Hurricane season’s on the horizon — are we ready?
It won’t be long before June arrives, bringing with it the 2024 hurricane season.
That might be a problem for Canada’s adjusters and insurers given many are still managing residual claims from Hurricane Fiona’s 2022 battering of the East coast.
If the region gets hit hard again this year, adjuster capacity could be strained.
Thankfully, 2022’s Hurricane Ian which did extensive damage in several U.S. states wasn’t a major event in Canada, notes Michael Galea, Sedgwick’s senior vice president for national operations in Canada.
“Fiona was much bigger,” he tells Canadian Underwriter. “With Fiona we are seeing the last group [of claims] get completed, the additional weather events from last year added strain on contractors.”
Fortunately final post-Fiona repairs – delayed for many property owners due to shortages of construction labour and building materials and by the remnants of Hurricane Lee which rolled through in 2023 – aren’t likely to be knocked out of queue if a new storm causes severe damage.
“Those with existing damage have already locked-in contractors, although emergency repairs will be most important to mitigate losses,” Galea notes.
Rising prices
Meanwhile, persistent inflation in the years following Fiona means some adjustment periods have been dragged out.
“That is a direct result of managing the claims over those two years,” he says. “Insureds are less likely to cash out because of rising prices, and therefore we keep the file [open] until the contractor completes the work.”
Inflation is also impacting end costs for repairs in the region. “Contractors are the ones conducting the restorations. They are typically paid when the work is completed to account for any price increases,” Galea says.
Having large numbers of active files is producing some strain but insurers’ access to independent adjusters also provides some relief.
“I think the industry is experiencing fatigue but continues to manage the increased demands with so much activity occurring at one time,” he adds. “We have been fortunate enough to have global resources to scale…to help alleviate that burden…”
Generally, the past few years have seen increasing storm severity which can mean adjusters and restorers don’t finish their work on one storm before they have to deal with fallout from a new NatCat. The rapid pace is proving taxing, Glenn McGillivray, managing director of the Institute for Catastrophic Loss Reduction told CU late last year.
“They are coming hot and heavy and very close together now, which never used to be the case…”
In past years, he and others noted, NatCats were more manageable.
“They didn’t really overwhelm anybody. We had lots of time in between losses where governments and insurers could make people whole again, and before we had to deal with the next one,” he noted. “That’s not the case anymore.”
Feature image by iStock.com/HadelProductions
