August - the heart of hurricane season.The hurricanes during August 2005 changed the insurance industry. In fact, with experts predicting a number of storms in 2006, carriers are taking action-developing tools and programs-to help their customers through natural disasters, especially hurricanes.

The Department of Atmospheric Science at Fort Collins-based Colorado State University anticipates 17 named storms forming in the Atlantic basin between June 1 and November 30. Nine of the 17 storms are predicted to become hurricanes, and of those nine, five are expected to develop into intense or major hurricanes (Category 3, 4 or 5) with sustained winds of 111 miles per hour or greater.

Blue Cross and Blue Shield of Louisiana, The Hartford Financial Services Group Inc. and Travelers, a business of The St. Paul Travelers Companies Inc., are three insurers that launched new customer programs for the 2006 hurricane season.

CLAIMS HISTORIES AVAILABLE

After Hurricanes Katrina and Rita struck its state, Blue Cross and Blue Shield of Louisiana's first response was to make drug claim histories available to its members. That expanded into providing members with a report of the medical care they received over the past three years from physicians, hospitals and labs-a claims record that could be vital to their care in the aftermath of a natural disaster.

"Claims-based health histories are valuable resources for our customers year-round, but they are even more important during hurricane season," says Ob Soonthornsima, senior vice president and CIO at the Baton Rouge-based, state-owned health insurer.

In the event that a hurricane causes a customer to evacuate and seek medical care from unfamiliar doctors, the records give the new doctor an overview of the patient's medical conditions and care received. "They have a record in their hands of every health care procedure, surgeries performed and prescriptions filled in the last three years," says Soonthornsima.

The health histories are drawn from claims filed with Blue Cross and Blue Shield of Louisiana and provide information from each episode of care, including diagnosis and treatment. Customers can access their records online through the insurer's Web site or by calling the company's customer service department and completing a verification process.

The histories are also accessible to physicians within the Blue Cross and Blue Shield of Louisiana plan. If, for some reason, a customer can't communicate with the insurer, the physician can call in and a customer service representative will verify that the customer is legitimate and make the information available, says Soonthornsima.

The record can even go with the customers if they choose to leave Blue Cross and Blue Shield of Louisiana.

"We believe that the consumer owns this (record), and to support this principle we had to make sure the information was portable as well," says Soonthornsima. "This is why the claims are Web-based and can be printed or downloaded," he notes.

The claims histories were made available in October 2005, and since then, 5,000 claims histories have been accessed by customers and doctors, according to Soonthornsima.

"This is very doable and the kind of thing I like to see," he says, pointing to the histories' clinical value at point of care for emergency situations. "I'm willing to bet that within the next 18 to 24 months, you'll see more and more of this (kind of service) being made available."

EMERGENCY CLAIMS CARD

The Hartford also wants to make the claims process a little easier for its customers during disasters, which is why the Hartford, Conn.-based insurer launched an emergency claim card in June.

In addition to traditional checks and electronic fund transfers, insureds of The Hartford's who sustain losses from a natural or man-made disaster can receive money for certain covered expenses-smaller, but vital, day-to-day living essentials-with an emergency claim card.

The emergency claim card is a debit card, issued by New York-based JPMorgan Chase & Co., that can be used at ATM machines to withdraw cash-or at stores that accept point-of-sale purchases. Point-of-sale purchases require a personal identification number (PIN).

According to Juan Andrade, executive vice president of The Hartford's property/casualty operations' claim organization, the use of a PIN with the emergency claim cards creates security for customers. "Some people try to take advantage of the chaos after a natural catastrophe, but with our emergency claim card, a stolen or lost card is of no use to anyone without the PIN," he says.

In a catastrophe, upon review of the claim, the cards are issued by company claims handlers directly to customers at a catastrophe site or the nearest accessible location. Within 24 hours the claim handlers activate and fund the card through a secure Hartford online Web interface with Chase.

The Chase interface was built last year when The Hartford introduced electronic funds transfers to hurricane victims for additional living expenses, says Jeff Rehor, assistant vice president and controller of claim financial in The Hartford's P&C operation. "We were able to leverage existing technology from the bank, as well as the technology we to support our electronic funds transfer."

The cards have no value until they are activated by the Hartford, says Rehor. "That's important to protect against fraud if the card is lost or stolen. In most cases, the card is activated within a few hours. Customers can call us to verify when funds are available," he says.

