FMI tells PIANJ: How we survived Sandy and details of Hanover deal

In PIANJ's continuing efforts to maintain strong relationships with insurance companies across the region, PIANJ representatives traveled to northern New Jersey, specifically Branchville, on Oct. 23, 2013, to meet with Franklin Mutual Insurance Co. (FMI). "We want to have healthy conversations with insurance carriers when there aren't issues or problems that need to be addressed." said PIANJ President Stephen P. Tague, CPIA.

FMI President Jim Ayers, along with Vice President Gary Capone, sat down with PIANJ to discuss the current business and future outlook for FMI. Representing the association were Stephen Tague, CPIA; Vice President Charles Caruso, CIC, CPIA; Secretary Rip Bush; and Board Member Michael DeStasio Jr., along with PIANJ Business Issues Director Jim Pittz, CIC, CPIA.

Surviving Sandy

Back in 2009, when PIANJ and FMI last met, they spoke proudly of the detailed plans FMI had in place to stay operational and speed money to policyholders should a disaster strike. Well, since that time Irene and Sandy visited the eastern seaboard. "We were certainly tested; we had to handle two years' worth of claims in two days," stated Ayers. "However, we were still able to close 60 percent of the claims in the first thirty days." After the storm, FMI looked toward the future and will take further measures to automate their assignments for claims, as well as enhance the web-reporting features. With the addition of drop-down menus to help assign claims and based upon the severity of the claim, assign them to the proper adjusters, payments will be made much faster now.

FMI also has launched a mobile app that helps with ease of use. "We now get less paperwork and it allows us to move things along faster; many of these changes have enhanced our back office," stated Capone. He continued, "Overall approximately 78 percent of our claims are closed within 60 days. That's just how you have to operate.

As with any discussion regarding catastrophes, the subject will soon turn to reinsurance. Reinsurance is a cost within the rates, so it must always be considered. Also, FMI has no windstorm deductible on Personal Lines, only the hurricane deductibles—which are mandated. This can be figured back into the rates, so it can be easier to plan and handle.

As always, we fall back to consistent underwriting, this will always help to keep the reinsurance costs down, " continued Ayers.

Hanover and FMI

Hanover approached FMI to see if they could come to a solution regarding their unsupported homeowners business. As they had done in the past with other carriers, FMI agreed to write that business, on a roll-over basis while trying to match coverages. In response to PIANJ's questions, FMI detailed the procedures they are following regarding agent and policyholder notices and coverages.  

According to Ayers, "There are some policy differences, such as pollution, where FMI, as most other carriers, has the pollution exclusion and Hanover did not. Hanover is offering a one-year buy back for the pollution coverage that the insured must agree to. Also, FMI insisted on insuring premises to value when they accepted the Hanover business. FMI will apply an inflation cost to the coverage and eventually evaluate these risks for updated replacement values (as we do with our entire book)."

"Our main focus is our policyholders and agents. Providing excellent service enhances the professional, independent agency system, delivering the quality professionalism our clients deserve" added Ayers.—Pittz