Smothering The Flames

These are huge figures, especially when compared to recent loss history. For instance, the Insurance Services Office's Property Claim Services unit reported that combined catastrophe claims for 2007′s entire third quarter barely topped $1.13 billion. It seems certain that those levels will be reached just by this singular event, not to mention any winter storm activity that could rear its head before the end of the year.

Historically speaking, the October 2007 wildfires already rank as one of the top three most costly in history, according to the Insurance Information Institute's (I.I.I.) figures. Only the Oakland Hills fires in 1991 and the Southern California conflagrations in 2003 ranked higher. But despite the high dollar figures being floated, international rating agency Fitch Ratings said that insured losses are expected to be within the level of losses anticipated by carriers when pricing catastrophe risk into premiums. This was confirmed by the I.I.I. soon after the fires began to burn out.

"The homeowners' and commercial markets in California are generally healthy and competitive, and for the most part events like [these wildfires] are already factored into rates," said Dr. Robert Hartwig, president of the I.I.I. "Despite the magnitude of the loss, this event is well within the range of what insurers anticipated and, in and of itself, should not drive up rates."

Hartwig also seemed ready to squash fears about policy cancellations and insurer withdrawals — similar to those seen on the Gulf Coast following Hurricane Katrina — before they got out of control.

"There is no homeowners' insurance crisis in California," assured Hartwig. "Insurance is widely available and affordable throughout the state, although one or two insurers out of many have decided to reduce their exposures in the area by not offering policies to new customers."

Implementing a Plan

But when the California Department of Insurance (CDI) issued an emergency declaration allowing non-CDI licensed adjusters — typically those adjusters from outside the state — to legally work claims in California, it was clear how large the catastrophe was becoming, and how necessary temporary housing was going to be. But some temporary housing providers had their own issues with which to deal.

"We had to evacuate the office for a day," said Scott Aimone, president of DMA Insurance Housing Assistants, a temporary housing firm that has its national placement center located in the heart of San Diego. "It was the closest I have seen them come. The fires actually hit a corridor that was headed right where our headquarters is located. We're a couple miles from the ocean, but some of the reports said that if the winds persisted, the fires were going to keep moving until it hit sand. That was a little intense, having them right in your backyard."

Ultimately, DMA escaped the fires, but they faced another potential disaster: handling a flood of new business. Handled poorly, new business from the fires had the potential to alienate victims and complicate the work of insurance claim professionals. But Aimone said that he learned something from his past experiences with wildfires and quickly implemented a plan.

"We increased our hours and our staff tremendously — at one point, we had doubled our staff and set it up in a way that it's not going to decrease the level of consistency in our product," said Aimone. "In other words, the people we were bringing in who may not have been as fully trained as others were handling lower-level responsibilities, then handing it up to someone who had more experience. So the level of our product remained consistent and we were able to handle the large volume."

Aimone said those and other techniques were developed during the devastating Southern California wildfires of 2003, which occurred in almost the same areas as this year's fires and caused even more damage. But because DMA documented their experiences four years ago, they were able to seamlessly implement the processes and procedures and avoid getting caught off guard, even as they faced disaster themselves.

Who's Number One?

So having a plan prior to and during times of natural disasters is essential. Claim professionals and temporary housing specialists should all be working toward alleviating the stress of the claimant and policyholder. This was a function insurance companies seemed to accomplish particularly well during and immediately following the wildfires.

"There was definitely an increased presence of insurance professionals," said Aimone. "I was right in the heart of one of the heaviest hit areas in Rancho Bernardo [in San Diego], and the caravan of mobile homes that insurance companies were bringing in, the signage that was being displayed — just the attempts by insurance companies to make themselves visible — was really impressive. There were advertisements taken out in the local papers and other media by most of the carriers, which provided a flood of information."

