Filed Under:Agent Broker, Commercial Business

How the insurance industry prepares for hurricanes

A convoy of 10 power company trucks, seen near Zion Crossroads in Gordonsville, Va., are heading for the staging area ahead of Hurricane Matthew. (Contributed photo: A. Stoppe)
A convoy of 10 power company trucks, seen near Zion Crossroads in Gordonsville, Va., are heading for the staging area ahead of Hurricane Matthew. (Contributed photo: A. Stoppe)

Hurricanes always generate a certain dread as well as excitement within the insurance industry.

While insureds may be boarding up windows and packing to leave the area, adjusters may be packing to enter those same areas as soon as the damage is done.

Some are getting ready to go to areas that get struck to handle an onslaught of claims, remaining adjusters will have to handle extra loads, and underwriters will enforce moratoriums and refuse new policies within a given areas.


One of the first things that happens when a storm is building is the enforcement of moratoriums on new business. Most carriers have guidelines providing that once a tropical depression, storm or hurricane watch or warning has been issued by the National Weather Service, coverage can’t be written until a certain number of hours after the watch or warning expires, usually anywhere from 24 to 78 hours. This is to avoid a person buying insurance because the applicant needs coverage immediately.

The moratorium may apply to increases in coverage as well. Also, the declaration of a state of emergency or announcement of evacuation for part of the state may trigger a moratorium by a given carrier.

The moratoriums generally apply to property policies, either home or commercial. Some carriers will still write Auto liability policies as those coverages are not affected by storms.

Underwriters are key

Underwriters are the key employees when moratoriums are put in force. It’s their job to know the territory the moratorium affects, and to be sure that no policies within that area are written during the time of the moratorium.

Flood policies have a built-in waiting period of 30 days before coverage takes effect. This avoids having to put moratoriums in force for any given storm in any given area. Flood policies also have a particular definition of flood, so not every situation is covered even with a flood policy.

Related: NAPSLO’s push continues to get Flood bill to the finish line

South Carolina evacuation Hurricane Matthew

South Carolina State Troopers, right, lead the first wave of cars evacuating on the reverse lane of Interstate 26 Oct. 5, 2016, as traffic headed towards Columbia, S.C., near the Remount Road overpass in North Charleston, S.C., in advance of Hurricane Matthew. (Photo: AP/Mic Smith)

State insurance departments

Insurance departments play a part in storm preparation and clean up as well. They may issue moratoriums restricting the canceling or nonrenewal of policies that suffer damage from the storm, or they may restrict cancellations or nonrenewals to a small percentage of the book of business.

Restricting cancellations and nonrenewals ensures that individuals don’t lose their insurance coverage due to one storm. After Hurricane Andrew, Florida took such steps. Even so hundreds of thousands of homeowners lost their coverage, leading Florida to create a carrier of last resort.

In event of a large storm, there often aren’t enough adjusters in the state to handle the volume of losses. Insurance departments that require adjusters to be licensed will issue special provisions to allow extra adjusters to enter and work in the state to help settle claims.

South Carolina has already issued such a bulletin because Hurricane Matthew is predicted to impact the coast and could be a category 2 or 3 storm at the time. Tropical-storm and hurricane-force winds are expected, as well as flash floods and other hazards. This bulletin is in effect until further notice, and the state is referring interested adjusters to its website for further information.

Related: 20 most helpful state insurance websites

Drone surveying earthquake damage in Italy - Hurricane Matthew

Firefighters operate a drone to survey damages in the church of the village of Cossito, central ItalyAug. 27, 2016 following the devastating earthquake that struck a mountainous region of central Italy. Drones are expected to be used in a similar manner to survey damages in the aftermath of Hurricane Matthew. (Photo AP/Andrew Medichini)


Adjusters are impacted the most when storms occur. They’re required to know the policy coverages and exclusions, and be able to explain them to insureds. The availability of GPS and navigation systems makes finding insureds much easier. Before GPS, adjusters were using paper maps and trying to find roads when the signs had been blown down.

Adjusters may have a company-issued go kit: a jacket with the company name and logo clearly displayed so that insureds can identify representatives, drafts that can be written onsite and given to insureds for immediate expenses, flashlights, tape measures and other tools that may assist in reviewing damaged areas. Adjusters also need access to copies of the policies for reference to ensure coverage is available. Often adjusters are located out of the storm area to have access to electricity and other necessities that may be out of service.

Traveling adjusters are not the only ones under duress. Adjusters that remain behind suddenly have double the workload, as they are covering for the losses that occur at the home office. They may be adjusting claims in areas they don’t normally handle and working with unfamiliar policy language.

Drone potential

Drones have the potential to make adjusting in storm areas much easier and faster than before. Allstate has already used drones to inspect hail damage in Texas. After a hurricane drones can be used to access areas that are restricted by local authorities or too dangerous for adjusters to enter until some cleanup has occurred. Other carriers are almost certain to start using drones in the aftermath of Hurricane Matthew if it hits as predicted.

Public adjusters face different issues. Some states restrict public adjusters from approaching insureds for at least seven days in a disaster area. (For example in California it’s a felony for public adjusters to do so.) This is to prevent public adjusters from taking advantage of insureds at a particularly vulnerable time. Although public adjusters represent the insured, they receive anywhere from 2 to 35 percent of the insured’s settlement, with an average of 15 percent.

Related: Adjuster tools for water losses

Home Depot - building materials - Hurricane Matthew

In this photo taken Aug. 15, 2011, Tom Malone lashes building materials down to his truck at a Home Depot store in North Little Rock, Ark. It’s common for building materials to be in short supply in storm-damaged areas as people try to make repairs or rebuild. (AP Photo/Danny Johnston)

Other issues

Once the adjusters have processed a claim and issued payments, repairs are the immediate issue. Insureds are required to make temporary repairs to protect property as much as possible.

What many don’t realize is that these temporary repairs may have to last longer than a few days due to lack of available contractors to do the work and materials to do the repairs. Prices are then driven up by supply shortages against a large demand. Insureds may have to stay in alternative housing for a longer period of time.

Agents and company staff in the area will have to deal with their own losses while handling those of their insureds as well. Agents should have data on their customers backed up and stored safely so they can access the information to assist adjusters and insureds.

Agents and adjusters will need to find places to set up shop, and that may be some distance away. Agents will have to be able to communicate with staff and see that they have a safe place to work. Adjusters may have issues with lodging and rental cars.


Insured misperceptions are an enormous problem. Many don’t read their policy nor pay attention to warnings from the Federal Emergency Management Agency (more commonly called “FEMA”) or states that Homeowners’ policies don’t cover damage from floods. When a storm occurs and their claims are denied, they blame the industry.

Explaining lack of coverage to insureds is a daunting task that adjusters and agents face anytime there is a major storm. The state insurance department may be swamped with complaints for things that are clearly excluded in the policy.

Related: With Matthew coming, you may need a hurricane attorney

View our full coverage on disaster risks and recovery for Hurricane Season 2016






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