After days of massive rainfall, residents of the Carolinas are now faced with the reality of the devastation caused by more than two feet of rainfall over a four day period.
According to South Carolina Governor Nikki Haley, there are:
- 40,000 households who have experienced no running water and 26,000 without electricity
- 13 dams failed and 62 were being monitored
- 74 miles of interstate highway were closed
- Preliminary estimate of over $1B in damages
This excerpt from a Guardian News article tells the reality of the Carolina Floods: South Carolina’s state insurance director has warned of horrendous losses as he prepares to release the first official estimate of damage from this week’s deadly flooding that claimed at least 17 lives. And many residents are learning that their insurance may not even cover damage to their homes.
University of South Carolina professor Jerry Wallulis is among those who fear they may be left to pay for the cost of damage out of pocket, despite having household insurance. “We don’t live in a flood zone and like a whole lot of people had no realization that we would ever be in danger of a flood. Many folks who live in elevated areas saw no need to buy flood coverage and have been severely hit by flood damage,” he said.
Patricia Harman from PropertyCasualty360.com does an excellent job of dissecting the situation in her recent article on the Carolina floods: Since flood and wind damage are frequently excluded from standard Homeowners policies and only about 10% of homeowners in South Carolina purchased flood insurance, many losses will be uninsured.
Adjuster Dave’s Take:
As outlined above, these are unfortunate scenarios because there often isn’t any insurance coverage for the typical homeowner. Once off the coastline, few people have an NFIP flood policy. However, people are often required to file a claim to obtain an insurance denial letter, which can be a requirement for potential FEMA assistance, tax write offs and SBA Loan applications. This means the insurance company still needs to send a representative to conduct and document the inspection (typically an Independent Adjuster in a Catastrophe situation).
In situations like what’s happening in the Carolinas, there are four important things for the industry to consider as it pertains to improving claims operations and customer engagement at the point-of-inspection:
In an era where the field adjuster is often inexperienced (especially in Cat scenarios), the policyholder is best served if the claim decision-making is handled by someone in an office who is experienced. Whether the end result of a claim inspection is an estimate/payment or a denial letter. The ideal inspection/scoping tool for field adjusters is one that can tackle any claim scenario and facilitate off-site centralized handling.
In the event of a Denial situation, the Policyholder and the Carrier need thorough inspection documentation. Denial letter requirements vary from state to state and generating them is often a difficult and time-consuming task for both seasoned and new adjusters. In a perfect world, all Denial letters should be handled by the centralized claim office. Denial letters generally require a manager to review and sign-off on and there is a tremendous amount of administration to keep track of, which can be especially hard from the field for seasoned and new adjusters.
Estimating software technologies provide little to no value in denial scenarios. If there is no insurance coverage being applied to a loss, there generally is no estimate being written. The most important thing for the Carrier in a Denial is thorough inspection documentation that proves why they denied the loss, this is for protection should the policyholder decide to fight the decision. Therefore using a mobile estimating platform at the point-of-inspection isn’t the ideal tool for the job.
While some IA’s get flat daily rates, many Independent Adjuster bill rates are directly tied to a percentage of the loss amount or the coverage lines that are triggered. Because of this, IA’s often avoid storms like the Carolina’s due to fears that they’ll make very little money. When there is no policy coverage, an Independent Adjuster only gets a base fee, which is nominal, especially after figuring in all the expenses of being on the road. Additionally, because of the lack of coverage, most claims often involve the added challenge of working with an upset homeowner. Storms where there are more denials than settlements become a lot more beneficial for adjusters when they don’t have to handle denial paperwork. “As an adjuster, if I can focus on getting more inspections done and I don’t have to deal with denial paperwork. Even though I’m not making very much per claim, if i’m doing an increased volume of inspections, it could make working a storm like the South Carolina floods worthwhile.” - Brent Prentiss, Independent Field Adjuster for a large Carrier.
In sum, as the industry moves away from the clipboard and digital camera and onto the iPad and digital inspection software, it’s important to remember that all scenarios require inspections and quality inspection documentation–but only those that are covered losses require an estimate and estimating software. Furthermore, there is benefit to all parties to facilitate a process whereby both estimating and denials can be handled, at scale, remotely.
Our thoughts and prayers go out to those in the Carolinas affected by this disaster.
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