Insurance Industry Update #2 on Hurricane Rita

Contact:		Jeffrey Brewer
Phone:		847-553-3763
E-Mail:		Jeffrey.brewer@pciaa.net
MEDIA BACKGROUNDER
September 27, 2005
Insurance Industry Update #2 on Hurricane Rita

CHICAGO – As insurance professionals are gaining more access to areas affected by Hurricane Rita it is becoming increasingly clear that the damage to Louisiana and Texas from Hurricane Rita was substantial. Due to extensive flooding and other damage that resulted from Rita, access to some areas of both states continues to be restricted. On a positive note, the Federal Emergency Management Agency (FEMA) and state government officials have insurance information centers open in both states to help victims of Katrina and Rita. These centers are an important first step in getting the claims process started for many residents.

In an effort to keep the public abreast of the latest insurance-related developments, the Property Casualty Insurers Association of America (PCI) is continuing to collect information from its member companies that write both personal and commercial insurance policies in the affected areas, as well as from state insurance regulators and other officials.

Here is the most up-to-date information regarding the most frequently asked questions about the storm:

Business Interruption Coverage - Business interruption insurance may prove to be of great assistance to the hundreds of businesses forced to close due to damage caused by Hurricane Rita. Business interruption insurance protects the profits that an owner would have earned if the business remained open, and it can also provide paychecks for employees while the business is shut down. With the large scale flooding, power outages and property damage in the affected areas, business interruption losses should be expected on a large scale, although specific numbers are yet to be determined. PCI can walk you through the basics of how this coverage works.

Flood Insurance - In the aftermath of Hurricane Katrina there has been increased attention focused on distinctions between wind damage and flood damage. When a home is flooded, a standard homeowners policy will not cover the damage. A separate flood policy is needed that is offered by the National Flood Insurance Program (NFIP). This policy covers direct physical losses by flood. Since the areas affected are now designated natural disaster areas, if a property owner does not have flood insurance, the Federal Emergency Management Agency (FEMA) may be able to provide some financial assistance to help with the cost of the damage. Assistance can be provided either by loan or cash grants. PCI has experts on this subject that can answer questions regarding these coverages.

Use caution in hiring a contractor - For homeowners who are able to begin the rebuilding process following Hurricane Rita, the Property Casualty Insurers Association of America (PCI) urges them to use caution in hiring a contractor or other workers to help repair and clean up storm damage. As the rebuilding process gets underway, unlicensed contractors and scam artists may be looking to cash in on the misfortune of property owners. Consumers who see or experience fraudulent practices can report these situations to the local authorities and the National Insurance Crime Bureau at 1-800-TEL-NICB (800-835-6422). PCI can offer tips on how to avoid being ripped off.

PCI has spokespersons and subject matter experts available for print and broadcast interviews from Chicago-based studios. Please contact Joseph Annotti at 847-553-3604, joseph.annotti@pciaa.net or Jeffrey Brewer at 847-553-3763, jeffrey.brewer@pciaa.net to arrange an interview.

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $184 billion in annual premium, 40.7 percent of the nation’s property/casualty insurance. Member companies write 50.8 percent of the U.S. automobile insurance market, 39.6 percent of the homeowners market, 33.5 percent of the commercial property and liability market, and 41.6 percent of the private workers compensation market.

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