Wildfire Woes

When catastrophes strike, the insurance industry often suffers. In addition to suffering financial losses from having to manage claims, those in the industry also seem to suffer in the public’s eye.

Mainstream media has an exceptional ability in finding disgruntled consumers who are willing to talk about their unhappy experiences in settling claims, and rarely does the media find consumers who will talk about the opposite. But perhaps in dealing with the aftermath of October’s wildfires, the insurance industry’s good will will help to paint a rosier picture.

I don’t intend to make light of a horrible situation. It’s impossible to ignore the devastation and disruption caused by the wildfires in Southern California. As the story on page N4 describes, just as evacuees began returning to their homes and businesses at press time, estimated insured losses were trickling in. The latest count tallied approximately 500,000 acres burned, more than 2,000 structures destroyed, and the state’s avocado crop charred. Insured losses were estimated in the $1 billion to $1.5 billion range. And that didn’t even take into account any effects from the five fires that remained burning.

Celent analysts Craig Weber and Donald Light cautioned the industry shortly after the fires began that it was “go time for insurers,” and that they would be facing pressure to uphold obligations.

“Meeting policyholder expectations is certainly a goal, as it is hard to regain loyal customers once they walk away. But regulators and the courts are also watching to make sure that insurance companies do what they promised to do,” Weber said.

He emphasized that the lawsuits stemming from Katrina were still fresh in many consumers’ and regulators’ minds. And almost as if his statements were bait, local newspaper and television stations began reporting policyholder’s fears that they wouldn’t have coverage for their claims, they’d lose coverage, and that rates would skyrocket to unaffordable prices.

Yet if there’s any good news stemming from the wildfires, it was the industry’s response. From agencies to brokerages to insurance companies, nearly everyone pitched in to aid victims. Industry associations worked to serve as information resources and coordinated with the state Department of Insurance on gathering aid and resources. Brokers such as Barney and Barney began collecting gloves and masks to help fire victims more easily sort through the ashes. And the Farmers Insurance Group of Companies drove a mobile response unit straight to the Qualcomm Stadium evacuation site, where it set up phone and Internet lines so people could reach their loved ones, distributed temporary living expenses, and even fed evacuees breakfast, lunch, dinner and snacks — regardless of whether they were Farmers customers or not. Those are just a few of the many examples of insurance professionals going beyond the call of duty.

Of course, agents and carriers stuck to the primary task in contacting customers to help them recover from the losses, as they should. But hopefully an indirect result of all the extra services provided was that when consumers think of insurance, the industry now burns a little brighter (excuse the pun) in consumers’ eyes.