Insurance Agents Reflect on a Year of Harsh Lessons
Robert Gilbert Jr. says his claims department set a record for calls in one week following the October snowstorm.
In most industries, the busiest year on record would be cause for celebration. For insurance agencies — thanks to an unforgettable series of freak weather events — being busy is a decidedly mixed bag.
“This was easily the busiest year in my 37 years in business in terms of claims activity,” said Kevin Ross, vice president and treasurer of Ross Insurance Agency in Holyoke. “It started off with the snowstorms in January, then we had a tornado, a hurricane, an earthquake on the East Coast — we didn’t experience a problem, but it rattled us a little bit — and then the October snowstorm.
“Of course, the tornado was catastrophic for us; our clients who were hit by the tornado were just devastated,” he continued. “We insured a campground in Brimfield where someone died; that place was absolutely devastated, too. But they’re rebuilding — they were adequately insured, and they’re moving on.”
Thousands of homeowners across Massachusetts found themselves in a similar position — hoping to move on from the latest unexpected assault from Mother Nature — and insurance helped them do just that. But the flood (no pun intended) of claims placed unprecedented strain on insurance agencies, making 2011 a challenging year, to say the least.
“It was a difficult year; about the only thing we didn’t have was locusts and volcanoes,” said Robert Gilbert Jr., president and CEO of the Dowd Agencies in Holyoke. “Between the ice dams earlier in the year, the hurricane, the tornado, and the snowstorm, we had significant damages throughout Western Mass., even moreso than in the eastern part of the state.
“It had a huge impact on a lot of agencies. It was a tremendous challenge,” he went on. “We’re one of the few agencies with our own claims department, and we had to bring in other staff to handle all the claims. Right after the snowstorm, we had 5,213 calls in one week, which was a record. All the snow piling up with all the leaves still on the trees broke those limbs and cut power to so many homes and businesses.”
Bill Grinnell, president of Webber & Grinnell Insurance in Northampton, agreed that 2011 was the worst year for property losses that the region’s insurance companies have experienced.
“I know the loss ratios with agencies across the state are as high as they’ve been in a long time, especially on the homeowner lines,” he told BusinessWest. “Western and Central Mass. got killed with the tornadoes, the hurricane, the flooding, and the snowfall in October. They all affected this region of the state most heavily. It’s going to impact rates; companies are making adjustments on homeowner rates, and we’re seeing increases almost across the board.”
But amid those challenges — and, make no mistake, the claims process is far from over for victims of those weather events — the crazy year also posed opportunities for insurance agents to reconnect with their customers, to drive home the importance of having the right levels of coverage, and perhaps to add new business as well.
First, the Bad News
Of course, agents wish the value of their product could have been reinforced without such widespread destruction.
“That tornado was devastating. In Springfield, 570 homes were destroyed,” Ross noted, adding that the event caused upheaval of another kind for agencies like his. “We’re still working very hard settling claims.”
There’s little doubt that the June 1 tornadoes and other weather events of 2011 will impact all customers in some way, he said. “Companies have already indicated to us that they’re looking at rate increases of anywhere from 5% to 15%. That’s too bad — we’ve had fairly stable costs on the homeowner’s side recently — but the costs were heavy and have to be recouped.”
A more immediate concern was simply making sure tornado victims were covered. As a general rule, they were.
“A lot of people, after the tornado hit, were asking, ‘do we have tornado coverage?’ The answer is, ‘yes, you have windstorm coverage,’” Grinnell said — and that was fortunate for home and business owners in dozens of communities struck by the twister. “You saw total losses occur out on that swath of area the tornado ripped through, and you want to make sure you have enough insurance to cover something like that.”
Kevin Ross says tornadoes are covered under the typical policy, but many other events require added coverage — and customers are starting to take those options more seriously.
But all the agents who spoke to BusinessWest said that, although 2011 brought some harsh lessons in why insurance is important, those lessons were valuable, and customers are taking them to heart.
Ross said he’s already seeing clients contacting their insurance agent and getting more informed about what’s in their policy, and what should be, before the next disaster strikes. “People are making more educated decisions, buying insurance properly and preparing for these unexpected events. Our staff is working with clients and ironing out coverages.”
The biggest focus came after the tornado, he added, but subsequent weather events — particularly the pre-Halloween snowstorm, with its widespread tree and structure damage and resulting power outages that lasted more than a week in many cases — drove home the point equally well.
“We had opportunities to explain the coverage and true up people’s coverage,” Gilbert noted. “We don’t often have these significant weather situations; we certainly don’t have tornadoes. What I tell people is, I hope their coverage is up to date. I spent a long time consulting with people, getting their coverage up to par. Unless they experience a serious situation, they don’t realize the impact. The tornado woke up a lot of people.”
Therefore, 2011 was an opportune time for customers to review their policies and make sure they understand what their situation would be if an adverse weather event struck again, he continued. “Unless people are used to having a lot of claims, this might be the first one they’ve had, and they don’t know the true value of insurance. Our job is to protect someone’s balance sheet so they don’t have to dip into their pockets. The whole point is not to make you rich; it’s to make you whole.”
Some Good News, Too
He was able to help many customers do just that. One client who lost a building in the tornado received a $5.2 million payout to renovate the structure, Gilbert noted. “He was glad he listened. We’re really here to protect people’s assets, not just to charge them premiums.”
Ross said that, as an independent agent, he prides himself on having their customers’ backs during times of great need. “Our customers pay us, and we’re the ones who represent them before the insurance companies, when the insurance company denies claims.”
One such customer claimed that a snow load at the front of his building bowed and buckled the structure. The insurance company initially denied the claim, but Ross argued on his behalf. “We said, ‘we think it’s covered,’ and he ended up getting paid more than $100,000.
“This kind of thing happened throughout the year for us,” he added. “Insurance companies are inundated with claims, and sometimes they make decisions too fast. We were there for our clients, to make sure they were paid what they deserved based on the policy they had. We feel that’s the most important thing to do for our clients during times like these.
“It makes you feel proud to write those checks for people, when you go to bat for them when, otherwise, they might not get paid. That’s gratifying,” Ross continued. “I love processing claims. We don’t often get the opportunity to do so many; the average homeowner submits a claim every 10 or 15 years. But it’s the greatest thing in the world to deliver that claim check, it really is.”
But those stories don’t always have happy endings, often because policy holders fail to understand the fine print or exclusions, or decline coverage for, say, flood damage, one example of non-standard coverage.
A year like 2011 “definitely gives us more credibility,” Grinnell said. “We’ve seen customers go years and years without any claims, and all of a sudden, bam, they have two or three of them.
“Now, they’re making sure they’ve got enough insurance; they’re taking a harder look at their insurance, and starting to ask questions. It’s a great time to talk to customers and review their policies and explain their coverage to them. That’s really what we’re here for.”
Of course, no one knows what the future will bring, which is why insurance agencies will remain so important.
“We’re looking forward to 2012,” Gilbert said. “Hopefully it’s a good year, and people will listen to their independent agent and buy the insurance coverage they need.”
And perhaps ask about that optional volcano protection … just in case.
Joseph Bednar can be reached at bednar@businesswest.com
