When a catastrophe occurs, significantly more focus, oversight,and demands are placed on all parties involved, from medicalpractitioners and rescue workers to insurance claims professionalsand politicians.

For insurers, there is arguably no better time to demonstrateone's value and commitment to policyholders and the community as awhole. Being able to make good on such a promise hinges upon properpreparation and precise coordination of resources. Conversely, amisstep or seemingly innocuous oversight can yield disastrousresults, especially during this time of heightened need andtension.

The mile-wide, EF5 multi-vortex tornado that collided withJoplin, Missouri on May 22, 2011 created unique challenges forclaims professionals, some of who share their stories in thisarticle. Even the most accomplished engineers and claims directorsfound the aftermath before them disorienting.

“It Looked Like Hiroshima”

“Upon our arrival, the damages looked like an atomic bomb hadbeen detonated,” says Todd Klingaman, director of general adjustersat CNA, who arrived the very next morning to begin coordinating asubstantial commercial claim. “I worked the Hays,Kansas tornadooutbreak and this was entirely different. The sheer force of thestorm allowed it to level buildings.”

“The utter scope of the damages was surreal,” adds Eric Dempsey,an engineer who would arrive several days later to investigatedamages to machinery and electrical components ataJoplinmanufacturing plant. “Everywhere I looked, buildings wereflattened to the ground. The tornado had carved a path ofdestruction three quarters of a mile wide and six miles longthrough the heart of the city.”

The tornado had struck the city of 50,000 that Sunday eveningwith unrelenting force, killing 161 people and injuring hundredsmore. Winds peaked at 250 miles per hour, and the storm destroyedmore than 7,500 homes and apartments as well as 550 commercialproperties. When the twister finally dissipated, 25 percent ofJoplin had been decimated, amounting to insured losses of at least$1.9 billion.

In the wake of the deadliest tornado since 1950, as with anylarge-scale catastrophe, people were left to cobble togetherresources as best they could, all while contending with utilityoutages and assisting the wounded. Catastrophes teach us manylessons—empathy, courage, resilience, to name just a few. In theclaims realm, they teach us how to optimize response, and byextension, the quality of service to policyholders.

Critical Care

As Klingaman reveals, the commercial claim his team of expertshandled for Freeman Health System underscores how proper planningand optimal catastrophe management minimizes both monetary andhuman loss. It began when St. John's Hospital became one of thecasualties of the storm. Miraculously Freeman West Hospital,located just a few blocks from St. John's, was largely spareddamage of similar enormity but nevertheless was reeling from theimpact of the storm.

Ambulances were out of commission, and so critically injuredresidents began arriving via pickup trucks. The wounded weredropped off at the hospital parking lot, which would morph into amakeshift triage area. Dwight Douglas, general counsel for FreemanHealth System, worked alongside doctors, nurses and volunteers atthe emergency room for 6 continuous hours, and is thus intimatelyfamiliar with devastating injuries, such as severed limbs andobjects impaled in bodies.

“We handled at least 500 traumatic injuries and performed 22life-saving surgeries in about 10 hours,”Douglas explains.

With so many in need, getting the hospital functional was ofparamount importance. Douglas immediately contacted CNA, with whomFreeman carries total replacement coverage of $450 million, forassistance. “This is when you get to see if an insurance companyhas adjusters in the field with the necessary experience, and ifthe company can bring in experts who can quickly assess the damageand begin remediation,” he said.

Rapid Response

It might be fair to say that Douglas, like many commercialinsurance customers, was exhibiting the healthy skepticism requiredof a prudent gatekeeper of immense resources.

“Before [Douglas] could report the loss, we were alreadypreparing for deployment to Joplin, as we knew we would havelosses,” Klingaman says.

“One can never be too prepared,” he continues. “Make the weatherchannel your friend. You should always be informed so you can be ofservice to the policyholder immediately.”

Klingaman immediately called Todd H. Waers, a property generaladjuster at CNA, instructing him to “pack his bags.” All of thistranspired before the call from Douglas.

