a big help, we are going to push it, companies like it, we like it, it takes the pressure off the agent and is useful in many ways,” he explained.

There is a comprehensive “Hurricane Command Post” on FAIA’s website. The information is continually undated throughout the hurricane season. Jennifer Pitts, FAIA Webmaster and a Catastrophe Council staff coordinator, encourages comments or claim number changes be sent directly to her.

Letter going out

“We are writing a letter to FAIA members telling them that with the approach of the hurricane season it is time to get serious,” Ghioto said. “They shouldn’t wait until a storm threatens, now’s the time for agents to send this information to their clients. At the same time agents need to formulate their own hurricane plan, buy a generator and get prepared for what could be an uncertain hurricane season.”

Communications stressed

Ghioto said communications was a major problem in previous hurricanes-even with adjusters in the area, no one could communicate with them. During Hurricane Andrew he said electricity was the first thing to go taking out cell phones, computers, telephone systems, signal lights-everything grinds to a halt.

After Hurricane Charley hit FAIA sent people into affected areas for one-on-one meetings with every agent-a list was pulled of every agent in Port Charlotte and divvied-FAIA staff met with them to find out what they needed.

“We kept hearing the same thing over and over,” Ghioto said. “Take care of our policyholders, we know there are adjusters in the area but we can’t talk to them.”

FAIA contacted the companies and told them they needed to call their agents and tell appraisers to be in their office at least one or two each hours each day to issue first-party checks so people would have money.

Improved claim handling

Finally, FAIA continues to work with insurance companies to critically review how the claims response process can be improved. On May 12, FAIA’s Catastrophe Committee hosted more than 30 insurance carriers, including Citizens Property Insurance Company, to evaluate the “good and bad” of last year’s storm season. From this effort FAIA has added even more useful information to its Catastrophe Guide and developed “best practices” for companies to consider during the upcoming hurricane season.

Alabama agents ‘seasoned’

Members of the Alabama Independent Insurance Agents are seasoned hurricane veterans. According to Vic McCarley, AIIA executive vice president, members have gone through a number of major hurricanes which preceded Hurricane Ivan.

The AIIA prepares and distributes a “Things to Do” publication for its members once it knows they are targeted for a storm. The publication includes information related to emergency numbers, claims advice and offers to assist them.

“When Hurricane Ivan came through, within 24 hours of landfall, we contacted slightly over 100 agencies in the counties affected to see what assistance they needed, and all of them had everything,” McCarley explained. “Many had generators left over from previous storm duty. Almost all of them had ordered pre-printed loss notices from their carriers to make sure they had them in case they had no computers to work with.”

A large number of agents were advised to transfer their agency calls to cell phones or satellite phones which proved to be extremely important. All of them had established voice messages through their phone carrier to let customers know how to get in touch with them, forwarding numbers and location changes.

Several even ran newspaper advertisements directing customers to national claims office numbers. As the time passed and services were not immediately returned, some requested ice and gasoline, which AIIA provided.

After the hurricane season ended, AIIA started looking for services that might tie all of this together, especially if it had members who lost their agencies in a catastrophe like a hurricane. They decided to offer members Agility Services. AIIA’s offices are also a member and would be back up and have its offices operational within 48 hours.

PIA of Florida distributed hurricane info

A two-part CD, containing vital pre-hurricane and post-hurricane preparedness information was mailed out in early May to agencies that belong to the Professional Insurance Agents of Florida. The CD included a comprehensive disaster plan, which PIA of Florida implemented at its Tallahassee offices, including standby generators and hurricane supplies to make it possible for PIA of Florida employees to service members throughout even the worst possible catastrophe.

PIA of Florida assembled the information on the CD from a wide variety of sources, including information from the National Association of Professional Insurance Agents in Alexandria, Va.

“When the CDs went out we urged all our members to look at its contents right away and prepare for the 2005 hurricane season by following a comprehensive disaster plan,” Mary Frederick, PIA of Florida communications director explained. “It’s critical that agents implement a disaster plan-if agents fail to protect their agencies during a catastrophe, their businesses could fail.”

Information on the CD was organized into folders containing PDF and Word documents outlining pre-hurricane and post-hurricane procedures.

The Word files can be customized easily by agencies to meet their needs. These files include a printed claims log form that can be filled in manually in case of power loss, a duty roster supplied as a sample of how individual agencies can manage information, and a draft of a poster on which the member can cut-and-paste phone numbers to place on the front door or windows of the agency.

The information about the disaster plan walks agencies through a checklist describing what they should do before an emergency occurs, such as the importance of computer backups, client and carrier relations and dealing with adjusters.

According to Frederick, the CD will provide invaluable information for both agents and their clients about pre-storm and post-storm activities.

Vital pre-disaster information

Pre-disaster information on PIA of Florida’s CD, includes: a hurricane supply list, explaining how every business and household should prepare before a hurricane; hurricane tips for homeowners, a marketing piece for agents to send out to policyholders; and an errors and omissions primer describing how to deal with a catastrophe, and how businesses can be protected from an E&O claim.

Post-disaster information

“Of course we have a long list of claims numbers for all the companies, including their 800 numbers and we confirmed that they are working,” Frederick said. “Forms on the CD include the three most popular ACORD forms, to be used only after a member’s area is hit by a major storm, employee rosters and a claims log-in form.”

