Before Hurricane Katrina, Gillis, Ellis and Baker Insurance, a New Orleans-based independent insurance brokerage that writes casualty insurance, liability benefits, health, employment, risk management and seismic vessel coverage, had offices across the street from the Superdome-today half of GEB’s employees are scattered between Texas, Georgia and points-in-between, while the other half are busy taking claims in a 24-foot by 60-foot single-wide emergency recovery mobile unit parked in Baton Rouge, La.
Anderson Baker, president, said GEB began taking claims by turning data over to an outside entity while Agility Recovery Solutions of Charlotte, N.C., set up his operations in a mobile unit in Baton Rouge, La.
“During the interim we had a service take our claims and forward them to our carriers,” Doug Mills, GEB chief operating officer explained. “We were happy to come to this trailer this morning and find a note attached saying, ‘We are glad you are here, it gives us hope.'”
Baker said that after all the 2004 hurricanes, GEB rethought their disaster recovery plan and chose Agility Solutions to get them back in business.
GEB Insurance, an Assurex Global partner, wrote $45 million in premiums at its downtown New Orleans office in 2004. Eighty five percent of its business is commercial and 15 percent personal.
Concerned about other agents
“A few of my very good peers at other agencies did the same thing,” Baker explained. He said an overwhelming majority of agents affected by Hurricane Katrina did not subscribe to Agility, or as far as he knew, any other service.
“Because I know them well and they are good, professional associates of mine, I hope they made other arrangements-but I am fearful that is not the case,” Baker said.
Business lifelines, provided by Agility Recovery Solutions through all types of disruptions, enabled GEB to access equipment and share its critical disaster experience. Agility maintains distribution centers with more than $35 million in computer equipment in stock and maintains access to more than 100,000 constantly available mobile units. Agility works with its members to tailor their disaster recovery plans individually through a consultative approach and client preparedness plan. GEB signed up for its services in advance and therefore Agility was ready and able to respond on an instant’s notice.
Back in business
GEB began taking claims from its 4,000 customers Sunday, Sept. 4, with 12 to 18 employees manning the banks of phones in the air-conditioned mobile recovery unit. Baker said GEB will take claims and forward them to carriers seven-days-a-week, at least 15 hours each day.
GEB has been in business since 1933, and has developed a close relationship with their clients for more than 25 years.
“Without Agility I would be sitting around staring at television all day, knowing that there is nothing I could do,” Baker said. “Being set up in an emergency trailer gives me a purpose in what I am doing right now and what I am doing with my life by being able to do what I promised my customers I would do.
“This is the only time we have to deliver our product,” Baker explained. “Of course we can issue Certificates of Insurance all day long, and our customers often think that is good service, but that’s not service compared to what we are encountering now-and without Agility I would be unable to fulfill that promise. We would be absolutely dead and our clients would suffer.”
Many businesses without recovery plans
Bob Boyd, president and CEO of Agility, estimates that almost 70 percent of the businesses in the United States do not have a backup recovery plan.
“In the wake of a disaster like Hurricane Katrina, statistics indicate that about 68 percent of the businesses affected will not survive because they do not have a backup recovery plan in place,” Boyd explained. “If an insurance company does not have a way to recover their business, if they do not have their data backed up, if they do not have a place to go, or a place for phones to ring and cannot respond to claims-they are going to lose those customers.
“Hurricane Katrina had a monumental impact on the region. Right now we are recovering 10 companies on the Gulf Coast, insurance companies, construction companies and associations,” Boyd said. “We have had representatives in the affected area since Sept. 1 when we started receiving calls for help and have been recovering people since then.”
Agility has been assembling its single-wide, and double-wide mobile units with generators, air-conditioning, high-tech equipment, satellite systems and teams to assist the large number of people displaced in Louisiana, Mississippi and other Gulf Coast states.
Agility’s first goal was to establish campuses to house its clients in Baton Rouge, and other parts of Louisiana, as well as Mobile, Ala. Boyd said some clients have moved to secondary sites they had set up in other areas, such as Chicago.
“Even if they weathered the storm, even if they find a place and can get back into business, a month from now, those customers are going to go someplace else, to another physical location,” he said. “It is vitally important to get back into business quickly, to get into contact with customers and let them know you are there for them.”
To put the magnitude of the disaster caused by Katrina into perspective, Boyd said that when 9-11 occurred, Agility had a total of 17 declarations, all of which only involved shipping equipment to clients that were able to recover at their own facilities.
“With Hurricane Katrina, there isn’t any infrastructure, we are going to end up deploying 10, 15, 20 or more mobile units,” Boyd estimated. “When it is all over we will probably end up recovering 30 companies. It will dwarf any recovery effort that has ever happened to the industry, and on a completely different scale.”
He said Agility has created a place for people to work and live and that it will do this over and over.
“It couldn’t have been done if Agility hadn’t been around for 17 years and had relationships with FedEx and other essential companies and able to get through the Federal Emergency Management Agency,” Boyd explained. “FEMA was not letting anyone into Mississippi without a pass, we really relied on resources we had developed over time.”
“As an agent, and if I can round up my employees, I am confident we will get through this, survive this and deliver what we promised to our clients,” Baker said. “I hope I have a city to insure a year from now and there are lots of people like me who are going to get back and make it happen.”
Baker said that how long it takes to get everyone’s claims settled will depend on what the policyholder decides to do. He said a lot also depends on how their policy is worded and whether or not they have to rebuild to be fully compensated.
“If they decide to move on and don’t rebuild, they could be penalized,” he explained. “An insurance policy isn’t written to let you torch your house and get paid for it-it is designed to permit policyholders to be put back whole-which means you get a new house there.”
Baker said he was sure there is going to be some leeway and some interpretation to the policy, probably in the insured’s favor, but said there will be a lot of his clients who simply don’t want to live in New Orleans any more.
Baker said he can foresee there will be lots of discussion about which claims are due to flood and which are due to wind.
“Definitions have pretty much been determined by the law, but I suspect this will be resettled after this process,” Baker said.
He explained that the typical homeowner living in New Orleans is often asked about flood insurance, and in many cases it will be required to take out a mortgage. But in many areas that are not considered to be a flood zone, the insurance is not mandatory.
“Every spring we send out a letter to each of our policyholders saying it’s time to check up on your flood insurance coverage,” Baker said. “And we have many policyholders who read that letter and say, ‘We’d better get some.’
“While flood insurance is something you are aware of, a lot of people who do not live in a flood zone, that are in Zone C, simply do not buy it,” he explained.
When New Orleans is rebuilt Baker thinks it will be very different.
“The local is going to see a changed city. It will not be the slow, carefree city it used to be, it will be on guard, it will be wary,” Baker said.
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