“When insurance agent, Scott Brothers, of The InsuranceCenterasked when we could be there, my response was four minutes as weare on the outskirts of Joplin now,” Klingaman says. “We thenidentified the key players at the hospital with the assistance ofMr. Brothers and were onsite at the hospital within an hour.”

Involving the agent, Waers and Klingaman say, is essentialbecause of the relationship already established. An insured willobviously not know the claims adjuster, so the agent can ease thecomfort level and provide assurance that everyone is acting in hisor her best interest. A trusted agent not only knows the insuredbut also the area and can therefore provide your adjustment teamwith valuable assistance.

CNA then supplied Douglas with all pertinent contactinformation—including cell phone numbers and email addresses. Thisillustrates another essential component of the catastrophe responseequation, Waers points out.

“You have to keep the lines of communication open,” he says.“Make sure the insured understands that you are only a phone callaway and will be there in person to assist. It is alsocrucial to provide regular, detailed updates, such as statusmeetings with the insured.”

Otherwise, ineffectual communication can harbor distrust. Or, asKlingaman explains, it can exacerbate the emotional toll. He alsoemphasizes regular meetings with claims staff, so as to “take careof your own” while diminishing distress, which can easily betransferred to the insured. “[You must] be there at the beginningand the end providing customer service to [your]policyholders.”

Klingaman brought in Robert Dudek, executive general adjuster,to assume handling all areas of the claim, provide ongoingdirection to the CNA adjustment team, and communicate with Douglasand his facilities' directors, the CFO and CEOs. Dudek and Waerscontinued onsite for several weeks, with subsequent onsite meetingsconducted on a monthly basis for the life of claim with allparties. Dudek's 30 years of experience brought the necessaryexpertise to keep the claim on track while helping to solidify therelationship with the insured and bring the claim to conclusion.

The 'Show Me' Phase

What Waers and Klingaman refer to as the “show me” phase waswell underway by this point. Ostensibly, this means that the claimsadjuster rightfully earns the trust of the insured, thereby takingcontrol of the situation to speed the road to indemnity and squashunnecessary hassles and expenses. In order to do this, the claimsadjuster must know how to prioritize tasks immediately, andeffectively.

There were several urgent needs that CNA addressed to ensurefunctionality at Freeman:

1. A generator for the business center housing all systemcomputers.

2. Emergency repair to 17,000 square feet of hospital roofingand other open buildings.

3. Potable water for the dialysis center and hospital.

4. Finding temporary locations to relocate destroyedoperations.

5. Drying out of rain-soaked facilities.

“Freeman had a backup generator, which had been donated,”Klingaman says. “Unfortunately it wouldn't work, so Freeman came tous at 6 p.m. Wednesday we figured out another way. Throughconnections and vendor relationships with Belfor, we had agenerator delivered, piped in and working by 4 a.m Thursday.”

Additionally, CNA contacted Vernon County Sheriff Ron Peckman toask that the Nevada-Missouri National Guard's water purificationand tanker unit be made available (if necessary), in the event thatwater pressure was not restored. Sheriff Peckman cleared thered tape and provided us with guidance on how to accomplishactivation of the Guard unit via the Governor.

“Once you earn the trust of the insured, then a good adjustmentteam can really shine,” Klingaman says. “This also means that ifyou make a promise, then you absolutely must deliver on it.”

CNA leveraged its “preferred vendor program” relationships toprovide the necessary experts to assist with the adjustment as wellas with emergency and permanent repairs to the hospital. (Thedevastation in Joplin quickly exhausted the hospital's normalresources.)

Contingency Plans

After locating emergency generators, trucks to supply the mainhospital and dialysis center with water, Klingaman and Waersenlisted the help of Bill Sutter, president and CEO of RMC GroupLLC, with whom they had a long history of successful collaborationson claims, to address the emergency repairs to compromisedbuildings.

