Ariz. Director of Ins. Visits Claims Facilities in Wildfire Area

July 9, 2002

Arizona’s director of insurance, Charles Cohen, recently visited Show Low, Ariz. to inspect the on-site catastrophe claims facilities of the four largest homeowner and auto insurers in Arizona: State Farm, Farmers, Allstate, and American Family.

As of July 3, those insurers had been in contact with the majority of their policyholders and had opened more than 1,700 claims related to the fires. Insurers expect a relatively small percentage of these claims will prove to be total losses. Claim payments are already being made for eligible living expenses and in some cases, for damages caused by smoke or slurry.

The four insurers have one or more catastrophic claims facilities set up in Show Low and the surrounding areas. The insurers advised that the special facilities and staff will remain in the affected area as long as needed to effectively deliver services related to the fires.

“Because of the extraordinary magnitude of this disaster, I felt it was important to get a firsthand look at the catastrophe claims operations of the major property and casualty insurers,” said Cohen. “I am pleased to report that I am satisfied and even impressed with the level of commitment and service being delivered to policyholders in the impacted areas. I was glad to see strong evidence that the insurance industry understands its obligation to provide the coverage and service that their customers have paid for and have a right to expect in this time of need.”

At the time of the onset of the Chediski-Rideo fire, all four of the insurers inspected placed a temporary moratoria on new business in the affected areas. However, these companies all indicated they will return to their ordinary underwriting and new business policies as soon as the immediate crisis has passed.

Cohen added, “I am very concerned about the moratoria placed on new business by insurers in the area of the Chediski-Rodeo fires. A cessation in selling new insurance coverage while a loss is actually occurring is understandable, but should be a temporary and restricted as is absolutely necessary. I was glad to hear from all of the insurer representatives that I spoke with that these moratoria will be short-lived and will be terminated after the immediate crisis is resolved. I remain concerned about the future of the homeowners and fire insurance markets in this area. The department will monitor the situation closely so we can react as needed as the market after-effects of this fire develop.”

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