Regulators and legislators respond to Katrina Losses
As state insurance regulators mobilize to help consumers, a Louisiana legislator and a representative for Pan-American Life Insurance Company are offering details of the slow rebound in the aftermath of Hurricane Katrina.
The legislator, Shirley Bowler, R-Harahan-La., says she has concerns that state catastrophe funds and private solutions may not be enough to encourage insurers to write business in her area and, consequently, an optional federal charter could be a better alternative.
The reason, she explains, is an optional federal charter could make it possible for companies to more easily write business in many states, diversify their risks, and thus, be more willing to write business in states like Louisiana.
Bowler says that such coverage is critical for the area because of the devastation experienced in New Orleans and the surrounding areas. “We’ll be a long time recovering from this,” says Bowler, a state representative for the New Orleans suburb. “The loss of life is devastating,” she adds.
“My district experienced mostly wind-driven claims,” says Bowler. While her area was on high ground and did not experience flooding, “there is not one building that does not have roof damage,” she continues. Wind even ripped off brick siding from some homes, she says.
In spite of the devastation, she says that in the 3 times she has returned to New Orleans there are signs of improvement such as progress in restoring electricity. And schools in Jefferson Parish, adjacent to New Orleans, are slated to reopen on October 3. Bowler says several supermarkets have reopened.
But even so, there are still practical issues that area residents face. For instance, she says, that receiving mail may be a problem because of the number of requests to have mail forwarded. Right after the storm, she says she requested to have mail forwarded to Baton Rouge and has not received a piece of mail to date.
The issue is one that could impact insurers and state regulators as they try to get regular payments such as annuity, disability, workers comp and structured settlement payments to consumers who are now displaced or relocated.
Bowler says she has heard reports of insurance claims adjusters being displaced from hotels by disaster relief teams from the Federal Emergency Management Agency. If this proves the case, it makes it more difficult for people to file claims because they need the adjuster’s opinion in order to make a FEMA claim, she explains.
Pan American Life, New Orleans, one of a number of life insurers directly impacted by Katrina, continues to make progress in reestablishing normalcy, says Tom Richert, director of marketing.
A total of 300 of 450 employees have been contacted, up from 150 employees last week, he says. Efforts continue through newspaper ads, contacted employees and the establishment of a new communications platform to reach employees that have not been contacted, Richert says.
A teleconference for 200 employees was held on Sept. 8 from new Dallas offices, he says. In addition, the company is in touch with the Louisiana insurance department and all rating agencies, Richert adds.
He says offices have been established in Baton Rouge, Dallas and Philadelphia, although he asserts that the company will return to its headquarters in New Orleans. “We are a New Orleans-based company and we will be back there. It is our home.” That home, according to Richert, did not sustain major damage. Electric power is restored and network servers were able to be moved to Pan-American’s temporary locations so that business continues normally, he says.
The company is also in the process of establishing a new communications platform, Richert adds. That platform will reach employees, managing general agents, their brokers, employers and employees with employee benefits programs, and individual policyowners, he continues.
Additionally, Richert says a fund is being established for the company’s employees who are in need. Pan American’s CEO, Jose Suquet, is pledging $10,000 and other senior managers, company vendors and business partners will also be asked if they want to contribute, he adds.
State insurance regulators who started to marshall their resources right after the Hurricane blew through the South, continue to organize their efforts.
Louisiana Insurance Commissioner J. Robert Wooley says commissioners are receiving industry input in preparation for the release of emergency orders that is both practical and coordinated. The emergency orders are scheduled to be released on Sept. 16, he adds.
Wooley says department representatives are visiting shelters to try to make contact with people who need help with insurance questions. A number of state insurance departments including Texas and Utah are also taking such action, he says.
Assistance can be offered in helping a Katrina victim establish contact with the victim’s insurer, he continues. In some cases, electronic fund transfers are being made to banks near shelters so that victims have immediate access to cash, Wooley continues.
Wooley says he is working with the New York insurance department to determine how it handled payment of death claims when there was no evidence of death such as a body. And he says he is in touch with the Florida insurance department to learn about how it responded to a record 4 hurricanes that hit the state in 2004. What he is learning he says, is that initial consumer inquiries are more informational, with questions in the subsequent 3-4 weeks more focused on problems.
Wooley says there might be instances in which policies are lost or unreadable because of flooding and access to policy information may be available through lending institutions with which consumers have mortgages. But, he continues, in order to access this information, it will be necessary to establish confidentiality agreements with the Department of the Treasury and the Office of Financial Institutions.
Most consumer questions are currently focused on water and wind damage to property rather than on life or accident & health issues, says George Dale, Mississippi insurance commissioner.
The department is working on issues such as making sure annuity contract holders without addresses get paid and life insurance payments on the lives of deceased who cannot be identified or found are made, he says. Dale cites instances where a post office and courthouse with records have been blown away.
Kevin McCarty, Florida’s commissioner of the office of insurance regulation, says the devastation experienced by Florida in the wake of 4 hurricanes including Ivan, is still not of the magnitude of Katrina which has scattered thousands of people across different states.
Florida created an e-storm system to respond to insurance hurricane issues in the state, McCarty says. One of the functions of an insurance department in the aftermath of a disaster is to act as a conduit, he explains. This system will be set up at shelter locations and manned by insurance department staff to help Katrina refugees connect with insurance companies, he adds.
If an insurers’ or an agent’s business location is destroyed, there is usually a continuity of business plan in place, he says. A database is usually backed up in another location, McCarty adds. And, even smaller companies have these plans, he says. Virtually all of the homeowners’ companies McCarty is aware of have such a plan, he says. If an agent’s business is destroyed, records are most likely available through the home company, he continues.
McCarty says regulators’ response to Katrina makes a good case for state regulation on a number of counts including the ability to collect data uniformly and to work collaboratively.
The experience of disasters including the Oklahoma bombing, the World Trade Center attack, hurricanes in Florida and earthquakes in California, have prepared regulators to reach out to consumers, he says.
“We’ll be a long time recovering from this. The loss of life is devastating.”