One Agent's Tale Captures Katrina Woes

Like many who suffered through Hurricane Katrina and its aftermath, independent agents often ended up in as bad a shape as their policyholders. Take David Treutel Jr., who lost his Mississippi home and office while seeing his Bay St. Louis community virtually obliterated.

In trying to reassemble his own personal and professional life, Mr. Treutel–like many agents across the Gulf region–faced the added burden of fulfilling the promise every insurance agent makes to clients by being there to help policyholders become whole again.

The Treutel Insurance Agency is a third-generation business with nearly a 50-50 split between commercial and personal lines, generating about $1.3 million in revenue. The agency's nine employees worked in an office on a bluff in a portion of town that never experienced flooding in all of its recorded history, explained Mr. Treutel, the agency's owner and president.

Last Aug. 26, the office prepared for Katrina–which at the time was expected to hit Florida, he remembered. Equipment was secured, office furniture moved, and the agency catastrophe plan put in motion. Under the plan, everyone expected to be back in the office after the storm passed to begin processing claims.

The agency's computer back-up records were secured in three separate locations–the office, the Treutel home and a safety deposit box at the local bank. “On an impulse, I took the office back-up with me,” he said. “It was the smartest thing I ever did.”

His wife, Angelyn, the agency's vice president, was in Texas attending a conference. Normally, he would have stayed in his home through the storm, but his father-in-law needed to be moved. After some coaxing, Mr. Treutel, along with his teenage son, moved his father-in-law to stay with relatives 15 miles inland on higher ground. By the time they reached their destination, Katrina was raging, and they hunkered down to wait out the storm.

As Katrina passed, Mr. Treutel made several attempts to get back home, but high water and debris made roads impassable. Seven miles inland he found the highway covered with eight feet of standing water.

When he tried again the following day, he was greeted with total devastation. Debris, mud and cars were piled all over. A trip down Main Street took 30 minutes. He located the other members of his family who survived the storm, happy to be alive. His home was saturated by 12 feet of water. In the 80-degree heat, there was no fresh water, ice, power or telephones. It would be several days before there would be any water or ice.

“Five people drowned within a block of my home,” he said. “We put the body bags on the side of the road.”

At the office, on the bluff that had never seen flooding, there was a hole in the roof and about seven feet of water caused by the storm surge from the town's back bay. The office–and everything in it–was destroyed.

“The first couple of nights were the worst,” he said.

Among his family, the storm took eight homes and 15 vehicles. Fortunately, his in-laws came to their rescue, driving a caravan into town to take members out and set up housing in Mobile, Ala.

It would be four days before Angelyn Treutel arrived from Texas, bringing with her a generator and other supplies to get things running again. In the whole time, she had no communication with her husband.

Within days the Treutel Agency set up operations under a tent. Mr. Treutel spray-painted the side of the office telling clients of the new location. “They came to us in the hundreds, looking like zombies,” he related.

Among his 9,000 policyholders, there were 8,000 claims. For five months, Mr. and Mrs. Treutel, his father (David Treutel Sr., the retired scion), and all but two of his staff handled customers, working under the tent, then calling in the claims information to carriers while on the four-hour drive to Mobile, where they had secured an apartment. What was not finished when they arrived home was filed using a laptop, ending the workday around midnight. “We did that for about five months,” he said.

Hurricane Rita, a few weeks later, made her mark, blowing the tent down. It would be three months before they could secure a trailer, and not until January before they opened a new office in an actual building, including telephone service.

During those months, it was the help of some carriers and fellow agents that helped get them through their ordeal.

Safeco was one of the first to get people on the ground to help, Mr. Treutel noted. He said the company put air cards in their laptops and furnished satellite phones. The company also provided call center support. St. Paul Travelers and Progressive pitched in by furnishing cell phones. Zurich and American International Group's Lexington also provided support and assistance.

He credited Afni's “CSR 24″ system with allowing customers to call his office number, which was disconnected, then having the messages relayed to the agency over their cell phones.

Their agency management system vendor, AMS, restored the agency's information to a laptop within a couple of weeks. Mr. Treutel noted his fortuitous decision to take the back-up with him, because not only was the back-up in his home destroyed, but the bank with the third copy was flooded and destroyed as well.

Agents from Florida and Mississippi also arrived to lend a hand, and agents in Texas made donations.

However, other companies were simply unprepared, he said. In some cases, a service representative refused to take claim information verbally, saying it had to be faxed. Only when the Treutels spoke to upper-level managers who grasped the severity of the situation, and the reality that there were no fax machines to be had, did the company alter its policy.

“Some companies were flexible and imaginative, and some were not,” he said. “We had to get to authority to get through.”

There was also a lot of difficulty with the excess and surplus lines market, he said, complaining that communication was slow.

No matter how helpful, no company was fully prepared for the disaster, he went on to say, noting a wide disparity in performance. Even Safeco appeared to be surprised at how long it took to take care of the claims, he pointed out. “Some companies did not help our agents,” he said. “They need cat-response teams that know how to help.”

Claims management was also a major problem, he said, citing a shortage of experienced adjusters. The region was totally devastated, with much of the infrastructure–including signage–gone. Adjusters lacked GPS devices to help them find the locations of properties.

Many adjusters came into town, only to leave after a few weeks. Policyholders, looking for answers, had no adjuster to turn to. An added burden was that separate coverages required separate adjusters, which added to the strain, he noted.

Katrina's effects are lingering eight months after the hurricane hit. It will be two years before one of the state's major interstate bridges is repaired. There are still food tents set up by faith-based organizations to feed and support residents. Of the 15 gas stations in the area, only three are working. There is no major grocery store within 30 miles of town.

The labor force is growing as rebuilding progresses, but there are no homes to house them. Affordability will be a major issue, Mr. Treutel pointed out, since the median income in the state is $40,000.

There is also the long-term effect on mental health from the stress of the past hurricane season, and worries about the one soon to come. Tens of thousands are living in FEMA trailers that are not built to withstand a hurricane or flood.

Professionally, Mr. Treutel said his biggest fear is companies have not learned their lessons from Katrina, and that people believe things are back to normal. “There's a perception that there is no need here, but there still is a lot of need,” he added.

More company executives need to visit the region–as did the president of Zurich American–to the see the extent of local needs and understand the problems agents face, he said.

“This will happen again, and the question is will the industry respond better,” observed Mr. Treutel. “There is much we could have done a lot better. I hope we learn and repair our shortcomings, because policyholders need better and quicker response.”

As an independent agent, he said, “I'm happy I'm able to help bring back the community.” Mr. Treutel is on several boards dealing with rebuilding issues, “but I never thought in a million years that at the age of 48 I would be rebuilding my home and life.”