(Click here for Part 1 of this story, in which we talk to representatives from national insurance trade groups about the lessons and legacy of Superstorm Sandy.)
Its first name was Tropical Depression 18, and it was born last year in the morning hours of Oct. 22, 2012, in the Caribbean. By the time it dissipated over Pennsylvania a little over a week later, it had left billions of dollars in damages in its path through the Northeast.
Now, a year later, Online Auto Insurance (OAI) revisits the disaster with an industry group in New York, the state that saw the largest number of car insurance claims from the storm.
‘We Are Not Immune’
It wasn’t just wind and rain that Sandy sent New York’s way. The disaster dumped hundreds of thousands of claims on the state’s insurers.
Cassandra Anderson, associate vice president for the New York Insurance Association, said the 442,000 claims New York insurers were asked to respond to was “an unprecedented” number.
There were other staggering figures: 35,000 adjusters were deployed by the state’s insurance companies, which ultimately paid $10 billion in claims to New Yorkers.
But in addition to the huge numbers quantifying the extent of the damages, Anderson said other stats are a bit more encouraging: nearly 100% of the claims filed after Sandy have now been resolved, and the ratio of policyholder complaints to claims now stands at less than 1 percent.
But the road to that point wasn’t easy.
Sandy was a monumental storm, but it wasn’t without some precedent. Harsh hurricane conditions have hit New York in recent years, Anderson said, and Sandy became the latest reminder of that when it rolled into the tri-state area on Oct. 29.
“After Irene, Lee, but especially Sandy, New Yorkers learned that we are not immune from disasters,” Anderson said.
New York Home to Most Car Claims
New York was home to the most Sandy-related claims for car damages by far. According to the National Insurance Crime Bureau (NICB), New York had more than double the number of car claims in New Jersey, which had the next-highest number of Sandy-related auto claims.
Anderson said the latest figures put New York’s total number of vehicle claims at around 150,000.
“The sheer volume of autos damaged is what was most staggering,” she told OAI.
While closing out car claims proved to be a relatively smooth feat in New York, initially serving those claims proved to be the biggest problem, with pockets of flooding spread throughout the state.
“It was challenging for insurance adjusters to access many of the affected areas due to unsafe conditions, gas shortages, highway restrictions for vehicles with only one person, and parkway restrictions for commercial vehicles,” Anderson said.
Anderson said that, being in upstate New York, she was spared most of Sandy’s wrath. However, she heard stories about insurers’ employees who were “personally affected by Sandy” but still getting out to help customers.
“[They] were personally affected by Sandy and put the needs of their policyholders before their own needs,” she said. “We heard many stories about downstate New York staff working around the clock despite their own property being damaged, not having power and having difficulty traveling because of the gas shortage.”
It was that generous spirit that helped New York’s insurers perform “admirably” and start the road to recovery, Anderson said.
“A crucial part of the recovery process is individuals better protecting their property and building stronger,” she said. “Mitigation is key so that as a state we are better prepared for future disasters.”
Towing Scams and Flood-Damaged Cars in Sandy’s Wake
Like representatives told us last week, Anderson also said she heard tales of scammers trying to take advantage of the bad situation caused by Sandy.
For instance, owners of cars left stranded by the flooding faced over-aggressive towers trying to cash in.
“Towing was an issue with some companies engaging in price gouging—even going as far as saying 50 percent of the fee was going to charity,” said Anderson.
And months after Sandy, yet another issue came into fuller view: authorities found that more and more vehicles damaged during Sandy (usually by floodwaters) were being resold into the used-car marketplace without the appropriate documentation.
“That’s always a concern after these events, that these [damaged] cars end up in the stream of commerce,” said Robert Passmore, senior director of personal lines at Property Casualty Insurers Association of America (PCI). “It can mean a good price, but it’s not such a good deal if you don’t know what you’re getting.”
Flood-damaged cars are prone to serious issues involving the on-board electronics that may have been damaged by the flood waters, which is what makes it so important that a flood-damaged car is noted as such on its title.
However, Passmore said, the industry benefited from “one thing that we have now that we didn’t have during Katrina”: the National Motor Vehicle Title Information System (NMVTIS).
Insurers have been reporting total-loss claims on vehicles to the nationwide system since 2009, Passmore said, giving consumers a publicly sponsored way to find out if a prospective used-car buy has ever been totaled or salvaged. Dozens of states participate in submitting data to the system.
“If anybody is buying a used car and wants to know where it came from, that would be an ideal place to start,” Passmore said.
The Road Back
Anderson said that the New York insurance marketplace is “strong and vibrant,” making it “possible for New York to withstand Sandy’s blows and begin rebuilding.”
The same can be said for the industry at large. Dr. Robert Hartwig, president for the Insurance Information Institute, said that the industry was able to pay claims while entering 2013 in relatively good financial health.
He said it was “continued evidence of the property/casualty (P/C) insurance industry’s remarkable resilience in the face of extreme adversity.”
(Photo credit: Jason Howie)