BUSINESS PLANNING

Individual policyholders aren't the only ones insurers are focusing on for hurricane relief. In June, Travelers, a business of St. Paul, Minn.-based The St. Paul Travelers Companies Inc., released two online tools to help its commercial customers create disaster recovery plans to ensure optimum business continuity in the event of exposures from natural or man-made disasters.

The first tool, "Disaster Preparedness and Business Continuity Management," is a collection of Travelers' existing risk control documents, such as "A Strategy Guide and Sample Plan for Business Continuity Planning," technical bulletins and checklists incorporated into a CD-ROM. Among the topics:

  • Hurricane preparedness.
  • Natural disaster protection, response and recovery.
  • Property and equipment recovery guidelines.
  • Health precautions.
  • A general overview of business continuity planning.
  • FEMA emergency management guide for business and industry.

The second tool, called "Open for Business," is available to Travelers' customers via the Disaster Preparedness and Business Continuity Management CD or on the insurer's Web site.
This Internet-based tool-made available by the Institute for Business & Home Safety (IBHS), Tampa, Fla.-is designed to help small- to medium-sized businesses create disaster recovery plans as well as mitigate natural disaster risks.

"Many businesses lack a business continuity plan. For those that do, their plan is not formal or tested," says Marty Henry, vice president, Travelers' risk control. "Statistics (such as those from American Red Cross) show that as many as 40% of small businesses do not reopen after a major disaster, such as a flood, tornado or earthquake. The benefit of this tool is to ensure that these customers do not end up in this category-by helping them create their own disaster recovery plans."

Users register and log-on to the site, enter their business location's ZIP code, and a list of natural disaster risks that exist in that area appear on the screen. After choosing a disaster risk, Open for Business guides the user through questions pertaining to property owners or renters.

"The recovery plan is customized to help businesses recover their essential business functions and to inform individual employees about their responsibilities," says Henry.

Is Your Business Prepared?

Customer service during a disaster may be important, but insurers and agencies need to protect and help their own businesses in these times too. The Florida Chamber of Commerce, Tallahassee, Fla., provides free emergency e-mail protection service available to all Florida businesses during the 2006 hurricane season. The "Digital Disaster Preparedness" service is available to companies that have an Internet domain name and request the service online-a process that is designed to take less than 10 minutes.

Developed in cooperation with AppRiver LLC, a Gulf Breeze, Fla.-based business e-mail security services provider, the "Digital Disaster Preparedness" service will protect and preserve e-mail traffic if businesses' IT infrastructures are vulnerable to hurricane-related damage.

"Businesses can avoid disruption to their e-mail traffic for the duration of any outages at no cost by taking advantage of this service," says Blake Gehres, chief technology officer, Florida Chamber of Commerce.

Florida businesses can sign up on the Digital Disaster Preparedness section of Florida Chamber's Web site at www.floridachamber.com or the AppRiver's Web site at www.appriver.com.

Once a company signs up, AppRiver will monitor that company's e-mail server activity. If the receiving server is down for any reason, AppRiver will begin queuing the business' incoming e-mail messages in one of its Tier 1 data centers located in Texas, Virginia and England until the company's e-mail servers are fully functioning or the company asks for its e-mail to be redirected elsewhere. E-mail messages can also be made available online at the user's request. The service, which also includes free spam and virus filtering, is available from June 1 to October 31.

Is Congress Prepared?

Karen Clark, president and CEO of Boston-based AIR Worldwide Corp. told members of Congress and their senior staff in June that a single future hurricane or earthquake has the potential to cause insured losses in excess of $150 billion and total economic losses approaching $500 billion. Clark participated in a seminar at the U.S. Capitol Building hosted by the Congressional Research Service titled "Insuring and Mitigating Risks of Large-Scale Disasters: Is Federal Disaster Insurance Needed?"

"There are many potential natural catastrophe scenarios resulting in insured property losses exceeding $100 billion," says Clark. "Examples include a Category 5 hurricane making landfall in Miami, which could result in insured losses of more than $130 billion, and a large magnitude earthquake in the Central U.S., which could result in insured losses of more than $150 billion."

Clark provided an overview of the financial threat posed to insurers, policyholders and the economy as a whole by increasing insured property values in high-risk areas. AIR estimates the total value of properties has roughly doubled over the past 10 years and expects this trend to continue in the foreseeable future.

"There is a 1% probability of an insured property loss exceeding $100 billion this year," says Clark. "That may appear small to some, but the probability of experiencing this loss or greater over the next 10 years is almost 20% when the continual growth in the number and value of exposed properties is included."

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