Insurers Deal With Hurricane One-Two Punch

Claims adjusters are still sifting through the debris left by Hurricane Charley while a fresh line-up of likely claimants is examining the damage from Hurricane Frances. The back-to-back, yet dissimilar storms have posed unique challenges to insurers. Loss estimates due to Charley, attributed to its strength, range from $6 billion to $10 billion, while losses from Frances are estimated to fall between $3 billion and $10 billion, due mainly to the storm's large size (it was three times the diameter of Charley) and long duration. Overall, the Frances claims will likely be smaller, but more numerous, according to industry sources.

In response to this combined assault, insurers have armed themselves with several levels of technology. "All of our [member] companies have offices tied together with powerful technology and intranet hookups," states John Eager, senior director of claims for Property Casualty Insurers of America (PCI).

St. Paul Travelers (St. Paul) planned for the hurricanes using a combination of RMS (Torrance, Calif.) modeling and Weather Underground and NOAA (National Oceanic and Atmospheric Administration) Web sites to track the path and severity of wind speeds. "We could then take that information and, utilizing Microsoft [Redmond, Wash.] MapPoint, load in policy exposures to model out the initial staging of our catastrophe teams and where to place mobile headquarters," explains Peter McMurtrie, vice president of claims services.

With the combination of the two hurricanes, insurers also saw the unique challenge of evacuating adjusters working on Charley, knowing that after Frances they would have to be brought back in quickly and safely. Finding the best evacuation and staging location was critical. "Because we had an infrastructure already in place, we were able to move everyone to Atlanta, and later move additional staff into mobile headquarters in-state," McMurtrie said.

Similarly, Allstate (Northbrook, Ill.) says it had national catastrophe teams positioned outside of the state of Florida at least three days before Frances hit. They were ready to respond and began processing claims as soon restrictions were lifted from the damaged areas. Allstate has brought in 600 adjusters in addition to 600 that are currently working on hurricane Charley. "We use PC Weather Products' (Marietta, Ga.) HURRTRAK mapping software to give us an idea of locations close enough to the storm to insert people into damage areas once the storm passes, yet far enough to be out of harms way," says Bill Mellander, National Catastrophe Team spokesman for Allstate.

Loss reporting channels have been the next chief challenge brought on by the hurricanes. PCI has found that usage of the catastrophe codes assigned by Property Claims Service group (PCS), a subsidiary of ISO (Jersey City, N.J.), to organize data storm by storm expedites the process. "Loss numbers assigned by PCS help with faster delivery of data," said Eager.