Isaac Prods Insurers to Shift Into Proactive
Hours after the Navy destroyer USS Cole was bombed in Yemen on Oct. 12, 2000, killing 17 American sailors and injuring 39, the families of members of Navy Federal Credit Union likely didn’t know that much more was going on behind the scenes on their behalf.
Mike Retelle, CUNA Mutual Group claims manager and disaster team leader, recalled how some of the sailors killed or injured may have had insurance policies running through the $49 billion Navy Federal in Vienna, Va. It turned out that some did.
“That same day, we contacted life and disability,” Retelle said. “As soon as we identified who was dead or injured, we handled the claims even before the families started notifying us.”
Retelle said it’s this same proactive approach that CUNA Mutual takes when it comes to handling natural disasters such as tornadoes and, recently, Hurricane Isaac as well as man-made ones like the Sept. 11 bombings and the attack on the USS Cole.
As Isaac churned in the Atlantic Ocean, Retelle and his team kept a close eye on the handful of possible tracks the category 1 hurricane could take. When it looked like Miami and Key West would be the focal points, CUNA Mutual started contacting credit unions that were in the storm’s path to remind them to hunker down and to immediately let the disaster team know of any early wind or rain damage, no matter how minor. Phone numbers and emergency procedures were given out.
“Severity is in the mind of the beholder,” Retelle said. “We want them to contact us early because if power goes down, the system can be gridlocked.”
As Isaac moved through the Gulf toward Louisiana, the disaster team and a field force dispatched ahead of the storm to find out which credit unions were likely to be impacted. As it turned out, many of the state’s credit unions are not located along the coastline. Still, there were two credit unions that sustained major flood losses to their branches and seven experienced damages to their interiors, roofing, siding, windows and signs, according to CUNA Mutual.
Retelle said that during hurricane season, his team of about roughly 30 managers from several divisions will start watching the coast of Africa where many of the storms form. Isaac was not a major storm compared to others, but because New Orleans is 80% underwater, flood losses will add on to the estimated $500 million to $2 billion in damages to homes and other properties. The storm also took its time moving across the region before heading up into Arkansas, where tornadoes were among the threats.
As of Sept. 5, CUNA Mutual had received an estimated $250,000 in claims, Retelle said. A little over 6,000 credit unions have property and casualty coverage with the company. While flood damages fall under federal guidelines, CUNA Mutual can assist policyholders with the processing of those claims, he added.
Indeed, Isaac’s floods will be the majority of claims filed through the National Flood Insurance Program, said Blythe Lamonica, chief communications officer for the Louisiana Gulf State Insurance Information Center in Baton Rouge. At press time, there were still areas of the state that were not accessible due to flood waters.
Lamonica said many of the insurers in Louisiana have a windstorm, named-storm or hurricane deductible on homeowners’ policies. These deductibles can range from 2% to 5% of the total insured value of the property. Louisiana is unique in that this deductible is applied on an annual basis, she noted, adding a homeowner who sustained damage from Isaac will likely have to pay this deductible. Louisiana Commissioner of Insurance Jim Donelon estimated that Louisiana Citizens Property Insurance Corp., described by Lamonica as the state’s insurer of last resort, will pay claims from Isaac totaling less than $75 million. The insurer has a 2% hurricane deductible on its policies, except for properties below the Intracoastal Waterway, which have at least a 5% deductible.
“The claims reporting process has been moving along with no reports of problems from companies,” Lamonica said. “Many of the insurers were in place, ready with mobile units, prior to Hurricane Isaac making landfall. Once it was safe to move into the impacted areas, the companies partnered with local media and other agencies to help spread the word about the mobile sites across the state.”
Back in Florida, as officials with the Republican National Convention in Tampa, Fla., rearranged the schedule of events, Quorum Insurance LLC was also watching Isaac’s track. The Tampa-based agency represents several regional and national insurance companies and serves nine credit unions.
“Fortunately for the Tampa Bay area, Isaac was virtually a nonissue,” said Kim Brubaker, vice president and chief operating officer for Quorum. “We had some heavy rains and wind, but no severe damage in or around the area where we’re headquartered. I did not see an increase in new claims from our major property insurance carriers.”
Quorum does not adjust or administer claims but acts as advocates for its credit union member clients should an issue arise as they are working through the claims process, Brubaker said. All of the insurance agency’s current credit union partners are headquartered in Florida, but one has a few branches in Alabama. Quorum is also licensed to do business in Georgia, North Carolina, South Carolina and Tennessee.
“Hurricanes are a constant and major challenge for insurance agencies and companies doing business in Florida,” Brubaker said. “The climate has still not completely recovered devastation of Hurricane Andrew 20 years ago. Each new year, a new hurricane season is a reminder of what could happen again to residents in our state.”
Because of those threats each year, Quorum strives to educate and advise members on the things to look and ask for to make sure they are adequately protected, Brubaker said. The firm has an annual campaign each spring to promote the benefits of flood insurance to its clients. Quorum’s long range plan is to be the insurance broker of choice for credit unions across the country.
Retelle said CUNA Mutual also takes a proactive approach by conducting webinars, holding risk management training sessions at leagues and helping credit unions plan for what-if scenarios. For instance, if a key person on staff is incognito after a storm, what would be the next line of instructions. Or, what happens if the credit union makes it through a hurricane but its sponsor company sustains heavy damages.
When checking on credit union in advance of a major storm, Retelle said he’s noticed a kindred theme.
“Credit unions are notorious for saying, ‘Don’t worry about me but you might want to check on the guys next door.’”