Under pressure: brokers try to deal with the Fort Mac claims crunch

Residents driving home to Fort McMurray will see pep-talk billboards slapped up by the R.M. of Wood Buffalo—signs that read things like, “Together, we will rebuild.” But for insurance brokers handling their policies, the dawn ain’t here yet… and it’ll be a long while before it comes.

Everyone agrees the real tide of claims after the blaze hasn’t hit yet, but the first wave has struck.

“Up until now it’s been absolutely overwhelming, exhausting and probably the most amount of stress our organization and the staff within our organization has ever even remotely experienced,” says Lee Rogers, president of Rogers Insurance. And that’s a brokerage with a major profile in Alberta, with offices in Calgary, Red Deer, and yes, Fort Mac. “We’ve never even come close to experiencing this as an organization, as a staff, as a company.”

Rogers estimates the business has somewhere close to 5,000 claims right now, and he expects that to climb, possibly to as high as 10,000.

He compares it to the Hurricane Katrina disaster, but he’s far from done when discussing how to put the fire in context. “I mean we won’t know until people get back in how much worse it’s going to be. So you can talk about ice storms, but everyone still had their building, everyone still lived in their homes, everybody knew what their loss was without power. Nobody still knows [in Fort McMurray] what their loss is, yet everybody does have a loss. You know, Slave Lake—yeah, similar, but not to the scale. From our experience anyway, not remotely to the scale this is.”

Which begs the question then of how his staff is coping. “Well, we take it one day at a time, and I don’t know that every day we cope that well with it, to be honest with you. We’re down 20-plus staff because our Fort McMurray staff are unable to work. Some of them have found their… way back to our offices finally to help, but not all of them are back to work yet.

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“And yet we’ve got thousands and thousands of claims where quite frankly, we need another hundred people. So the issue is we can’t just go plug in 20 people and get help, because they need access to our system, they need to understand how to read our systems to determine coverage, they need to understand protocol and process. I can’t just go and hire 30 people tomorrow nor do I have the financial resources to go and hire 30 people tomorrow.”

(Chris Bolin, Maclean's)

(Chris Bolin, Maclean’s)

Brian Nielsen, president of Drayden Insurance in Edmonton, which has offices in other locales like Fort Saskatchewan and Westlock, says his business has about 250 clients in the area, both personal and commercial, and he expects to see 150 claims. “I mean that’s a big number but not anywhere what a broker who’s from that region or closer to that region is going to see.”

So far, “it’s a lot of work absolutely, but it hasn’t been overwhelming. The experience we had when Slave Lake hit [in 2011]… We felt that certainly a lot more, and we were able to learn a lot from that and be able to apply that to this disaster.”

As the crisis began, says Nielsen, Drayden staff were making phone calls or sending emails to every single client who had a Fort McMurray address. “We reached out to them. Lots of people were actually on the road, actually driving out of Fort McMurray at the time… We just reached out and said, ‘Listen, this is our number, this is your policy number if you need it.’… Kind of give a bit of brief explanation of what the coverages are, because it was an emergency evacuation… We just tried to give them some counsel around that aspect of it very, very early on.”

For others, it’s the complexity more than quantity that’s leading to long hours and possible migraines. Terence Hogan, a principal at Lloyd Sadd in Edmonton, says “there’s probably upwards—just in my reach—somewhere around the range of 20 to 25 [commercial] claims of significance, and then from there it kind of filters out into more or less significant claims.” A single claim, of course, might have five to 10 different elements like business interruption, auto, equipment, property and on it goes, with perhaps hundreds of millions of dollars of exposure.

Those magic wands of wisdom

“It has been extremely stressful for brokers,” says George Hodgson, CEO of the Insurance Brokers Association of Alberta. “I talked to a few at our convention last week, and they were overwhelmed at that point, or they had people in their office who were overwhelmed… But at the same time, they are managing. I think a lot of the companies have kind of stepped up to the plate in terms of contacting some of their brokers’ clients to start the claims process. I think the companies have learned a bit from the southern Alberta floods and from the Slave Lake fire, so I think some of the processes are much more streamlined than what they perhaps were three, four or five years ago.”

Not everyone would agree with that. Garth Lane, principal at Lloyd Sadd in Edmonton, told Top Broker that the lessons of Slave Lake and southern Alberta floods “certainly help, but they’re no real measure to success in this one. Every one of them has been dramatically different in context and in character. We understand some of the anxiety, some of the emotion, but the solutions to this one are completely different than the solutions and techniques that we employed in the previous ones.

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“To some degree, I think everybody—insurer, broker, client—they’re all going through another learning phase, and if any insurance company tells you that they’ve got this disaster planned and it’s just going along like clock work—not a chance.”

He says one of his colleagues handles business for school boards in the area, and they “didn’t lose a school, but we have substantial damage, and we’re having weekly conference calls with 24 people on the line. And I’m telling you,” he adds with a wry chuckle, “none of them—and they’re mostly insurers—have a magic wand of wisdom as to how to get through this.”

The silver lining, if there is one to the crisis, says George Hodgson, is that a lot of the local brokerages in Fort McMurray are part of a larger broker chain.

“There are not too many of the little, tiny brokerages. I did talk to one, though, that only had a couple of people in Fort McMurray in the office there, and they had about 3,000 policies. So my guess is if you’ve got 3,000 policies… you’ve got 3,000 claims.” But Hodgson adds that this particular brokerage does have another office elsewhere that’s been able to help with the overload.

“Some of the smaller brokerages in the area, like in Athabasca and Lac La Biche and places like that, they will be overwhelmed, because they will have a lot of policies there as well. Those are the ones that are worrying, more so than others, because they don’t necessarily have the capacity.”

Meanwhile, the frantic pace continues for Rogers Insurance. Lee Rogers says one commercial claim has “consumed two of my people’s time” since the wildfire disaster began.

A variety of other claims are “on the go” from the hospitality sector and other commercial areas, as well as apartments and condos. “I mean it’s almost all day, every day, trying to work with them. I don’t think people sometimes understand the magnitude of what a broker does, but it’s a lot more than deliver a policy.”

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