S. Floridians Viewed Hurricane Katrina as an Expensive Nuisance

Insurance adjusters scrambled to South Florida to work on claims before they realized Hurricane Katrina was going to cross into the Gulf of Mexico and become a catastrophic hurricane devastating Mississippi and Louisiana.

Katrina slapped Dade and Broward counties with experts estimating damages from $600 million to $2 billion, depending on whom one asked. One prediction by Risk Management Solutions of Newark, Calif. estimates Florida’s damages at $2 billion.

“At this point, we are standing by,” Jeff Grady, president and CEO of the Florida Independent Agents Association told Insurance Journal. “We have sent financial aid to our sister associations in Louisiana and Mississippi and offered our assistance in supplies, manpower and additional monies.

“Their response is that the damage is still too overwhelming to know exactly what they need,” he said. “They indicated they will let us know when they have a better handle on the situation.

“In the meantime, many of our members are lining up to help and have pledged just about anything their fellow agents and citizens might need assistance with. We are keeping them at bay right now until we know more.”

FAIA contacted agents’ associations in Louisiana, Mississippi, and Alabama and has sent two checks of $5,000 each to Louisiana and Mississippi.

Vic McCarley, executive vice president of the Alabama Independent Insurance Agents, expressed his appreciation, but said for now they had the resources to handle the problems there.

Florida, in the meantime, has its own, albeit less severe, problems.

“Florida had perhaps $2 billion damage and 11 deaths from Katrina,” Jennifer Pitts, FAIA staff liaison for the Catastrophe Council, said. “Our staff contacted agents from Escambia County to Panama City to determine their needs.

“Most reported power outages and a little flooding, but were working their catastrophe plans and did not need assistance,” she said.

Pitts advised anyone needing assistance, whether in the Florida Panhandle or in South Florida, to call (850) 893-4155 ext. 328, or email jpitts@faia.com.

FAIA said Citizens Property Insurance Corp., the state’s insurer of last resort, received a record number of calls, but its staff was ready for them.

Unfortunately, Sprint may not have been. All of Sprint’s toll-free service was out throughout the Panhandle.

Apparently many of Sprint’s lines are routed through a switching center located in New Orleans. Citizens said its service returned late that night, although they cautioned it could be spotty in the Panhandle.

Miller calls Katrina ‘unusual’

“This was an unusual Category One hurricane,” Sam Miller, executive director of the Florida Insurance Council said. “Normally Cat One’s are minimal for us, but it was growing in strength and intensifying toward a Cat Two when it made landfall.”

Miller heard preliminary damage estimates of $600 million from the Insurance Information Institute. He said there are questions about whether the amount of damages include flooding estimates. After National Flood Insurance Program reports its claims the total damages from Katrina could dramatically increase, he added.

“Dade and Broward counties had a high amount of damage for a Cat One hurricane, but of course our damages pale compared to Louisiana and Mississippi,” Miller said.

“Miami’s situation is not too bad, the total number of claims and losses are manageable,” Miller explained.

According to FIC, each carrier must interpret the hurricane deductible statute in conjunction with hurricane watches and warnings and make its own determination about application of the hurricane deductible to Panhandle losses related to Katrina’s second landfall.

The statutes require that the hurricane deductible be applied only to losses from a weather system that has been designated a hurricane and during this time period, from the imposition of the first hurricane watches or warnings for Florida through 72 hours after the lifting of the last hurricane watches or warnings.

This 72-hour clock expired Sunday afternoon for the South Florida landfall. The NHC did, however, include West Florida from Destin to the Alabama line in a hurricane watch issued at 10 p.m. Sun., Aug. 28. Legally, this resets the 72-hour clock.

Statute (627.4025) reads:

(c) “Hurricane” for purposes of paragraphs (a) and (b) means a storm system that has been declared to be a hurricane by the National Hurricane Center of the National Weather Service. The duration of the hurricane includes the time period, in Florida:

1. Beginning at the time a hurricane watch or hurricane warning is issued for any part of Florida by the National Hurricane Center of the National Weather Service;

2. Continuing for the time period during which the hurricane conditions exist anywhere in Florida; and

3. Ending 72 hours following the termination of the last hurricane watch or hurricane warning issued for any part of Florida by the National Hurricane Center of the National Weather Service.

PIA of Fla. wants to share

“The staff and members of Professional Insurance Agents of Florida learned a great deal from the storms of 2004 and want to share our lessons and knowledge with anyone in need,” Mary Frederick, PIA of Florida communications director said. “We have shared access to our Hurricane Resource Center with the members of PIA of Louisiana and PIA of Mississippi with instructions to share with any agent in need. PIA of Florida’s Hurricane Resource Center is jammed packed full of disaster-related topics with access normally limited to PIA of Florida members.”

Frederick said PIA’s headquarters secured the limited permission from ACORD for all PIA agents and affiliates in the areas affected by Katrina to distribute and use three forms: ACORD Property Loss Notice, ACORD General Liability Notice of Loss, and ACORD Auto Loss Notice.

PIA of Florida staff found its Panhandle agents heaving huge sighs of relief. They called members in Escambia, Okaloosa, and Walton counties. Everyone was fine… moderate claims activity has been reported. Calls to Dade, Broward, and Monroe county members showed that claims were manageable with power and water outages here and there.

A nuisance in South Florida

Katrina came across South Florida as a minimal hurricane (Cat 1) and behaved like one, Dulce Suarez-Resnick, with the HBA Insurance Group in Miami, commented. When Katrina came through Broward and Dade county areas it was mostly a nuisance storm, especially considering the damage and destruction Katrina has caused along the Gulf Coast and New Orleans.

“Most agencies had the cat plans in place, at least I hope they did,” Suarez-Resnick said. “Overall, I think agents were prepared considering we were caught by surprise when the storm decided to move in 12 hours earlier than expected.”

She explained that Katrina was supposed to come ashore in the early morning and actually started moving in at around 4 p.m. the previous day.

“Agency principals were caught making a call on when to shut down operations and send their employees home,” Suarez-Resnick said. “Our office shut down at 3:30 p.m. and by the time I arrived home there wasn’t enough time to prepare, since the weather had deteriorated to the point that it would be dangerous to be outdoors installing shutters.”

She was at her office the next morning, ready to take claims, but was without electricity and the phones did not work. So she the staff used three old Trimline phones that were hooked up to make calls to clients and she also used her cell phone.

“Katrina was mostly a flood event in South Florida, with the exception of the trees that were blown down onto dwellings and vehicles and the strong winds in the coastal areas that caused boats to detach from their moorings,” Suarez-Resnick said.

“The problem we see is that many people went without insurance because it was either too expensive or not widely available (renters) or people who purchased new homes and were told by their lender that they didn’t have to buy flood insurance because they were in zone “X.” Well during Irene and the no-name storm the areas that flooded were zone “X” areas. We need to offer the coverage and educate the customer.

“Due to 2 percent hurricane deductibles or the insured amount, many of the claims will not be covered by insurance,” Suarez-Resnick said. “For example a $300,000 coverage, “A” deductible would be $6,000.”

Suarez-Resnick said that this helps the insurance industry, many claims will not be paid since they will be under the deductible.

“Once again the building code proved that it can withstand the wrath of a Cat 1 or 2 storm,” she said. “We need to spread the message throughout Florida and the rest of the southeastern coastal states.

“I look at the pictures from the Gulf States and most of those structures are frame construction, even some of their commercial building are built below the standards we use for dwellings in South Florida.”