Three weeks after Hurricane Sandy slammed into the New Jersey coast, New Jersey Manufacturers Insurance Group has fielded more than twice the amount of claims the company got from Hurricane Irene, according to company executives.
The company, which writes nearly all of its business in New Jersey, as of Nov. 20 had tallied 49,191 claims due to Sandy, according to Scott Markulec, the company's director of personal lines and ceded reinsurance. Homeowners claims number 40,388, while there are 8,803 automobile claims, he said. The company got about 22,000 total claims from Irene.
Claims reporting has fallen off since the time just after the storm, but Markulec said he expects the total number to crest 50,000. Markulec said it's difficult to say what variety of destruction a storm like Sandy would typically bring to the state, because there is not a lot of precedent, but the company did expect to field more homeowners claims than auto.
"New Jersey has a long history of not having storms like this," Markulec said. "Other than Irene, which was inland flooding, you'd have to go back to 1903 or 1904 that even resembles Sandy."
Markulec said the most common claims for home damage has been wind and falling objects. He said storm surge, which is excluded from a standard homeowners policy, is also a culprit, and is contributing to auto losses. Markulec said a large portion of the company's reported auto claims are due to flood, which has been a greater issue for the company with Sandy than it was with Irene.
Markulec agreed with a statement made last week by Kevin J. O'Donnell, president and global chief underwriting officer for RenaissanceRe Holdings Ltd., when he mused that Sandy could be the largest auto catastrophe the United States has seen.
New Jersey Manufacturers Insurance Group writes an overwhelming percentage of its overall homeowners 97.6% and private passenger auto business 98.3% in New Jersey, according to BestLink, A.M. Best Co.'s online financial system. The group in 2011 wrote homeowners direct premiums in New Jersey of $165.5 million, while it wrote $859.5 million of direct private passenger auto premiums. The company in 2011 in New Jersey wrote direct private passenger auto physical damage premiums of $284.2 million, which is 98.2% of the company's total in that line, according to BestLink.
Markulec said the company was proactive, even before Irene, in its planning for a large-scale catastrophe. Eric Stenson, spokesman for the company, said lessons learned from Irene helped the company to be even better prepared for Sandy.
"It helped to develop a streamlined process for claims reports and asking initial questions during times of greatest volume of incoming claims reports," Stenson said. "It also helped us to assign and manage an extremely high volume of claims efficiently and effectively."
Sandy made landfall Oct. 29 just southwest of Atlantic City, N.J. as a post-tropical cyclone, according to catastrophe modeling firm AIR Worldwide. According to some industry estimates, the effects of Sandy are expected to tally up to $25 billion in insured losses, which is nearly six times the $4.3 billion caused by Irene. Still, a quarter of insurance companies writing homeowners business in New Jersey in 2011 posted adjusted loss ratios above 100. The landfall of Sandy brought with it the potential for a second consecutive year of elevated loss ratios. New Jersey Manufacturers had a 2011 adjusted loss ratio of 124.96. The company has a five-year average combined ratio of 113.6, but that figure is heavily influenced by the large discretionary dividends the company pays to its policyholders, according to BestLink.
Markulec said the company is well capitalized to deal with the effects of Sandy. The company in 2011 had a policyholder surplus of about $2.3 billion, according to BestLink. New Jersey Manufacturers Insurance Co. currently has a Best's Financial Strength Rating of A++ (Superior).