Posted on 28 Nov 12 by Annie George
When Hurricane Sandy took an unusual left turn and plotted a path to crash into New York and New Jersey, executives at American Collectors Insurance did a double take; the storm was bearing down on a region where the classic car insurance agency has an "incredibly large" concentration of business, said Laura Packard, the company's vice president of sales and marketing.
"As soon as it did make landfall, we realized what a major, critical incident this would be to so many of our own policyholders," Packard said.
The two states are among the agency's top 10 for business volume, and Packard singled out its business on Long Island in New York and the coastal New Jersey shore communities. The fallout from Sandy, which brought with it massive surges of corrosive salt water that flooded vintage cars, has proven to be unprecedented, topping even what the agency saw following 2005's Hurricane Katrina.
"We've taken more claims in the past three weeks than any three-week period in our 36-year history," Packard said. "This is by far the largest event the collector car industry has seen."
Sandy made landfall on the evening of Oct. 29 just southwest of Atlantic City, N.J., as a post-tropical cyclone, according to catastrophe modeling firm Air Worldwide. RMS estimates that Sandy could rack up insured losses up to $25 billion.
Packard declined to speak in specifics about claims figures and written premium levels because the company is privately held. She did say that about 96% of the claims the company has seen are from flood driven by storm surge. The few other percentage points are claims from trees crushing garages and the like, she said. The company writes classic car insurance on Assurant Specialty Property paper.
"Salt water immersion really does equate to a total loss, in most cases," Packard said.
American Collectors typically gives their policyholders first dibs on buying back salvage and often the company gets taken up on it, Packard said. Policyholders typically do this in non-flood claims and it's usually because of sentimental value, she said.
"With the Sandy claims, we are not seeing quite as many people as eager to buy back the salvage and that's because people understand how corrosive salt water can be and how expensive a restoration can be to get that car where it needs to be to make it safe," Packard said.
After the winds from Sandy had calmed and moved on, the agency sprung into action. From the chief executive officer down though the company ranks, a personal phone call was made to every policyholder reporting a claim and the effort was well received, Packard said.
"That's the lesson that we walk away with from this; dollars and cents aside, having compassion and personal contact really goes a long way," she said.
Classic cars aren't the only niche insurance line to be greatly impacted by Sandy. The Boat Owners Association of the United States is estimating more than 65,000 recreational boats were damaged or destroyed by the storm. The estimated $650 million in total damage to recreational boats makes it the single largest recorded loss, the association said.
The storm also has the potential to be the largest auto cat the U.S. has seen. Kevin J. O'Donnell, president and global chief underwriting officer for RenaissanceRe Holdings Ltd., made that statement during a recent conference call and executives from New Jersey Manufacturers Insurance Group have agreed with it.