Disaster Claims Advocate : Florida Insurance Claims : Paul Berger : Claim Solvers Adjusting Firm

The 2009 hurricane season is less than a month away. For small businesses, this is the time to review your disaster preparation plans to secure your property, make sure customers are served and employees are safe if a storm were to hit this summer.

A recent Office Depot survey found that four out of ten businesses don’t have a plan for getting ready to face a major storm. About a third of small businesses never bother creating a disaster plan, dealing with a crisis when it arises rather than getting in front of a problem.

What’s worse is that 43 percent of businesses that are forced to close during a crisis, such as during hurricane or in the aftermath of a major storm, never reopen, according to research done by the Small Business Administration.

Having shutters for doors and windows, plenty of batteries and flashlights, and surge protectors for your computers are a good start. Also needed: set up a phone tree chain to notify employees and designate certain ones to make calls when necessary, comply lists of product inventories and equipment, document and back-up all software and systems used to run your business. It’s a good idea to keep copies of computer files and systems off-site so you can “re-open” your doors in another location if needed.

Check in with your insurance agent. Make sure you have adequate window coverage in Florida and other coastal states. Additional riders may be needed to covera equipment or property. Most policies don’t cover flood damage. Flood coverage can purchased through the National Flood Insurance Program.

Having a plan to deal with an unexpected disaster — created by Mother Nature or not — can make a big difference in minimizing the damage caused by a storm.  Because the key to business survival is to be able to return to some level of normal operations as soon as possible so you can restore your income, jobs for your workers and the service your customers expect.

A good source of information is the Emergency Management Guide for Business and Industry from the Red Cross.

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State Farm Insurance of Florida doesn't want its agents to sell homeowners policies after it stops selling property insurance in this state in the next three years. 

That's the sticking point between State Farm and the Office of Insurance Regulation. OIR has approved State Farm's plan to pull out of Florida. The cancellation notices begin going out in November.

But OIR has conditions, namely let the company's captive agency force sell homeowners policies for other companies. A group of State Farm have been lobbying hard for the insurance company to change its mind.

But the issue appears to be a non-starter. State Farm has appealed the OIR conditional approval and the case was referred to the Department of Administrative Hearings today.  No date has been set for the hearing so far.

If State Farm wants to pull out of Florida because it believes it can't make a reasonable profit, that's fine. But it shouldn't strangle the livelihood of its agent force of nearly 500 agents and the people they all employ.

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Since Hurricane Andrew walloped South Florida in 1992, we’ve known that stricter building codes and mitigation can make a difference even in coastal properties. After Hurricane Charlie ran through the Naples-Sanibel-Captiva area, University of Florida researchers documented that the homes built after 2000 fared much better than older structures.

The Resilient Coasts Blueprint, released last week by Ceres and a group of insurers, public officials, risk experts, builders and conservation groups, cited the example of FM Global. The insurer of commercial property found that 500 clients suffered 85 percent less damage from Hurricane Katrina than other similarly situation properties.

What made the difference?

Mitigation, such building retrofits taken by these policyholders. The blueprint notes that these loss prevention methods cost these policyholders about $2.5 million. The resulting savings on avoided losses: $500 million.

That’s a whopping return on investment. That kind of return behooves insurers to actually to work with policyholders and pay for the mitigation work themselves.

Putting funds into mitigation makes even more sense when you realize that coastal development remains practically unchecked despite the number of major hurricanes that have struck the Atlantic and Gulf coasts in the last 20 years besides Andrew: Hugo, Gustav, Charlie, Frances, Jeanne, Katrina, Wilma and Ike.

This study was directed by the Heinz Center, a nonprofit scientific and economic foundation working on environmental policy, and Ceres, the blueprint was endorsed today by a diverse group, including The Travelers Institute, The Nature Conservancy, National Oceanic and Atmospheric Administration, the Wharton School, and the Mayor of Charleston, S.C.

Ceres is a coalition of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges such as global climate change.  Ceres coordinates the Investor Network on Climate Risk (INCR), a group of 80 institutional investors and investment firms with collective assets totaling more than $7 trillion.

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If there is no federal rescue for the Florida Hurricane Catastrophe Fund, the state's massive pension plan could be the ultimate source of liquidity for the back-up fund.

A Senate bill debated Wednesday in the Senate banking and insurance committee would allow the Florida Retirement System with more than $124 billion in assets buy any bonds issued by the CAT fund to meet its obligations. The CAT fund has about $10 billion in the bank, but it has authority to sell up to $29 billion in back-up insurance for the insurers operating in Florida. The reinsurance is purchased by companies to lay off some of the losses they would see in a storm and conserve their capital to pay future claims.

The Senate bill would  also permit the state-backed Citizens Property Insurance Corp. to increase rates by as much as 10 percent for several years to reach actuarial sound levels. Without the staggered rates, some Citizens customers could be looking at premiums jumping 40 percent to 50 percent.

But the panel postponed a vote on its bill (SB 1950) designed to reduce the state's $28 billion exposure in the Florida Hurricane Catastrophic Fund, often called the Cat fund.

Lawmakers in both houses can't delay action much longer because insurers are out negotiating reinsurance contracts for the 2009 hurricane season which starts June 1. State officials have requested aid from Washington, D.C., but they've gotten no affirmative response yet.

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