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Just before Memorial Day weekend, The U.S. National Oceanic and Atmospheric Administration and Weather Services International released their 2010 hurricane forecasts. Both organizations are predicting monster seasons: NOAA said the season could be one of the most severe on record and WSI called for 18 named storms, 10 hurricanes and five intense hurricanes— well above last year and above the 1950- 2009 averages of 10 named storms, six hurricanes, and three intense hurricanes.

If you live or do business in a coastal area, you should get prepared. Personally, I am preparing to say, “I told you so.” Just a few months ago, I wrote in this column that the March 2010 storms (that, by the way, were not even classified as hurricanes) should serve as a wake-up call to carriers and regulators in New York. The carriers had an enormous job settling claims from those storms. Even though they brought in adjusters from around the country to help deal with the claims, my first observation was that the carriers were not initially prepared for this storm; some clients waited on hold for two to three hours just to speak with someone on the telephone over the weekend, when the storm hit. We agents took far more claims than we would have expected Monday morning, but we were there to serve the clients whether our carriers provided an 800 number or not. Here’s a lesson learned: Agencies and carriers both should update their emergency plans.

Many agency principals put disaster planning on the back burner because they have to deal with the more immediate jobs of running an agency, but the initial investment of preparing for an emergency will more than pay for itself in the event a hurricane or other disaster strikes, saving clients, income and major frustration. PIA offers members an exhaustive disaster planning toolkit, which emphasizes that a business contingency plan is not a one-time deal. The plan should not only address the internal workings of the agency, but also how the agency is going to continue operations and respond to client concerns and needs. PIA;s step-by-step contingency manual to provide information and resources necessary to create an agency-specific plan and may be obtained by calling PIA’s Industry Resource Center at (800) 424-4244 or by e-mail at resourcecenter@ pia.org.

Another lesson from the March storms is that since many carriers and adjusters were brought in from outside of New York state to facilitate claims, they were not familiar with state coverages in the affected Tristate area. Many carriers sent checks directly to clients to expedite claims, but no additional information was provided to explain the coverage, and agents then had to follow up with the company to determine what was paid and why. As a result, agencies did double work, even though the intent was to simplify and expedite claims for our mutual clients.

But, the most important lesson we should have learned was that a dire need exists for uniformity in windstorm triggers among carriers that do business in our state. I had the opportunity to reiterate this on May 10, when Peter Resnick of Interboro Insurance and I represented PIANY at a round table discussion on coastal property insurance problems hosted by Sen. Neil Breslin, D-46 and Assemblyman Joseph Morelle, D-132 chairmen of the Senate and Assembly Insurance Committees, respectively. Peter did a great job demonstrating how our clients are not likely to even know they have a deductible, let alone understand the information buried in the fine print of their policies that says insurers can apply large deductibles on claims for windstorm damage. He held up a 29-page chart from the New York State Insurance Department’s website that describes companies’ deductible provisions, including amounts, circumstances dictating when the deductible applies (the “trigger”), and geographic areas where the deductibles are used. “Look at all the different triggers in this chart,” he told them. “Your head will spin,” he said. “The average person won’t understand all these differences.” Peter is right. It’s important to distinguish between deductible amounts, which the NYSID has endeavored to clarify, as well as when the deductibles will apply—that’s a multi-part verbal formula that differs from carrier to carrier. The NYSID makes companies explain to people how big their deductible is, but no one explains the trigger formula. And, as I’ve said all along, this is where the problems will come. After the big storm hits, agents will be faced with furious clients asking: “Why didn’t you tell me I had such a big deductible? Or, “Why didn’t you explain the trigger?’”

PIANY is pushing for uniform triggers that put the deductible in force to be standardized. This is vitally important if we want to adequately educate and notify policyholders about their coverage. We can’t wait and continue to talk, when the hurricane season will have started by the time this article is published. The time to act is now! As agents, please let lawmakers know your feelings and the needs of your clients, because ultimately the consumer is being hurt by the current situation. Evidently, most of Albany does not comprehend the crisis we have on Long Island.

That said, I’m pleased to report that during the meeting, Assemblyman Morelle and Senator Breslin understood that Long Island policyholders are challenged by two problems. “We have different issues here,” Morelle said. “Number one, on the front end, do consumers understand the risk they’re taking on? Number two, can people afford their coverage?” he said. He also promised more intensive work to address these issues, and I hope that happens. What frustrated me most during the roundtable was that despite a room full of lobbyists at the meeting, the only one who spoke up was from State Farm. He made it sound like a uniform trigger would cause carriers to leave Long Island. I think he was disingenuous—if that was really the case, why didn’t the lobbyists from other carriers agree with him?

Though some reliable major insurers, like Travelers, remain steadfast in the market, others, such as Allstate and State Farm, aren’t writing or renewing coverage on the Island because they know we’re due for a major hurricane. How can a carrier, which is already pulling out of the market claim that addressing such an important issue would cause their company to reduce its presence there?

Unfortunately though, it’s true that more and more, homeowners must either use a New York Property Insurance Underwriting Association policy with lesser coverage or go to the non-admitted markets and pay up to five times more. As independent agents with responsible companies like Travelers and other fine agent-oriented carriers, we sell coverage (i.e., protection) first, and then we look at price. A lot of gaps exist under New York’s current Coastal Market Assistance Program. Perhaps if the coverages in this program could be made equal to what an insured can get in the voluntary market, more agents could feel confident offering it to their clients. Perhaps the state could provide an incentive to carriers by giving credits to companies which write in the CMAP program, so it would be to their advantage to write such policies, as was included in the 2008 NYPIUA law. Something has to be done. Nobody disputes a major storm is going to hit the Island someday—according to experts, this year is very well could to be the year. Companies and agents may be able to weather the hurricane, but I’m not so sure about the deluge of angry homeowners that we’ll face when their claims come in.