A millennial's guide to surviving a hurricane

Compounding the problem, the last decade has seen a historically low level of Category 3 and higher hurricanes hitting the state of Florida, the Gulf of Mexico, and the shoreline all the way up the Atlantic Coast. The media was even forced to invent a new category — "superstorm" — to make up for the lack of exciting weather events. As a result, many young brokers in the industry have little to no experience to draw upon as the Category 4 storm inches closer and closer to the coast.

Are you ready?

Your phone is ringing off the hook and your inbox is almost full. Insureds and agents are looking to you for guidance. The pressure is immense, and anything that goes wrong may ultimately land on your shoulders. It's a scary proposition, but there are measures you can take to positively influence your retail agent's experience during this turbulent time.

If you are an insurance broker placing coverage for properties located in any Tier I or II coastal counties, you should always have one eye on the Weather Channel during hurricane season. As soon as NOAA assigns a name to a weather system, your immediate concern should be the possibility of a binding moratorium. While each carrier may have different procedures and guidelines, they will all ultimately issue a moratorium if it becomes evident a named storm will hit the mainland.

Don't worry about your renewal accounts with effective dates within the moratorium, as they are not subject to its restrictions. In fact, as we saw with Matthew, the state's insurance commissioner will issue a moratorium of its own — freezing all contracts of insurance in the state to protect affected policyholders.

New business quotes, on the other hand, are subject to the moratorium. If you have a prospect insured who wants to move coverage to a new carrier for any reason (they are unhappy with the current carrier, your program would provide significant savings, etc.), you need to inform your agents of the possibility of a moratorium so they can advise the insured to bind coverage as soon as possible.

Being prepared to deal with a wide variety of disaster scenarios is a critical aspect of preparation. (Photo: Shutterstock)

Hurricane preparations

Once the moratorium goes into effect, it's time to focus on policyholders in the path of the storm. The first thing you should do is email a copy of the policy to your retail agents so they have it in their inbox, and don't have to go searching through files and folders to find it. Most policies will include a claims contact page (usually before the declarations or at the very end of the policy), so be sure to point out to your agents exactly where in the policy this information can be found. If the claims contact is not contained within the policy, you must research the carrier and find it yourself, then include it in the body of your email. A good carrier website should provide it, but in some cases you may have to make a friendly request to your underwriter.

It is also a good idea to remind your agents of the insured's duties in the event of loss or damage. While state and local authorities typically provide storm preparedness tips to residents — boarding up windows, tying down loose property, etc. — insureds may be uncertain regarding what to do if they actually sustain a loss. For example, insureds often worry about making temporary repairs to damaged property. Fortunately, the Building and Personal Property Coverage Form (and its derivatives) provides guidance regarding temporary repairs and other procedures to follow in the event of a loss.

Throughout the course of this process, remember that many young retail agents have never been through a major named storm either. They are the ones who must answer directly to the policyholders. And it is your job to assuage their anxieties. Assure them you are on top of the situation and will be available day and night to take any question they may have. Notice the use of take, and not answer, regarding potential questions agents may have.

While you should be eager to provide as much information as possible, there is an important caveat when it comes to your conversations with agents. There will be many "what if" or "am I covered" questions as the named storm approaches. Although you may be very well versed in the property insurance policy, you must remember that you are broker, not a claims adjuster. If you attempt to interpret coverage regarding a hypothetical loss, you are putting yourself in a vulnerable position should your advice differ from the final decision of the adjuster.

Instead of offering an opinion, find the section in the policy related to the hypothetical loss and email it to the agent. That provides them with the relevant information without exposing yourself to an E&O liability claim.

Related: Hurricane deductibles: How much do homeowners know?

In the aftermath of a hurricane, policyholders may be unsure of what to do and will look to their agents and brokers for guidance. (Photo: Shutterstock)

After the hurricane

When you get to work the day after the hurricane makes landfall, don't be surprised if your inbox is virtually empty. Many people who evacuated from the target zone haven't returned to their homes and businesses. Areas hardest-hit by the storm are often without power for a substantial period of time. And in many cases, agents themselves live in the path of the hurricane and may be experiencing the same devastation as their insureds. It may be wise to wait a day or so before following up with your agents regarding any potential damage.