Sutter was also instrumental in delivering on the insurer'spromise to the policyholder and quickly earned the trust of theother involved parties, which further streamlined the restorationof business at Freeman. Having worked in the trenches afterHurricane Katrina and the Sept. 11 attacks, Sutter possessed theforesight to prioritize projects effectively and secure contractorsduring a time when everyone was clamoring for resources.

“You want to believe that those you have been loyal to will getyou what you need in large catastrophes,” Sutter says. “But as wasthe case in Joplin, it turns into a first-come, first-serveproposition. Everyone you're accustomed to using will invariably beinundated.”

Because Sutter also has a varied network of contacts and experts“on call,” he was able to quickly engage roofers out of Kansas Cityand other areas to repair the buildings. This demonstrates whystaffing and resource allocation must always be a consideration,regardless of how active or relatively calm a season has been.

High-Profile Areas of Prioritization

With the added confidence that comes with working with a trustedpartner, CNA could focus on other aspects of the project. Now thatthe most urgent needs had been met—in terms of securing water andso on—the team could examine the high-profile areas of loss. WithFreeman's claim, this meant assessing the operating requirementsand impact of the tornado on Freeman's Ozark Center for Autism.

“Autistic patients are very regimented, require specialized careand stable environment,” says Klingaman. “So when the autism centerwas destroyed, we realized it was essential to minimize thedisruption and secure alternative accommodations as soon aspossible.”

Once again drawing upon established relationships, Klingaman wasable to relay requirements to trusted realtors, who could then gofull bore with a search.

The storm had impacted about 30 of 72 facilities, each withunique needs. So once a location was finalized, contractors couldmeet with Sutter to determine the best temporary solutions.

“With temporary build outs, they must be appropriate andfunctional,” Sutter says. “It is not about what someone likes, butrather based on the needs and demands of restoringoperations.”

“You bring a tent to go camping, not a motor home,” Waersadds.

Both Klingaman and Waers advise that weighing the revenues agiven book of business would normally be generating versus theexpense of temporary accommodations requires a nuancedunderstanding of a host of variables. Especially with a large-scaleloss, it is often prudent—if not compulsory—to bring in a certifiedpublic accountant (CPA).

Total Transparency

To facilitate a smooth claims process for Freeman, CNA consultedKurt E. Harms, CPA, of Buchanan Clarke Schlader LLP. Harms was thenable to create a thorough summary of all costs, accounting forcontents, extra expenses, and so forth. Harms wasable to lend more transparency to the overall process, furtherstrengthening the policyholder-carrier relationship. Duringregularly scheduled meetings, Harms helped CNA relay ongoingexpenditures and developments to achieve buy-in from allparties.

“I probably spent an hour and a half explaining how thespreadsheet works and how it is designed,” Harms says. “It provideda central point of reference to each party could check off items ona list and insert notes in Excel to confirm that we were all on thesame page.

“All of the details were broken down into eight to tensubcategories, including exterior building damage, interior waterdamage, electrical, and HVAC, personal effects, disposable items,furniture, fixtures, etc.” he adds.”

On the contents side, Kari Burke, owner and operator of TOSCO,was able to calculate real-time numbers and meet with facilities todetermine what documents and supplies had been damaged. Burkebrought in teams of people and introduced them to the heads offacilities to compile a list of the damaged, destroyed, anddisposable.

All contents data was incorporated into this master spreadsheet,which became an organic document of sorts. Initially the team beganwith educated projections and worked to agree with the insured onthe overall scope and pricing. As more specific data becameavailable, Harms would update the document, and working with hardnumbers as soon as they became available provided everyone with anaccurate reflection of costs as opposed to a theoretical one.

Large Lessons

There are so many moving parts in a large commercial claim.Here, we have covered but a few. Hopefully the case exampleprovided will spark discussion about your own claims organization'slevel of responsiveness and business acumen.

In the above example, Freeman incurred about $9 million ininsured losses following last year's deadly tornado. It is evidentthe loss would have been far greater, were it not for thesuccessful coordination and dedication of this skilled team thatrelied on individual strengths as well as each other.

Photos courtesy of Dwight Douglas, all rightsreserved.