Although damage from August's Hurricane Charley was still beingassessed when this issue of Claims went to press, preliminaryestimates of insured losses were just over $7 billion, making itthe second most expensive hurricane in United States history,according to the Insurance Information Institute.

Despite the losses suffered by thousands of Floridians, theinsurance industry and local government agencies were well preparedto deal with the aftermath of the Category 4 hurricane's 145 mphwinds. The state of Florida's Department of Financial Servicesimmediately deployed its Mobile Response Unit to southwest Floridato assist policyholders in filing insurance claims and resolvinginsurance problems.

“Volunteers from across the state are helping out with immediateneeds,” said Tom Gallagher, the state of Florida's chief financialofficer. “Local and national support organizations, including theRed Cross and FEMA, are coming together to ensure that food, water,and shelter are available. It's now our job to make sure thatinsurance claims are paid quickly and that no one takes advantageof storm victims.”

To curb price gouging among vendors responding to damages fromTropical Storms Bonnie and Charley, a toll-free hotline wasestablished. “Unfortunately, there are those who would seek toprofit from the misery of others,” said Attorney General CharlieCrist. “Anyone who seeks to charge unconscionable prices for vitalgoods should be warned that they will face the full force ofFlorida law. We encourage Floridians to report suspicious priceincreases to the hotline. Price gouging will not be tolerated.”

Florida law prohibits extreme increases in the prices of suchcommodities as food, water, hotels, ice, gasoline, lumber, andequipment necessary for use as a direct result of an officiallydeclared emergency. An unconscionable commodity price is defined asrepresenting a “gross disparity” from the average price of thatcommodity during the 30 days immediately prior to the emergency.This applies unless the increase is attributable to additionalcosts incurred by the seller or to national or international markettrends.

Violators of the price-gouging statute are subject to civilpenalties of $1,000 per violation, up to a total of $25,000 formultiple violations committed within a single 24-hour period.

The state also issued an emergency rule banning public adjustersfrom requiring cash up front to adjust claims for victims ofHurricane Charley, and limiting public adjuster fees to 10 percentof the claim amount. The emergency rule also gives consumers up to14 days to back out of a contract without penalty.

“By limiting fees, it's our hope that homeowners and businessowners dealing with the aftermath of the storm know what to expectand aren't scammed and gouged financially by public adjusters'inflating their fees,” said Gallagher.

The insurance industry wasted no time dispatching more than2,000 claim adjusters into the area, according to the FloridaInsurance Council. The final adjuster force may be double thatfigure, once the association has completed its count. Claimadjusters were equipped with state-of-the-art technology to enhancemobility and to get to victims most affected by Hurricane Charley.In addition to wireless laptops, cell phones, and mobile offices,adjusters navigated with GPS to reach customers, even if streetsigns and landmarks had been destroyed.

“The real story is how our insurance adjusters are armed withtechnology to overcome obstacles and challenges in the field,” saidSam Miller, executive vice president of FIC and industryrepresentative for Partners in Recovery. “The result is thecombination of person power and technology that's ensuring we canreach and help victims of this devastating calamity.”

Although insured losses attributable to Hurricane Charley willbe considerable, the final tally could have been much worse.Updated analyses of the storm's structure indicate that thehurricane's wind field was more compact than expected and that thestorm's intensity decreased more rapidly than predicted, accordingto Risk Management Solutions, a provider of catastrophe riskmanagement services. Radar and infrared imagery suggested that thestorm's radius to maximum wind was less than 6 miles at landfall,substantially smaller than expected for a Category 4 hurricane. Thelatest RMS data indicates that Hurricane Charley has the smallestradius to maximum winds of all storms on record in Florida.

“On average, a hurricane's strongest winds would be located 20to 25 miles away from its center,” said RMS meteorologist KyleBeatty. “But this can vary significantly between storms and evenduring the evolution of a single storm system. Wind speedobservations indicate that Charley's swath of damaging windsnarrowed abruptly just before landfall.”

Insurers expect insured losses resulting from Charley's landfallto be much less severe than those resulting from 1992's HurricaneAndrew. “Hurricane Andrew hit a densely populated area and covereda wide swath, while Hurricane Charley was much more compact and itstrail of destruction was much narrower,” said John Eager, seniordirector of claim services for the Property Casualty InsurersAssociation of America. “While the wind damage is high, companiesare seeing a much smaller grouping of water damage claims, whichlikely means that the individual losses will not be as high, onaverage, as they were with Andrew in 1992 or Hurricane Hugo in1989.”

Residents along the southern U.S. coast also have benefited fromconstruction and design advances made since 1992. “Homes andbuildings that implemented improvements in building constructionand roofing design weathered the storm much better than olderstructures,” said Eager. “Those who suffered damage to their roofsshould talk to their insurer about replacing damaged roofs withnewer, wind resistant shingles, and Florida homeowners who may beconsidering a new roof should take a lesson from Charley and usethe new designs when selecting their next roof.”

Although a number of insurers were ruined in the wake of Andrew,the industry is more optimistic about Charley. “While formidable,Charley falls generally within the range of catastrophic risk thatinsurers anticipated and built into insurance premiums forhomeowners and businesses in hurricane prone areas,” said RobertHartwig, chief economist for the Insurance Information Institute.“I would not expect the storm by itself to have a significanteffect on the availability or cost of insurance in Florida.”