Related: What homeowners and insurance agents need to understand about El Niño

While you should appear eager to help, it's important to understand that sometimes your assistance simply isn't needed. Many large agencies have inside departments solely dedicated to managing claims. The entire claims process — from filing the initial loss to receiving the final check – should not have to involve the broker at all. Insureds and their agents deal with the insurance carrier via an in-house adjuster, an independent or third-party administrator (TPA). But many of the smaller agencies have neither the staffing nor resources to manage claims, especially during a large-scale CAT event. They may be counting on their broker to guide them through the claims process, giving you an opportunity to provide value-added services that will set you apart from the competition.

Hurricane claims

Insurance carriers with large coastal property exposures have procedures in place and often increase the number of adjusters in the hurricane's projected strike zone. But even with all of the preparation, things can get quite chaotic after a highly destructive storm makes landfall. Networks and other systems may go down. It may take longer than anticipated to get ahold of a representative; and longer still to obtain a claim number. The assigned adjuster may be reassigned multiple times and other claims-related issues will be out of your control.

A broker's job is to educate agents on the potential pitfalls so they aren't caught off guard. Instead they will appear proficient and practiced — speaking with confidence when explaining to their policyholders why things don't appear to be going as planned. This will go far to reassure an uncertain insured.

Once the initial shock wears off, the insureds will find themselves in a vulnerable position, wondering what to do next. It's a scary place to be. In the aftermath of a major storm it may take several days before an adjuster can make it out to survey the damage. In the meantime, policyholders — including property managers — will look to their agents for guidance, providing yet another opportunity for the enterprising broker.

Policyholders often worry that making temporary repairs will somehow jeopardize their insurance contracts. Advise your agent to provide the insured with the "Duties in the Event of Loss or Damage" section of the ISO coverage form. It will explain that insureds must "take all reasonable steps to protect the covered property from further damage."

Reading from the policy verbatim may seem simple and obvious, but many policyholders need to be convinced that it is okay to act. To ensure they will be reimbursed for the repairs, have their agent advise them to take before and after pictures, and to keep all relevant receipts.

Another topic worth discussing involves the large number of contractors and other vendors who sweep into town following the hurricane. The law of supply and demand necessitates their arrival, and they do provide a service for people in serious need. But for an insured who wants nothing more than to be made whole again as soon as possible, they can also pose a major dilemma. Agents should know that minor temporary repairs are permitted, but major wholesale reconstruction must wait until an assigned adjuster surveys the damage and provides the green light to move forward. The insurance carrier must protect against catastrophe-related fraud. While this may irritate the policyholder, it's better than having a claim denied.

Things should settle down in the weeks following the storm as those affected ease back into a sense of normalcy. Now that the insured is working directly with the adjuster while coordinating repairs, a broker needs to set expectations for his clients. The agent and insured should understand that the insurance carrier or TPA is working overtime to settle each claim. However, payment may not arrive in the policyholder's expected timetable for a number of different reasons. The sheer volume of claims in the wake of a major hurricane tends to slow the process down for each individual policyholder. A prolonged repair schedule may postpone payment as the adjuster waits on receipts to file his final report.

The structure of the policy itself may also be a contributing factor. If the insured has a "per building" named storm deductible and say 30 buildings sustain damage, then the adjuster must individually adjust each separate building to see if the damage exceeds the per building deductible. While this policy provision ultimately benefits the insured, it does add additional time in comparison to policies with a "per occurrence" deductible.

The presence of a separate wind deductible buydown policy may further complicate things, resulting in multiple adjusters and insurance carriers.

Insurance is a relationship business. A natural catastrophe presents an astute property broker with many opportunities to strengthen relationships with clients. The goal is to provide valuable service during each step of the process.

Andy Houston (Andy_Houston@rpsins.com) is a senior property associate broker with Risk Placement Services, Inc. Special thanks to Wayne Leshynski, area senior vice president for Risk Placement Services, Inc. for his assistance.