Even before the floodwaters left the Gulf Coast, America's insurance companies were hard at work. Including Chicago-based Allstate, which just reported this week: it's already settled three-quarters of all property claims from the entire hurricane season.
That's remarkable, when you consider the company also posted more than a billion dollar profit. So maybe it is "in good hands" with president Tom Wilson, who's been at the helm less than a year.
Last year's storms did come at a price. Last week, Wilson asked 700 Chicago employees... to leave. And he's got plans for other drastic changes.
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"Well, it's been a challenging year, that's for sure," Wilson says. "Certainly, the wind blowing the way it did with Katrina, Wilma, Rita has kept us really busy."
"We actually have a group of people, it's 300 people, all they do is follow catastrophes. They're a little bit like storm chasers," he explains. "We have them in mobile homes. They love to get in their mobile homes. Sometimes we have to tell them 'Don't go into the storm area just yet!' "
To hear Wilson tell it, America's second-largest insurer almost certainly beat FEMA to New Orleans, ground zero.
"We were deploying mobile response units across certain bridges, because we knew those bridges would probably go out as a result of Hurricane Katrina," Wilson says.
"And if the bridge was out, we'd never get our vehicle in there. So it's that detailed, that forward thinking."
"You had record losses this year, because of Katrina. Do you think you were fully prepared for what happened?" I ask.
"We were surprised of the hurricanes and the frequency of them this year," Wilson answers. "That's actually one of the problems with catastrophes in general. You can't predict when they're going to happen or where they're going to hit. What we're suggesting is that there be a privately-funded, government-sponsored fund."
What he's asking is for Congress to set up a national catastrophic insurance plan. For un-insured victims or those who can't get enough insurance.
"From where I sit, that looks like a bail-out," I say.
"Insurance companies are regulated to the amount of money they can charge and the type of coverage they have to offer," says Wilson. "People who live in hurricane zones, they either can't or won't pay enough money to offset the risk."
Point taken. But Allstate must take some blame. It gambled on Louisiana. It had no re-insurance there. That's insurance an insurance company buys to protect itself in case of huge losses.
"You weren't re-insured in Louisiana. You're laying off 700 people. Does Tom Wilson deserve a bonus this year?" I ask.
"In a year like this, where we had $5.7 billion of catastrophe losses, we still made $1.6 billion and got a 9 percent return on equity," says Wilson. "Our management compensation relative to earnings will be zero."
"I'm bad at math. You're telling me, no bonus for Tom Wilson this year?"
"As it relates to 2005, I will get paid no bonus as it relates to earnings," he says.
Hurricanes, earthquakes, tsunamis. Chicagoans watch with fear and fascination as the world's natural hotspots crumble. We Midwesterners feel safely tucked away from calamity. Think again.
"What could be the worst kind of catastrophe that could hit Chicago?" I ask.
"Terrorism. And terrorism is not covered by your homeowners' insurance," Wilson explains. "If a terrorist blew up a truck bomb outside your house and your house caught on fire, that would be covered by your homeowners' insurance."
"But he drops a dirty bomb on the el and --"
"You're not covered."
"I'm not covered? I can't get covered?"
"No. Because we have no way of determining what the probability is that someone's going to drop a dirty bomb on the el in Evanston, we have no way to determine what we should charge you," says Wilson.
But businesses are covered. Right. Your house isn't. Skyscrapers are. Congress will pay to rebuild them. Wilson wants that law expanded to include consumers.
"Everybody in America could pay just a little into a terrorism fund," he says. "Over the course of 10, 15, 20 years; there'd be plenty of money in there. Then if there was an event, people's houses could be rebuilt. That's how they do it in Europe."
Sound a little like social security? Allstate's largely alone on this one. Most insurance executives say: Congress will never go for a national catastrophe fund. But Wilson's okay being out front. He says airbags come standard in today's cars, because Allstate took a similar stand, 30 years ago.
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