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NJ Insurance Companies Are Braced for Historic Number of Storm-Related Claims

11-13-12

After Hurricane Sandy brought mass destruction to areas of New Jersey, the state’s insurance companies are preparing for an influx of claims. President of the Insurance Council of New Jersey Deana Lykins told NJ Today Managing Editor Mike Schneider that estimated total losses from the storm in the Garden State are $50 billion to $60 billion. While it’s unclear how much of the losses are covered by insurance companies, Lykins said the state’s companies are taking steps to be ready to assess damage.

Lykins said Hurricane Sandy doesn’t compare to any other storm in the state. “This is the storm of a century and I know we overuse that term, but this is so much worse than Katrina or Irene or anything that New Jersey has ever faced,” she said.

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Every insurance company creates a catastrophe plan that is used in the aftermath of a storm like Sandy. “We have had thousands of claims representatives shipped to this state. We have had people brought out of retirement, we have had banners flown, private investigators hired to find policy holders with checks in hand,” Lykins explained. “We definitely want to be responsive to this incident. It is still — regardless of what we all do — the worst storm of our history.”

After a major storm, insurance companies sometimes decide to leave a state, which happened in Florida after Hurricane Andrew caused a lot of damage. Lykins said New Jersey has typically been a state with little anticipated loss even though it has a large shore area. “With the last two hurricanes, there’s obviously going to be a revised calculation of that risk,” she said. “To say that we are equal to Florida probably is an overstatement, but there definitely has to be a renewed look at the risk of New Jersey.”

Oftentimes victims of hurricane damage find insurance coverage differs depending on the type of damage, for instance wind damage versus flooding. Lykins explained that flood insurance is provided through the federal government and has a different set of rules of what’s covered and not covered than homeowners’ insurance.

“They may have two separate policies or they may have chosen not to have flood,” Lykins said. “And so it is an ongoing discussion and it absolutely will be an issue in the coming months helping people understand what policies are at play and who they need to be talking to.”

Private insurance companies are coordinating with FEMA to help storm victims. “I will tell you that myself and the companies, we are on the phone multiple times a day with the department and with FEMA. I think that we have a shared goal of wanting people to get the remedies that they are entitled to,” Lykins said. “We absolutely understand the hardships that are involved and we want to do as much as we can so we are talking to every group possible to see that people can get what they need to get.”