It seems every time you turn on the news these days that another disaster, natural or otherwise, is in the headlines. Just this year, FEMA has issued 34 major disaster declarations. Tsunamis in the west, severe storms and tornados in the south and Mid-Atlantic, and flooding just about everywhere it seems nowadays.
Every time I hear of another disaster, especially if it is closer to home, I wonder, am I prepared? Tool box? Check. Batteries? Check. Bottled water? Check. Extra gas, canned goods, blankets, first aid kit, tools, wood, matches – check, check and check. Don’t get me wrong, I’m not some survivalist complete with a bomb shelter in the back yard, but I do believe in making sure that my family and I are prepared to last at least a short while in the event of something unexpected.
Insurance companies also need to be prepared. Business continuity plans are now a standard practice in the industry. Some states, in addition to requiring that the insurer have such a plan in the event of a disaster, also require the plan, or at least contact information, be updated, maintained and provided to the state.
But for insurers, it goes beyond just continuity planning. In addition to being able to continue to operate and handle claims in the event of a disaster, insurers also have to be able to react to any order or directive from individual state insurance departments as the result of any disaster, emergency or storm. For example:
- Emergency/Catastrophe adjusters – Most states require an out of state license along with some sort of timely notice when allowing out of state adjusters that are not licensed in state to adjust emergency or catastrophe claims. Some states, like North Carolina, require that some unique identification be carried (North Carolina Bulletin 11-B-02).
- Suspended Cancellations/Non-Renewals/Non-Payments – It’s pretty common for insurance departments to suspend cancellations of all types citing disruption of mail service, loss of property, in effect extending coverage in the spirit of required notice provisions. In some states it is mandatory. In others, as recently seen in Arkansas (Bulletin No. 4-2011 Amendment) and Mississippi (Bulletin 2011-3), it is only at the request of the insured.
- Extension of Time Limits – At times, an insurance department may extend the required time periods for insureds and insurers to act in response to a claim. This could be reporting a claim, responding to a claim, accepting or denying a claim. It may apply to any statute, rule, policy or contract provision as set out by the department of insurance.
Failure to comply with these emergency directives could result in enforcement actions. Is your company prepared to handle these potential market conduct issues should they occur? Are there plans in place? Being prepared for any of these situations puts the insurer, just like a well prepared individual, in a position to weather the storm and come out the other side in a much better position down the road.
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