Business Insurance

Login  |  Register Subscribe



cbVid =

Matthew Lerner

Past storms taught adjusters to keep one step ahead of disaster

Firms learned to use planning, technology to deploy experts more efficiently

March 30, 2014 - 6:00am

Storms Teach Insurance Adjusters

A street and business in Hoboken, N.J., flooded after Superstorm Sandy in October 2012. Businesses constituted about 13% of Sandy-related claims but accounted for about 48% of insured losses, according to the Insurance Information Institute Inc.


Superstorm Sandy reinforced the need to get claims adjusters on-site with the right information as quickly as possible to get the recovery process moving for commercial and personal claims.

“You can never be fast enough, and we certainly had our challenges during Sandy and to a lesser degree (Hurricane) Irene,” said Bud Trice, vice president of catastrophe services Crawford & Co. in Atlanta.

“One thing that happens after every event is that you go and look back and ask, "What could we have done better here?' “ said Melanie Elias, associate vice president and director of claims at Minuteman Adjusters Inc., a claims administrator in Farmington Hills, Mich.

A historical lack of catastrophe activity in the affected areas may have contributed to response problems after Sandy, said Mark Nixon, president of the National Association of Independent Insurance Adjusters and principal of his own independent adjuster, St. Louis-based Nixon & Co. Inc.

Sandy's storm surge in 2012 presented great challenges because of the sheer number of people affected and those who were displaced and seeking lodging.

“All those people had to go to hotels, as did the Red Cross, Federal Emergency Management Agency personnel and claims adjusters,” Mr. Trice said. “It was kind of an exponential creation of the problem.”

National need but state regulation

Licensing reciprocity also delayed adjusters' arrival on the scene (see related story).

“The industry — and the market and the nature of the business — has gone national, but it is regulated on the state level,” said David Farber, counsel to the American Association of Independent Claims Professionals and a partner at King & Spalding L.L.P. in Washington. “The minute Sandy happened, you needed the nation's claims adjusters to come to New York to adjust thousands of claims. The need was national.”

One thing that helped Crawford navigate the post-Sandy devastation was sending adjusters to potentially affected areas before receiving claims assignments.

“With any large operation, we will typically marshal our forces in a certain place,” where adjusters get software updates, temporary ID badges and state-specific or client-specific briefings. For both Irene and Sandy, that place was Richmond, Va., said Mr. Trice.

In 2011 during Hurricane Irene, “we had a wide territory affected, and we were concerned we would send adjusters to the wrong location, and we were overly conservative in not releasing adjusters from Richmond until ... we knew demand existed in Maryland, or Connecticut or wherever,” said Mr. Trice.

A post-performance review, however, showed claims lagging as much as a full day in some states. That prompted Crawford to change its approach and release adjusters early, even if they had to be rerouted later.

“For Sandy, we were resolved to change that and to get a little lead,” said Mr. Trice. “We gambled and made a decision that we were going to send people to Connecticut and, if they (had) to drive back south to New Jersey, so be it.” But the thinking was “let's get them in place as quickly as possible before the losses arrive.”

The strategy “paid off,” he said. “From a statistical perspective, our contact times and inspection times were within reason from Virginia to Boston.”

Expedited electronic information handling helped streamline the process, Ms. Elias said.

“We looked at ways to get the information from the field faster,” Ms. Elias said. “What a lot of these independent adjusters have done now is set up systems so that if we need to check on where they are with a claim, we can just dial into their systems to see.”

Adjusters also learned lessons from Hurricane Katrina in 2005.

“After Katrina, when ... nobody had enough people to put on the ground, a lot of the independent adjusters started going out and recruiting and training more staff to have people on standby,” said Ms. Elias. Sandy and other storms reinforced the lesson that adjusters also need to be on standby for the Northeast, she said.

Mr. Trice also sees advantages of technology and information sharing, noting the faster “speed with which we received loss assignments in Sandy over the speed with which we received them with Irene and certainly prior hurricanes like Ike.”

“There is a time lag from the time that an insured hangs up the phone with its insurer until that claim reaches us,” said Mr. Trice. “That time lag was drastically shortened during Sandy. Why? Technology. We were taking feeds directly off insurers' systems.”

Irene and Sandy “were significant events hitting densely populated areas where there had little really not been a whole lot of history of those kind of catastrophes,” Mr. Nixon said.

“I know that some concerns that I heard from members and nonmembers were about having the resources and having the ability to source enough additional staffing and manpower to answer the calls they were receiving,” he said.

He said areas around the Gulf Coast that have more frequent tropical storms probably are more prepared for large-scale events.

 



Get our weekly Broker & Insurer newsletter
  •  



You may also want to visit

P/C Insurers

Claims Services

Catastrophes