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PIA Recommends States Ease Certain Insurance Regulations to Assist Consumers in Coping With Hurricane Katrina Damage

PIA is recommending that state insurance regulators and federal authorities ease certain insurance regulations that apply to insurance claims processing to assist consumers beginning to...
September 1, 2005

PIA is recommending that state insurance regulators and federal authorities ease certain insurance regulations that apply to insurance claims processing to assist consumers beginning to cope with the aftermath of Hurricane Katrina.  Drawing from the lessons learned and the actions that needed to be taken in the aftermath of 1992's Hurricane Andrew, there are a number of specific actions that should be taken now. 

On behalf of the PIA affiliates in Louisiana, Mississippi and Alabama, PIA National transmitted a request that the appropriate state Department of Insurance issue the following emergency rulings and take the following actions:

1.  Direct that for a specific period of time, insurers suspend insurance premium payments for all affected insureds for property and casualty as well as life & health insurance, both personal and commercial lines. As we know, once into the affected areas, PIA insurance agents and their customers will find that much of what was insured is gone. Claims will be the first order of insurance processing and servicing needs.

2.  Authorities should work with insurers to suspend for some period of time -- either in whole or in part -- account current insurance premium payments from directly affected insurance producers. Please note: carrier assessments of this will need to consider at least three factors:

a.  Agencies directly located in the affected areas;
b.  Agencies with banking facilities located directly in the affected areas;
c.  Agencies located on the periphery of the most affected areas, but whose insureds are in the most affected areas and subject to the DOI temporary order to suspend the insurance premiums payment by consumers.

3.   No insurance company should charge interest for periods of time in which insurance premium and/or account current payments are suspended.
 
4.   Direct suspension of all cancellation & non-renewal notices issued (being issued), and require coverage be continued for a specific time (order renewable). When the suspension is lifted, insurers will need to comply with the time frames & procedures from that date forward for issuing notices of cancellation and/or non-renewal. The DOI may, at its discretion, require coverage remain in force until insurance markets recover sufficiently.

5.   Include all the insurance producer trades associations in all insurance consumer contact efforts. Many insurance consumers know their local insurance agent, but may not know which companies insure them.

6.   PIA requests that the Federal Emergency Management Agency (FEMA) modify claims adjustment procedures to reflect the realities of this event.  For example, most affected flood insureds will not be able to contain and retain the damaged contents, interior and exterior rubble from their properties for adjusters to review. This is because most areas will be under the orders of civil authorities to remove all debris for public health and safety reasons.
 
7.   As quickly as possible, state DOIs, FEMA and insurers should coordinate to declare specific geographical areas as "total losses," especially for private homes, allowing total claims payouts to proceed.  When the wind, rain and flooding wipes away entire homes, this is a total loss, as is already evident from the news coverage coming out of the area.

8.   We ask that as much as possible all insurance-related recovery teams (state, federal & private sector) need to home-base in the same close geographical area just outside the devastation in each state to engender maximum effectiveness in coordination among all.  Having significantly different geographically spread out staging sites among insurers, FEMA, state & producer association efforts proved to create additional challenges in Florida last year than was needed for the response effort. PIA affiliates in the affected states are ready to assist with this coordination.

9.   Please be sure that 1-800 phone lines are working in affected areas. Right now, that is not the case in Louisiana & certain areas of Mississippi and Alabama.

10.   Be sure that all insurance-related recovery units also have with them ALL the general state-federal recovery information, locations and contact information to share with all consumers with whom we come in contact.

The recovery issues, realities and procedures that will apply to Hurricane Katrina's aftermath are akin to what we learned through the Hurricane Andrew in South Florida in 1992 -- but this situation is far worse, especially for New Orleans.

PIA members, their employees and their families of Louisiana, Mississippi and & Alabama are all strategically affected by these events, as are their neighbors and friends -- the people that they insured. While all begin the process of recovery, PIA members must, at the same time, re-establish themselves as quickly as possible to help the clients they insure.

It is important to note that despite the fact that the hurricane itself has passed, this catastrophe continues & recovery and needs will come in stages. 

Helping our affected members and affiliate associations muster the resources and plan for supporting PIA member agencies in re-establishing a staging area for recovery efforts will be our first priority. This first step will come after the emergency conditions begin to subside.

The local insurance agents who make up the PIA Family are committed to assisting the members of our American Family recover from this human catastrophe.

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