Hurricane Season: Preparing for Insurance Recovery

When catastrophe is looming, Risk Managers have a lot to contend with, starting with protecting their people and their properties. But their worries don’t end there. From ensuring best practices are in place ahead of time, to responding to disaster, there are a whole number of issues to consider when it comes to hurricane insurance recovery.

Here are a few tips from our forensic accounting team that should be considered before and after a named storm hits one of your locations.

Pre-Loss

• Vet your emergency response team prior to loss – Preparation is the key in any endeavor, but with property damage claims, you cannot be too prepared. There are “approved” vendors that insurance companies recommend; however, just because they are “approved” does not mean there will not be problems. We deal with this frequently. Notify the insurance company of who you plan to use, and make sure you discuss expectations with your vendors to limit surprises.
• Choose your adjustment team – When there are opposing sides with opposing interests, the outcome will be dependent on the experience and skills of the players on your team. Carefully select the independent adjusting firm and auditors. Work with your broker to find the right partner to be named in your policy. These relationships are critical to the claims process and outcome.
• Choose your claim team – Having your team lined up and ready for action will help get any claim started quickly and properly. Your internal team may consist of risk management, finance and operations. It’s helpful to arrange the key sources of information that you’ll need to support your claim. Get to know your broker’s property claim experts. They will be instrumental in helping with policy interpretation and guidance throughout. Having an independent forensic accounting firm arranged ahead of time will ensure your claim preparation can begin immediately post-loss. These experienced professionals will be a critical part of your claim team, delivering the expertise to quantify the loss and pull all aspects of the claim together.
• Review Percentage Deductibles – When you are faced with a Hurricane CAT claim, whether from a recent weather event or in the future, figuring out how your percentage deductible applies may be more challenging than you expect. We suggest reviewing how it works with your broker and/or with your forensic accountants to make sure you understand how it will apply in a real-world scenario.

Post-Loss

• Clarify and document the scope of work – Be clear on the scope of work with your emergency response and restoration company. Make the adjuster part of that conversation. Often, emergency response does not follow the normal protocols of a typical project. There likely won’t be time for detailed estimates, so try to get the adjuster to approve the work in real-time to avoid second guessing.
• Take a hands-on approach – Your property may still be underwater, but once access is granted, you must be hands-on. No one should have access to your facility without the presence of a company representative. It is vital to have a company representative onsite to manage the activity and guide visitors.
• Audit contractor charges before approval – The first weeks after a loss is chaotic. It’s important for policyholders to put controls in place to monitor activity and to verify work has been completed to specifications and according to the terms of the agreement. Reimbursable insurance expenses should be separated and audited prior to payment for proper detail and accuracy. This should be done efficiently in real time, and the adjuster should be involved throughout the process.
• Address issues immediately – When the first emergency response invoice arrives, insurance companies may act surprised and even dispute the expense, especially if the steps above have not been followed. Make sure to get the parties together to discuss the issues. Don’t procrastinate, and don’t assume. It is important to be proactive with any potential discrepancies.

The immediate aftermath of a disaster can be stressful and hectic. Preparation and communication can help you weather the storm, minimize unwanted surprises, and maximize recovery.

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Author: Jeff Esper