January 1, 2004 by Wendy Hillier
For an insurer, a crisis is when the confidence placed in them by their client is called upon. For a policyholder, the insurer’s response represents the difference between a positive experience, and a disaster on top of a disaster. The key to success: be prepared.
Scott Preston breathed a sigh of relief on September 8, 2003. It rained that day. It was the first rainfall since the beginning of massive wild fires that devastated homes and businesses in British Columbia in August.
But Preston’s relief was short-lived. The precipitation was not enough to make a notable difference to the hundreds of emergency workers who toiled tirelessly to put out the flames. Scott, too, went back to work.
Preston, a 15-year resident of Kelowna, is an insurance marketing representative. At the time of that rainfall, he and his colleagues were working from a temporary office they had established just down the block from the highway barriers preventing traffic from entering the fire zone. This team was so close to the fire barricades that they often worried they would be evacuated themselves.
For this team, timeliness and location were critical. Less than 24 hours after wild fires swept through the region leveling homes and displacing thousands of residents, they were there – and that is where they stayed until all immediate needs were taken care of and policyholders were well on their way to establishing a normal routine.
The claims experience is a moment of truth for insurers, particularly so for those who work closely with a network of broker partners. The claims experience may be the only time a policyholder comes into contact with the insurer – except for when they receive policy-related documentation, or, their bill. In today’s climate of general dissatisfaction with premiums and distrust of insurers and insurance products, it is more important than ever for the industry to deliver on its promises through the claims and indemnification process. It is one of the most visible ways we tangibly demonstrate our value.
A crisis situation raises the bar even higher. The key to success is to be prepared. Establish a strategy and a plan before the crisis hits. Begin by establishing a corporate catastrophe (Cat) team – identifying members, defining roles and responsibilities, clarifying processes, and securing agreements with vendor partners who provide necessary on-the-ground support.
Preston and his colleagues comprised the community-facing wing of Aviva Canada Inc.’s B.C. wildfire Cat team. The team is cross-functional, with trained representatives from all departments who are called upon to provide services in the event of a crisis. These resources were fully deployed this past summer, to offer support and comfort to policyholders in B.C. at a time when they needed it most.
A Cat team acts as the hub for both local and corporate efforts. Centrally managed are tasks including information technology, internal and external communication, tracking, resourcing and vendor management. The local wing of the Cat team are the employees who spring into action to ensure all resources needed to meet the needs of policyholders are available.
With members in place and a clear plan to work from, the insurer’s Cat team can be ready for action at a moment’s notice. Which is exactly what is needed in a time of crisis.
This is what our broker partners want as well. Greg McGill, general manager of Whillis Harding Insurance Agencies and senior vice president for British Columbia for WFG Agency Network, says he expects insurers will deliver on their promises. To recommend an insurer with confidence, he looks for assurance that there is a solid plan and strategy in place, and that the insurer has a proven track record for handling crisis situations.
In a crisis, there is no time for planning – only action.
There is no question the wildfires in B.C. were devastating. Wayne Wood, Aviva’s senior vice-president in the Western region, was there at the time and recalls the dire situation. “On August 5, 2003, in Barriere, 2,500 residents had been evacuated, with another 1,000 in North Barriere. In Rayleigh and the Paul Lake district, north of Kamloops, 4,000 residents were evacuated.
“Fire crews were dealing with 337 forest fires in the province. In the Kamloops district alone there were 306 fires. Combating the fire were 2,000 B.C. firefighters, aided by 449 firefighters from out of province. Forty-eight helicopters were assisting in the Kamloops region and the military sent in approximately 100 soldiers as support.
“At that point, the premier of B.C. had declared a state of emergency in the province’s Thompson-Nicola regional district, where 7,500 people had to be evacuated. He later extended his declaration to cover the entire province.”
Smouldering fires whipped up near Kelowna on Friday, August 22. That night, 26,000 people were evacuated from 9,000 homes. A further 15,000, representing 6,000 homes, were on standby. “Put it this way – a third of the population was displaced that night,” explains Preston. “220 total losses happened that night. This is the fourth forest fire I’ve worked through, but nobody has watched 220 homes burn to the ground in one night.”
Kelowna is a city with a population of 100,000 people, but it is a small community at heart. “This was a collective loss. Subdivisions, homes, just gone,” Preston says.
Whether in the form of temporary offices, dedicated 1-800 lines, or ads in local papers and on web pages, by all accounts the insurance industry responded quickly and well to this disaster. By September 15, 2003, according to the Insurance Bureau of Canada (IBC), the industry had already paid out $200 million to policyholders in need.
“It’s times like this when the insurance industry proves its mettle,” says Greg Somerville, executive vice president of claims for Aviva Canada Inc. “We were there at the beginning and were there until our policyholders had been put back on path. This is what we’re here to do. The insurance industry in general responds remarkably to events like the B.C. wildfires and does so in a way that all of us can be proud of. People helping people, a fundamental that makes our business a rewarding one.”
The role that vendors play cannot be undersold. Our vendors – appraisers, adjusters, dry cleaners, restoration contractors and retail suppliers, to name a few – provide support and services which tangibly represent forward movement towards achieving life as normal for a policyholders.
In Kelowna, for example, about 32% of the homes are custom-built. These homeowners required not only a claims cheque, but also the specialty services of skilled restoration contractors to restore their residences. The insurance industry can help by recommending a pre-approved qualified professional to offer quality services at a fair price.
In another example, during the B.C. crisis, Aviva worked with The Home Depot to make a large quantity of air scrubbers available to homeowners whose neigborhoods were secure but suffered poor air quality as smoke continuously rolled off the mountains. This was a value-add from the insurer that enabled the homeowner to return to their residence sooner – the end-state everyone was working towards.
“Above all, we can never forget that service to policyholders is why we’re here, and this is even more crucial at the time of a catastrophe,” says Steve Dreyer, a senior claims specialist and Aviva’s Catastrophe team coordinator for the B.C. fires.
Despite this amazing response effort, unbelievably, insurers were subject to negative media coverage. There was speculation that some communities were given preferential treatment over others. Some area residents appeared on newscasts to say they were not receiving claims payouts fast enough. This was discouraging and disappointing, but it did not slow down the industry’s crisis response effort.
“All we could do was handle each claim on a case by case basis,” says Aviva’s B.C. region claims manager, John Russell. “We know we cared for each policyholde
r as quickly and effectively as we could, particularly considering the situation. We had to remain focused on the policyholders.”
This focus paid off. Writes one B.C. policyholder: “This has been a very frustrating and challenging time for many, and thanks to you and the service providers you have hired in assisting me to get back to normal.”
“The bottom line in a time like this is that people want to go home, and want to get their lives back to normal,” says Somerville. “Our objective as an industry is to focus our efforts on making this happen for them.”