Insurers Activate Claims Teams in Wake of Gustav

Northbrook, Ill. — Although Gustav may not be carrying the same punch as Katrina a few years ago, if the catastrophe modeling companies’ loss estimates are correct, insurers have reason to send their claims teams down to the Gulf Coast area.

Although feared to hit landfall as a Category 4 storm with winds up to 155 mph., by the time Gustav made landfall yesterday near Cocodrie, La., it was downgraded to a Category 2 tropical storm with winds as high as 110 mph. As it plodded across northern Louisiana and east Texas, the storm dumped an estimated eight inches of rain and triggered flash floods, leaving more than 1 million homes without power due to fallen limbs and power lines.

Losses are predicted between $2 billion and $10 billion, with the higher-end relating to losses coming from oil and gas production fields along the Gulf of Mexico. AIR Worldwide, Boston, predicted losses between $2 billion and $4.5 billion, without flooding. In its latest statement, Risk Management Solutions, Newark, Calif., predicted overall losses at $4 billion to $10 billion, but did not include risk to levees in its estimate. Representatives from Oakland, Calif.-based EQECAT predict that 5% of gas production capacity to be shut off for the next year due to the storm.

State Farm, Bloomington, Ill., is pulling out all the stops with its Catastrophe Services operations. According to the insurer, its teams already are in contact with policyholders who have reported losses. Claim handling operations located in Jacksonville, Fla., and Dallas, Tex., have been ramped up with additional resources and hundreds of agents and claim employees already in the impacted areas are servicing policyholders.

In addition, State Farm's Catastrophe Team, a dedicated, mobile workforce of experienced catastrophe claim representatives has been activated, and is moving into the affected areas.

The State Farm Catastrophe Team also has the advantage of a fleet of mobile claim handling facilities designed to support the claims handling process. And the carrier has a fleet of 33 satellite-equipped vehicles that connect back to the company's home office system. These satellites can be taken anywhere and set up so that they are operational within four hours. The satellites provide incredible flexibility for State Farm's catastrophe claims operation.

State Farm has 12 mobile office facilities, ranging from a large van to a full-sized tractor-trailer (18-wheeler). Five of these are satellite-equipped. All of these vehicles allow claims representatives to set up drive-in auto claims operations wherever there are a number of auto storm claims. The company employs laptop computers with wireless air cards that provide on-line access to each of the insurer’s 1,700 catastrophe claims specialists. Within the last six to eight months, State Farm began setting up what it calls temporary hot spots within 50 to 100 feet of a leased facility or a hotel, thereby allowing State Farm claims reps total connectivity without the need to execute any hard wiring. Most State Farm catastrophe claims staff is equipped with handheld global positioning system (GPS) devices, allowing them to find policyholders even in the wake of major catastrophes that severely damage transportation infrastructure and road signage.

Allstate Insurance Co., Northbrook, Ill., intensified its Gulf Coast operations in anticipation of Hurricane Gustav's landfall, activating more than 1,000 claims adjusters, and positioning 15 mobile response units from Texas to Alabama, the company reports. This is in contrast to its efforts in the wake of hurricanes Katrina and Rita, when Allstate confirmed that it had 4,000 personnel and 30 mobile units working hurricane-ravaged areas. However, since 2005, Allstate has reduced its exposure in coastal communities.

The Allstate claims teams are equipped with generators, satellite phones, wireless data access, computers, bottled water and even teddy bears for kids. The goal, says the insurer is to enable Allstate to help customers start the claims process immediately from the affected areas, even if basic utilities such as power, water and telecommunications are not yet available.

Allstate also has made disaster-related information available to those policyholders in areas where there is power, using its online disaster information center at www.allstate.com/catastrophe and instructional videos on YouTube. The videos contain useful information and tips on what to do before, during and after a catastrophe.

Louisiana Farm Bureau Insurance, Baton Rouge, La., also made an instructional video available on YouTube.

These efforts are not without a future focus, say experts. Tropic Storm Hanna is delivering high winds and heavy rain to the Bahamas and Haiti, and a hurricane warning has been sounded for the Bahamas as Hanna heads for Cuba and the Florida peninsula.
And while Hanna closes in over the Atlantic, Tropical Storm Ike is right behind her, gaining power in her wake. Ike could reach hurricane force by the end of the week, with the Bahamas currently in its path. Behind Hanna is Tropical Storm Josephine, currently off the Cape Verde Islands. According to the National Hurricane Center, this storm could become a hurricane by Wednesday or Thursday.

Sources: State Farm, MarketWatch, PR Newswire