Natural Disaster and the Decisions That Follow
Jeff Rommel’s introduction to Florida could be described as trial by hurricane. Rommel took overFlorida operations in 2004 for Nationwide Insurance.Over a 2-month period in 2004, Florida experiencedits worst hurricane season in history
four majorhurricanes
(Charley, Frances, Ivan, and Jeanne) slammed thestate, causing an estimated $40 billion in damage. In the hurricanes’ wake, Nationwide received more than 119,000 claims
collectively worth $850 million. Although dealing with those claims was difficult, even more difficult was Rommel’s later decision to cancel approximately 40,000 homeowners’ policies. Nationwide received a huge amount of mediaattention as a result, almost all negative. In reflecting on
the decision, Rommel said, ―Pulling out was a soundbusiness decision. Was it good for the individual
customer? No, I can’t say it was. But the rationale wassound.‖Hurricanes aren’t the only weapons in nature’s arsenal, and the insurance industry is hardly the onlyindustry affected by nature. Consider the airline industry.
American Airlines has 80,000 employees, 4 of whommake decisions to cancel flights. One of them is Danny
Burgin. When weather systems approach, Burgin needs toconsider a host of factors in deciding which flights to
cancel and how to reroute affected passengers. He arguesthat of two major weather factors, winter snowstorms andsummer thunderstorms, snowstorms are easier to handle because they are more predictable. Don’t tell tha t toJetBlue, however. On February 14, 2007, JetBlue wasunprepared for a snowstorm that hit the East Coast. Dueto the lack of planning, JetBlue held hundreds ofpassengers on its planes, at JFK, in some cases for aslong as 10 hours (with bathrooms closed!). To the stranded travelers, JetBlue’s tepid offer of a refund was just as
four majorhurricanes
(Charley, Frances, Ivan, and Jeanne) slammed thestate, causing an estimated $40 billion in damage. In the hurricanes’ wake, Nationwide received more than 119,000 claims
collectively worth $850 million. Although dealing with those claims was difficult, even more difficult was Rommel’s later decision to cancel approximately 40,000 homeowners’ policies. Nationwide received a huge amount of mediaattention as a result, almost all negative. In reflecting on
the decision, Rommel said, ―Pulling out was a soundbusiness decision. Was it good for the individual
customer? No, I can’t say it was. But the rationale wassound.‖Hurricanes aren’t the only weapons in nature’s arsenal, and the insurance industry is hardly the onlyindustry affected by nature. Consider the airline industry.
American Airlines has 80,000 employees, 4 of whommake decisions to cancel flights. One of them is Danny
Burgin. When weather systems approach, Burgin needs toconsider a host of factors in deciding which flights to
cancel and how to reroute affected passengers. He arguesthat of two major weather factors, winter snowstorms andsummer thunderstorms, snowstorms are easier to handle because they are more predictable. Don’t tell tha t toJetBlue, however. On February 14, 2007, JetBlue wasunprepared for a snowstorm that hit the East Coast. Dueto the lack of planning, JetBlue held hundreds ofpassengers on its planes, at JFK, in some cases for aslong as 10 hours (with bathrooms closed!). To the stranded travelers, JetBlue’s tepid offer of a refund was just as