By Phil Zinkewicz

Whenever a catastrophe hits—hurricane, earthquake, fire, tornado, even terrorist attack—independent insurance agents and brokers are usually on the front lines of the relief effort. In 1992, when Hurricane Andrew landed in Florida, independent agents and brokers not only moved to have claims paid as quickly as possible, but they rolled up their sleeves and delivered supplies to areas badly hit by the hurricane. Last year, when four hurricanes hit Florida in quick succession, again agents were there to push through claims and to make certain that victims had the wherewithal to keep going. The same has been true of nearly every catastrophic occurrence.

Hurricane Katrina was no different in terms of agents continuing to do their jobs under adverse conditions. However, Hurricane Katrina’s devastation affected not only home owners and businesses, but their agents as well. This time around, insurance agents in Louisiana, Mississippi and Alabama lost their offices as well as their residences. They needed help from their colleagues in other states. And they got it.

A week after Katrina hit, J. David Daniel, a Louisiana independent insurance agent, spoke before the House Financial Services Committee. “I informed the committee that agents and brokers in Louisiana, Mississippi and Alabama have gone beyond the call of duty, despite their own personal losses, to serve the policyholders who need help,” Daniel said. “A number of independent agents have lost their own offices and homes, but have been literally working around the clock to set up makeshift claims processing centers on their porches, in tents and trailers, or getting out on the ground to serve the public. More than 100 insurance agencies in New Orleans have been affected, including my own, and it has just be amazing watching these agents, who are facing their own adversity, help their customers put their lives back together.”

Tommy Huval is CEO of the Lafayette, Louisiana-based The Huval Companies/Brown & Brown, located 135 miles from New Orleans. Shortly after Katrina hit, he described the situation in the Lafayette area this way: “Aside from the typical tasks associated with a storm—operations up and running, handling claims, etc.—we’ve had to deal with so many displaced people. We’ve had people living at our home. My brother has had 15 people living at his duck hunting camp. My father has seven people living at his fishing camp and our accounting manager in Baton Rouge has had up to 22 people living in her home. Virtually every hotel in South Louisiana from west Mississippi to east Texas is occupied. In the early days after the storm, the areas around Baton Rouge and Lafayette felt ‘commandeered.’”

Almost immediately following Katrina, agents’ associations began efforts to assist their member agencies. The Independent Insurance Agents and Brokers of America (IIABA) initiated a Katrina Relief Fund to which the IIABA contributed $100,000 to start. The Big “I” sent hundreds of catastrophe packs to the Louisiana, Alabama and Mississippi state associations for distribution. The catastrophe packs included logo items for agents to use in the field, windbreakers, ponchos, flashlights, hard hats, clipboards, polo shirts, t-shirts, duffle bags and more. InsurBanc, in collaboration with IIABA, put together a special loan program for qualifying agency principals affected by Katrina. InsurBanc, the four-year-old bank developed jointly by the Big “I” and W.R. Berkeley Corporation, is offering special pricing on short-term loans for hurricane-related expenses.

The Independent Insurance Agents and Brokers of Louisiana (IIABL) also worked feverishly to assist agents and brokers by setting up Web sites for agency emergency contact information, claims information, claims reporting, catastrophe information and agency assistance resources. Among those resources were assistance to agencies that were dislocated because of the hurricane in finding office space, a list of job opportunities for agency employees laid off because of Katrina, and volunteers who offered to help with claims.

In addition, the IIABL worked with insurance companies to address important consumer and agency issues, such as claims administration, coverage problems, requested grace periods for agents to pay accounts payable to insurers, requests to insurers that they provide agents with low interest loans for rebuilding or recovery, among other things. The IIABL also worked with Insurance Commissioner Robert Wooley and his staff at the Louisiana Department of Insurance on Emergency Regulations 15 and 17, which provides important consumer and agency protections in the aftermath of a catastrophe.

The National Association of Professional Insurance Agents (PIA National) also moved into action in the wake of Katrina. The PIA issued a call to members of the association from across the country to offer temporary housing assistance as needed to independent agents in the areas damaged by Hurricane Katrina. “Now is the time for all PIA members to come to the aid of their fellow agents,” said PIA National Executive Vice President and CEO Len Brevik when the PIA effort began. “Everybody knows that PIA members are local agents who help local people. We are asking members of the PIA family to pull together to help their Gulf Coast colleagues who are working to assist their clients in this time of need.”

From its headquarters in Alexandria, Virginia, PIA National immediately began to coordinate the relief effort with PIA state affiliate offices in Louisiana, Mississippi and Alabama. The PIA provided $100,000 in assistance to the three state affiliates hit by Katrina.

Moreover, PIA National contacted state insurance regulators and federal authorities recommending they ease certain insurance regulations that apply to insurance claims processing to assist consumers beginning to cope with the aftermath of Hurricane Katrina. On behalf of PIA affiliates in Louisiana, Mississippi and Alabama, PIA National transmitted a request that the appropriate state departments of insurance issue the following actions:

• Direct that for a specific period of time, insurers should suspend insurance premium payments for all affected insureds for property and casualty as well as life & health insurance, both personal and commercial lines.

• Authorities should work with insurers to suspend for some period of time—either in whole or in part—account current insurance premium payments from directly affected insurance producers.

• No insurance company should charge interest for periods of time in which insurance premium and/or account current payments are suspended.

• Direct suspension of all cancellation and nonrenewal notices issued and require coverage to be continued for a specific time.

• Include all the insurance producer trade associations in all consumer contact efforts.

• The Federal Emergency Management Agency (FEMA) should modify claims adjustment procedures to reflect the realities of this event.

• State departments of insurance, FEMA and insurers should coordinate to declare specific geographical areas as “total losses,” especially for private homes, allowing total claims payouts to proceed.

• As much as possible, all insurance-related recovery teams (state, federal and private sector) need to home-base in the same close geographical area just outside the devastation in each state to engender maximum effectiveness in coordina-tion among all.

• Make sure that toll-free phone lines are working in affected areas.

• Be sure that all insurance-related recovery units also have with them all the general state-federal recovery information, locations and contact information to share with all consumers with whom we come into contact.

Both IIABA and PIA National have supported an effort to call on Congress to adopt and fund a coordinated natural disaster catastrophe program. Daniel of the Big “I” said that independent agents and brokers should support a national solution for natural disaster risks, much as they support federal involvement in terrorism insurance. Specifically, Daniel expressed the Big “I” support for H.R. 846, the Homeowners’ Insurance Availability Act, introduced by Rep. Ginny Brown-Waite (R-Fla.). Patricia A. Borowski, senior vice president of PIA National, said: “The widespread devastation caused by Hurricane Katrina serves as an awesome reminder that neither one state nor a regional grouping of states can fund or support a catastrophe reserve fund. A national program for natural disasters has been discussed for many years. The time to create one is now.” *