The staggering amount of insurance claims as a result of superstorm Sandy has insurance companies in New Jersey working around the clock and hiring additional staff to process claims. NJ Today Managing Editor Mike Schneider spoke with Bernie Flynn, President and CEO of New Jersey Manufacturers Insurance Company (NJM) about how the insurer is coping with all those claims.
According to Flynn, Sandy caused a record total of more than 43,000 claims to date. To put that number in perspective, Flynn says that in a normal weather year, NJM’s homeowners department will typically handle 18,000 claims.
“Obviously, it’s much lower than it was [since the storm] but we’re receiving about 50 more claims a day,” he said. “At this point, we expect that to peter out over the next couple of weeks.”
The vast majority of the claims, Flynn says, are homeowners claims but about 9,000 are for auto.
“They involve flooded vehicles, the seawater totaled many vehicles. So we were making sure that our policyholders received payments so they could go out and purchase new cars.”
In the homeowners claims department, NJM added 370 individuals to its existing 32-member staff, according to Flynn.
“Two hundred of those are NJM paid staffers who have been cross-trained in the homeowners field, another 200 [are] outside independent adjusters,” he said. “They’re trusted professionals and they’re deployed in the field. So we go from 30, 32 to 400 and they’re all still working.”
Already, the company has paid out over $165 million and expects to pay out in excess of $300 million before all is said and done, Flynn said.
“Sixty-five percent of the claims that have been submitted have been resolved to date and we’re closing hundreds of claims everyday and millions of dollars continue to be distributed to policyholder,” he said.
Flynn said the most significant weather event in NJM’s 99-year history before Sandy was Tropical Storm Irene. Sandy, he added was four times the impact of Irene.
“So we were well prepared for the storm because of prior experiences with Irene, the October snowstorm, even a March 2010 nor’easter that was pretty significant, enabled us to be ready for this type of dramatic storm. You have to have a strong catastrophe response plan in place in order to properly service your policyholders.”
There has been much speculation in the media about insurance rates going up as a result of the increase in claims, but Flynn flatly rejected the notion that NJM would take that course of action.
“We have never raised either an auto or homeowners policyholder rates because they submitted a claim to us and we’re not going to start now.of course,” he said. “I have seen those reports, it’s good if other companies consider that, but our policyholders don’t have to worry about their rates going up because they submitted a claim.”
Despite the magnitude of Sandy’s impact on the insurance industry, Flynn insists that his company will remain financially strong.
“We have capital reserves in place for just this type of storm. We were surprised certainly as so many other were that this storm path took a left run into Ocean and Monmouth County but we model for losses like this. We prepare for it financially. It would take a storm many multiples of Sandy to put us in a difficult financial position. So our policyholders can rest assure that all the covered claims that have been submitted will be paid and that we will be in a very good position to continue servicing them for many years to come.”