Getting the claim paperwork started is a crucial first step, but finding temporary housing for fire victims should be the next. Some of the wildfire victims literally had nothing besides a burned-out frame of a house. Claimants suffered through a traumatic experience, often sifting through ash and rubble in an attempt to find personal belongings and memories that could be salvaged. Thinking several steps ahead to figure out where they're going to sleep for the next day, week, or month is difficult for most to comprehend. That's where temporary housing experts can be best utilized, and they can work quickly and smartly.

"I think it's extremely important to move fast," said Aimone. "You get that sense of urgency from insurance professionals on two levels. First, it's just restoring the comfort level to the policyholders so that they can focus on putting together inventory lists and trying to line up a contractor to begin the rebuilding process. Second, it's important to arrange for housing that matches up with the insured's former lifestyle before the inventory is completely dried up."

Aimone noted that moving a family into a hotel when they are accustomed to living in a house can exacerbate an already stressful situation. It could be noisy or uncomfortable, and things like kitchens and dining rooms are usually absent, keeping insureds from attaining some kind of normalcy in their lives again. So while it might be easier and quicker to take this approach, claim professionals should make finding a living arrangement that suits each individual situation their ultimate goal. But everyone involved — policyholder, adjuster, and temporary housing provider — must be willing to move quickly.

"There is that sense of urgency of just getting something secured before someone else comes along," said Aimone. "[Policyholders and adjusters] should see a place in the morning and not the afternoon because by the afternoon, 10 other families could have seen it and your insured might be out of luck. We had about 1,500 homes destroyed in a relatively small area, so getting a place that you can secure was very important."

Aiding Adjusters

Oakwood Worldwide, another California-based temporary-housing provider, also took a creative and timely approach in order to get claimants into suitable homes that offered comfort and amenities beyond hotels, which can lack things like kitchens and dining rooms.

"We reached out to partners in the relocation real-estate industries this year," said Toni Andell, director of insurance sales and business development at Oakwood. "With the home market being the way that it is and homes having a hard time selling, we reached out to these companies because we knew they had the inventory, and sellers might be interested in renting out their homes to fire victims. Customer service to us means thinking about all different aspects in order to get customers back into some kind of house, if possible."

Andell agreed with Aimone about the importance of having a temporary-housing plan in place. In times of disaster, her company makes every attempt to ease the workload of catastrophe adjusters and make the process of finding and tracking housing as easy as possible. Given that many adjusters are handling hundreds of claims at a time in an emotionally draining and stressful environment, it's a welcome relief.

"We make plans with adjusters and catastrophe teams to sit next to them at catastrophe and evacuation centers, which helps the hunt for suitable housing begin smoothly and immediately," said Andell. "We also have an online portal in which adjusters can call, e-mail, or submit online their requests. But because they're so busy, most are just calling them in. We input the information they send into a system where they have online access to it at anytime, day or night."

Once the information is uploaded, Oakwood keeps files updated with information that tells adjusters the status of their claims and tracks all notes and activity so adjusters know who the company communicated with and at what time. To handle the increased activity and avoid being inundated, Oakwood relies on its 60 other offices located throughout the nation by implementing a roll system. This involves forwarding calls to less-busy offices located out of harm's way, and staff members are ready with scripts and back-up plans to ensure customer satisfaction — from both an adjuster and claimant perspective.

"It's really important to be sensitive to the families and work with them and hold their hands," said Andell. "But it's also important to reach out to adjusters, and that starts with pre-planning. We were able to get the insurance catastrophe teams placed in temporary housing so that they could reach out to their policyholders faster. It's the pre-planning and knowing what you need to have ready to go in order to be successful in order to get people into homes quickly."

It's evident that no one can completely prepare for a disaster that moved as fast as the Southern California wildfires. But having a plan and a partner in temporary housing will go a long way towards getting insureds back to some sense of normalcy as quickly as possible.

"We didn't wait until October to start a relationship process," said Andell. "They're built all year long, and we plan all year long. We recap after every disaster and find ways to improve every system we have, because there are always ways to hone best practices. We have to keep that in the forefront, especially in California, because you have to be prepared."