Posted on 12 Aug 2010
As the fifth anniversary of Hurricane Katrina approaches, the Property Casualty Insurers Association of America (PCI) has released a white paper that highlights not only the unprecedented damage caused by Katrina throughout the Louisiana and Mississippi Gulf Coast region; but also how insurers are more effectively managing catastrophic risks and helping the public to be better prepared in the future.
“The people of the Gulf Coast and the insurers doing business in the region are resilient and remain committed to rebuilding and revitalizing the areas affected by the storm,” said David Sampson, president and CEO of PCI. “The response to Katrina was massive with more human and financial resources deployed to assist with relief efforts than for any other storm in U.S. history. The insurance industry dispatched thousands of insurance adjusters to the Gulf region to assist policyholders in filing claims and starting the recovery process. The industry paid billions in claims payments and made substantial contributions to the relief effort. This influx of insurance claims payments have contributed significantly to the ongoing recovery in the region.”
Hurricane Katrina created important opportunities for the property casualty insurance industry to assess the ways in which it prepares to respond to natural catastrophes. The white paper, “The Hurricane Katrina Experience – A Property Casualty Insurance Perspective: Five Years Later,” being released by PCI today examines the valuable lessons learned from Katrina and positive developments that have occurred since the storm.
The PCI white paper highlights the following key lessons for insurers:
· Communities and homeowners must be encouraged to reduce their risk of loss: By mitigating losses, insurance costs are ultimately lowered. Communities and homeowners must be encouraged to take actions that will lessen any potential catastrophe-related damages. Where possible, the insurance industry is working with lawmakers in establishing effective mitigation programs.
· With the experience of Katrina, insurers are better able to handle disruptions in services: As a takeaway from the storm, many insurers have done a variety of things to improve their ability to overcome operational challenges such as deploying fully functional mobile command centers to keep core services and operations running with speedy access to policyholder databases.
· Insurers are using advanced technologies to improve customer communications and service: Text messaging and social networking sites, such as Facebook and Twitter, have already become a valuable means to provide information about finding emergency services or filing claims, or simply answer questions in times of crises. Additionally, by using satellite technology, companies can locate disaster victims and reach them in order to provide assistance and assess the damages in a timely manner.
· We need to continually educate consumers about the importance of having flood insurance: Insurers are proactively educating their customers on what is covered on a property insurance policy, and verifying that their homes or businesses are not underinsured. Greater efforts are being made to encourage those vulnerable to severe windstorms and flooding to purchase NFIP flood insurance. Additionally insurers have been strong advocates for Congress providing stability to NFIP by making meaningful reforms and providing long-term reauthorization of the program.
· Continue developing and using more sophisticated catastrophe models: Moving forward from Katrina, the industry encourages the continual improvement in the science and technology of risk modeling so insurers can have the most precise and up-to-date tools available to respond to their ever increasing catastrophe exposure.
“The lessons learned from Katrina have helped to improve loss mitigation and disaster recovery efforts over the last half decade,” said Sampson. “Additionally, while the insured losses were significant, nearly $46 billion, the property casualty insurance industry has emerged from the Katrina experience on solid footing and today it is in a very strong position to fulfill its obligations to stakeholders and provide the necessary coverage to help fuel economic recovery after a major storm. Whenever and wherever storms occur, property and casualty insurers provide homeowners, business owners and drivers with the peace of mind that comes from knowing that their insurer will be there to provide a helping hand after the wind blows.”
PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $180 billion in annual premium, 37.4 percent of the nation’s property casualty insurance. Member companies write 44 percent of the U.S. automobile insurance market, 30.7 percent of the homeowners market, 35.1 percent of the commercial property and liability market, and 41.7 percent of the private workers compensation market.