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Lack of Claims Inspectors, US feels full economic effects from Harvey and Irma

By Patrick Higgins  |  11/09/2017 14:54
US insurance providers have found themselves short-staffed on claims inspectors, as Texas struggles to recover from Hurricane Harvey's catastrophic flooding and Tropical Storm Irma continues its onslaught up the Gulf Coast of Florida
 
The storms, which struck the US within two weeks of each other, have caused damages totaling in the tens of billions of dollars.
 
Per state agencies such as the Texas Department of Insurance, there are 340,000 licensed claims inspectors between Texas and Florida, though how many are currently at work in the disaster zones is yet unknown.  Many insurance companies, including Allstate, State Farm, and Hartford amongst others, have already begun sending inspectors to assess damage totality in Texas, and are waiting for complete access to Irma affected-zones.  Some insurance corporations, such as Zurich Insurance Group AG, had their Florida-based staff seek shelter from Irma locally so that they can begin claims assessments as soon as the state authorities give permission.  Additionally, when the go-ahead is provided in the coming days, insurance company adjusters will start scouring properties of South Florida customers, accompanied by consultants, contractors specializing in damage mitigation, and forensic accountants. 
 
Though insurers employ full-time inspectors, also known as adjusters, their numbers are far too few to respond to such national catastrophes as Harvey-Irma in appropriate time frames.  Therefore, the insurers are forced to seek out contractors and reassign other employees to disaster zones.  Given the extent of the devastation, however, there are fears that these approaches may not be enough. 
 
Natural disasters similar in magnitude have occurred before.  One need only to reflect on the devastation wrought on New Orleans by Katrina in 2005 and on the Jersey Shore by Sandy in 2012 to get an idea of the difficulty adjusters have had with the assessing process in the past.  In the aftermath of both storms, property evaluations by inspectors took months, partly due to the unavailability of experienced adjusters who could properly analyze total damage.  Making minor mistakes, such as forgetting to remove drywall to check for concealed structural harm or giving a false loss estimate to property owners, can severely impact the claims process for the multitudes of affected individuals, many whom rely on the insurance payouts to rebuild their lives.  Such mistakes have been issues in the past, especially in the aftermath of Katrina. 
 
Though today the mechanisms of evaluating and submitting claims have benefitted from the usage of new technologies, such as the implementation of drones for additional analysis, and increased training of adjusters, the severity of the catastrophes may backlog the claims channels even more thoroughly than Katrina, due to the magnitude of the situation.  Such severe hurricanes are typically once every 50 years' type-events, and since US hurricane records began in the 1850's, two such storms making landfall in the same season has never been observed.  Original damage estimates will most certainly change as the bigger picture of the devastation in Texas and Florida emerges.
 
Through the entirety of all of this, even after adjusters reach every property slated for evaluation, there is an added layer of complexity for many peoples' claim processes.  In the US, many insurance policies are backed up by governmental flood and storm programmes, such as the National Flood Insurance Program. In such cases, the insurance provider cannot provide compensation to property owners without government approval, which can take months or even years.  Due to the monstrosity of both hurricanes, the likelihood that claims finally be distributed after years of evaluation is high.
 

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