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It's Ground Zero for catastrophe teams handling claims from terrorist attacks

There's no doubt that years of experience come in handy when you're a member of an insurance company's catastrophe or "cat" team sent in to process property/casualty claims after a disaster. But even the most seasoned "cat team" veterans are discovering that the terrorist attacks of Sept. 11, 2001, are unlike anything they have ever encountered.

"This is Oklahoma City magnified 100 times."

"It's a totally different ball game," says Jim Howard, manager of The Hartford Financial Services Group's cat team that has set up shop in Shelton, Conn., approximately 75 miles from New York City. "I've got team members that have worked disasters like Hurricane Andrew and they all say this is unlike anything they have ever seen."

The Hartford has announced that it expects losses from the attacks to approach $450 million after taxes and net reinsurance. Aprroximately $30 million of the loss is expected to arise from life insurance claims.

"This one's tough," says Ken Chapman, a senior general adjuster with The St. Paul Companies' cat team in Purchase, New York . "I was in Oklahoma City after the [1995] bombing and couldn't imagine anything worse. This is Oklahoma City magnified 100 times."

The St. Paul has announced that the Sept. 11 attacks will likely result in losses of approximately $700 million from its United States primary insurance, reinsurance, and Lloyd's of London operations.

Claims coming in slowly

According to Howard, the most dramatic difference between this disaster and all others is how slowly these claims are coming in. "We're past two weeks now and I think we just broke 300 claims," he says. "Usually a hurricane blows in and out and then we're right there on the scene and hundreds of claims are pouring in. That just isn't the case here."

The Hartford says the first week after a hurricane, typically 50 percent to 60 percent of all claims are reported. By comparison, the insurer estimates only 10 percent to 20 percent of claims have been reported in a similar time frame after this disaster. The St. Paul's cat team is reporting similar findings. At last tally, the total number of its claims stood at 150.

Like the New York City doctors and nurses who waited outside emergency rooms for an onslaught of patients who sadly never came, cat team members have been revved up and ready to help their customers since the day after the attacks, but instead have begun initiating customer contact themselves. Howard says The Hartford has identified customers with potential claims and has begun calling them if they have not yet contacted the company. Part of the problem is that the devastation has caused a multitude of access problems — to buildings, businesses, and apartments, plus the phone lines and fax machines therein.

Two adjusters from The Hartford sent into the city on the same day may come back with two very different tales about their ability to do their jobs, says Howard. "One guy on business near ground zero will say he flashed his driver's license with a photo and his [company] ID and security let him through to meet his client, while another guy just two blocks over is told, 'Beat it.'"

Additionally, cat team members have also noticed how some clients will promise to fax a document necessary for claims processing and "then it never comes," says Sue Honeyman, a spokesperson for The Hartford. Honeyman says perhaps the customer can't locate the paperwork, but she also believes that "unless they have it right there, they're easily diverted. Everyone's still in collective shock."

It happened to all of us

Cat team members don't always see the media coverage of the tornado, hurricane, or flood that prompts their dispatch to the scene of the disaster, says Honeyman, but this tragedy was different. "We all saw the pictures," she says. "As a whole people we bore witness."

While in some ways the shared nature of the experience can help adjusters do their job by heightening their sensitivity toward their clients, it can also hurt because it's harder to distance themselves from the emotional stress of listening to people's stories of loss and pain. "A big part of our job is hand-holding," says Chapman. "The first time we meet clients, all they may want to do is talk about what they've gone through and that's okay." Both Chapman and Howard agree that cartharsis is necessary, but it can be emotionally and physically draining for the client and the adjusters.

"The sheer scope of this thing means everything gets magnified."

Last week, 15 of Howard's cat team members (the ones handling the most complicated claims) received psychological counseling through the insurer's Employee Assistance Program. Honeyman, who attended the session, says the team members were very honest about how this particular disaster is affecting them.

"Part of the problem with this disaster is that people say they are having trouble not losing their faith," says Honeyman. "There's heightened and prolonged anxiety. We're constantly being reminded we're at war. That doesn't happen in the wake of a hurricane."

Honeyman also says that while cat team members listen to their customers' stories, it's easy to flashback to the terrifying television images of burning debris and falling towers that have been seared into our memory. Many team members have trouble sleeping because when they close their eyes, they see the World Trade Center towers collapsing. According to Honeyman, counselors suggested that they try to rewrite the horrifying script by using "guided imagery" to replace scenes of falling towers with scenes of them being rebuilt, or with the faces of their loved ones.

Counselors also suggested that team members take time out to have lunch with their coworkers. "It's important to connect with people," says Honeyman. "The sheer scope of this thing means everything gets magnified and people need to talk about it."

Teamwork

Because this disaster is unprecedented, teamwork — among both catastrophe team members and their policyholders — will be absolutely crucial in sorting out insurance claims. Howard says it's impossible to speculate how many claims will result, where they'll come from, or how long it will take to resolve them.

"We insure businesses near airports and near pro baseball and football stadiums, and their businesses were undoubtedly affected when they were closed," says Howard. "They may not be anywhere near Manhattan, but we will have claims just the same."

Because this disaster is unprecedented, teamwork- among both catastrophe team members and their policyholders- will be absolutely crucial in sorting out insurance claims.

According to Chapman, The St. Paul has had claims from other regions of the country outside the Northeast and from overseas. He says this disaster is unique because businesses around the world have been affected. "Part of that is our technological evolution," he says. "Businesses are much more interdependent than they used to be."

The claims that are starting to come in are more likely to be complicated and involve unique coverage situations, say Chapman and Howard, especially if problems arise with paperwork that has been lost or destroyed. According to Chapman, those businesses that are progressing more quickly toward recovery are those that had recently updated disaster recovery plans in place that included backup of crucial business data.

If you're one of the affected property and/or business owners who has a property/casualty claim, you can help by providing some or all of the following to your insurance company:

  • The declarations of coverage page that summarizes your property/casualty coverage.
  • Photographs of your property or business, including pictures of artwork, fine carpets, and furnishings, taken before and/or after the attacks.
  • Receipts for major purchases, including business equipment and computers.

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