Practice what you preach

Frederick said the PIA of Florida office is better prepared for hurricanes this year because it follows the advice given in the CD. The office has standby generators and hurricane supplies to keep it running and make it possible for staff to service any agents in need following a storm.

Main Street America expands its independent coverage

Main Street America group has expanded its level of independent coverage this year. In years past, when preparing for the hurricane season, Steve Benaski, corporate director of Property claims said Main Street always had a primary and secondary group of independent agents to help them. Last year the firm went to a third tier as well, and the decision paid off handsomely. The same strategy will be implemented this year.

In the early spring of 2005, Benaski joined representatives of its Old Dominion insurance team and its Main Street America corporate team to meet with many of its hard-hit, Florida-based customer agents and discussed the last season. The company was able to obtain a first-hand account of what their needs are and how to better serve them in the future.

“We also held a ‘post-mortem’ after last year’s hurricane season to determine what worked well and what we could have done better,” Benaski explained. “The group consisted of a variety of internal and external stakeholders: home office claims personnel, regional claims personnel, marketing, underwriting (PL and CL), customer service reps, customer-agents and regional directors … anyone touched directly or indirectly by the hurricanes. Several great ideas were suggested at this meeting and helped us refine our processes for the upcoming hurricane season.”

Benaski said that an event like 2004 is not a claims event, it is an organizational event.

“As an organization we understand this very clearly and everyone at Main Street America is willing to pitch-in to ensure our customers are serviced exceptionally well.”

The company’s catastrophe plan has always included shifting of its entire operation to any one of several alternate locations in the event one office is shut down.

“This past hurricane season, we implemented this location shift for a two-day stretch and it was seamless to our customers,” Benaski explained. “This plan is not unique only to our Jacksonville facility, we have it in place for all claims offices. Our phone system is also very flexible and we have trained staff standing by to fill any voids.”

Plastridge geared up

Thomas E. Lynch, president of Plastridge Insurance Agency with agencies in Boca Raton, Coral Springs, Delray Beach, Palm Beach Gardens and Stuart, Fla., said that after Hurricane Frances hit last September the agency opened its Delray Beach office and used a generator to run computers, fax and phones.

“Our other offices had phone problems, so we forwarded their numbers to our Delray office and continued taking claims,” Lynch explained.

Plastridge has placed local contractors on call and they have agreed to be available to shutter all its office windows and doors. They have emergency stockpiles at each office, including water, food and office supplies. All employees have agreed to constantly update their contact information, provide their cellular phone numbers and have established plans to inform the office about how to contact them before and after storm warnings have been issued.

Plastridge, founded in 1919, has five locations in Broward, Palm Beach and Martin counties, and employs 65.

Lynch said that internally it reviewed claim procedures with the staff prior to the hurricane season; set up manager coordinator lists so it can rotate staff where needed; reviewed what is not covered-such as trees, landscaping, screen rooms, and other items-to avoid submitting claims that they know are not covered and to educate clients about these items; reviewed how to enter a claim on the computer for tracking purposes; and stressed customer service, empathy and listening to its staff.

Plastridge met with clients this year to discuss pre- and post-hurricane preparedness and suggested they build a relationship and credit line with a bank; and contact contractors, such as roofers, before the storm so they will be available after the storm to assist them.

Gateway created disaster recovery team

“We have created a disaster recovery team, not just to prepare for hurricanes, but for other disasters such as fires and power outages,” Debra M. Zambrana, Gateway Insurance Agency LC chief administration officer said.

The Fort Lauderdale firm sent an e-mail hurricane newsletter to clients a few days before the hurricane season began.

The Risk Pro Net International Inc. member created an action plan and created a branch of the disaster recovery team at each office.

“We are looking into mobile work stations, like motor homes equipped with generators and off-site storage options for our data and email servers,” Zambrana said. “We are also equipped with laptops that use wireless card connectivity.”

Underwriter lists hurricane tips

ACE Select Markets, a division of ACE USA, Disaster Mortgage Protection insurance product unit that focuses on underwriting and marketing of specialty insurance products, recently gave its representatives a list of the top 10 tips and methods to help ensure adequate protection for homeowners in advance of a
disaster.

ACE advised its agents to provide policyholders with a list of things to do in case of a catastrophe and to research additional insurance options before seasonal weather hits. Its recommendations included:

Be an informed consumer; ensure that you are fully covered and that in the event of a disaster you can pay your mortgage; know what insurance products and services are available and how they are handled; purchase supplemental insurance coverage; know the hidden costs of disaster.

In the immediate aftermath of a disaster, you may be financially affected and lose income if you’re not working. Understand your deductibles; know who your insurance agent or company is and how to file a claim; keep contact information on contractors; be aware of local government agencies that react to disasters and the scope of their responsibilities; and evaluate your risks.

Cat mobile: Jay Williams, FMS managing director; Paul Peeples, vice president of technology; and Louis Lopez, educational communications coordinator; out on the road visiting agents to determine what they needed and delivering supplies.

Mark Stichter, left, at the headquarters near the DFS set-up.

Paul Peeples, right, FAIA managing director, delivers a check to an agent in need, behind them is the CAT Mobile.

Topics Florida Catastrophe Carriers Agencies Claims Hurricane

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