Chip Merlin has been cooking on all burners and dishing out news of Ike claims handling faster than I could digest and link Dig into this big spread – we were all invited – and then I’ll put out a little desert.
If you want to find a bunch of irate policyholders with plenty of stories to tell, hang out with Tina Nicholson and Javier Delgado in our Houston office. Commercial and residential policyholders have had enough frustration trying to do it themselves and are seeking legal counsel to fight the delays and denials from their insurance carriers. Anger at the insurance company and the adjusters working their claim is the prevalent emotion.
Modern insurance companies are in a much more favorable legal and financial position than the purchasers of their products. An insurance policy contains mutual obligations. Unlike other general commercial contracts, the insurance company promises that it will provide financial security in the event of a catastrophe. It further promises that the policyholder has “peace of mind,” that in the event of a catastrophe, such as a Hurricane Ike, the policyholder will be fully and promptly indemnified. Unlike a typical commercial contract, a non-breaching party (the policyholder) cannot replace the performance of the breaching party (the insurance company) by paying the then prevailing market price for counter-performance. Instead, the policyholder is completely dependent on performance by the insurance company when he or she is most vulnerable. If the insurance company fails to fulfill its obligations completely, the policyholder will likely suffer contractual and extra-contractual damages. Unfortunately, many insurance companies and adjusters delay, refuse, or fail to uphold their part of the bargain.
Newspapers, television and individuals on the internet have picked up this bad faith conduct during the claims handling process following the 2008 Texas hurricanes. These reports indicate that insurance companies are refusing to provide insurance coverage or engaging in sloppy, slow, or deliberate bad claims handling. It does not take a financial genius to figure out than an insurance company can make more money by collecting premiums and not paying claims, than it can make by collecting premiums and paying claims. I recently noted this inherent incentive in Playing the Float and the Wisdom of Warren Buffett.
You’d think the Texas Windstorm Insurance Association would know better; but, from reading Merlin’s next post, clearly they do not.
A new client informed me last week that his wife was going to protest against the Texas Windstorm Insurance Association (TWIA) in Austin, Texas. From what I hear, she is going to have quite a few neighbors with her as they commemorate the sixth month anniversary of Hurricane Ike by creating a storm of controversy as they march to TWIA headquarters. Power to the People!
One of the leaders, Brenda Cannon Henley, recently spoke with me at length regarding her perceptions and anger over the situation TWIA has caused businesses and residents…
Many of our people cannot come home because many of them have no home left to come to. Most are in a battle for their life against the huge Texas Windstorm Insurance Association and we’ve found that this sad group is not playing by the rules.
More than 100 (at this point) of our friends, neighbors and family members are protesting their action (or lack of) in Austin in front of TWIA’s offices on Friday, March 13, the exact anniversary of the day our lives changed so drastically. Many have come home — sort of, anyway — to RVs, fifth wheels, and partially repaired properties.We laughingly call ourselves “slabbers” the name TWIA dubbed us early on after the storm.
Many others we know simply cannot face coming here to the Peninsula where they believe their dreams of a lifetime died violently six months ago. One of our neighbors has never been back and her husband says she cannot come back. She has developed a raging fear of the water, a fear of diseases she surmises are here, and a fear of losing her life, as at least four of our immediate neighbors did…
As I read this, I felt a sense of déjà vu. It was like the Mississippi Gulf Coast following Hurricane Katrina. SLABBED welcomes Texas Windstorm Association and Ike victims to “the scheme” predicted this last year…
One of TWIA’s preposterous findings in nearly every case is that “slabbers” have exactly the same amount of damage to the estimated replacement cost of the structure–11.2%. Ms. Henley told me she has seen 53 adjusters’ estimates to total loss structures and each of them show only 11.2% damage. All our clients have only 11.2% estimated damage as well. Last week, I posted a sad joke about this, The Parable of Hurricane Ike Insurance Claims.
An adjuster comment was posted to Views From Hurricane Ike TWIA Insurance Adjusters which helps voices additional causes for the anger and need to protest TWIA’s disgraceful claims handling:
“You cannot imagine the hurdles TWIA put property adjusters through on “Ike” claims. I really felt sorry for the Texans that had to suffer three times for one storm. (the actual hurricane), (the TWIA claims process), (contractors repairs).
I hope that Texas can get its act together when it comes to state windpool. When an adjuster calls the carrier regarding a claim, you would think the carrier would understand that it must be an important call for the adjuster to stop what he is doing and contact them. Phones turned off at 3PM, no return phone calls, no communication on payments to insured, and the best excuse is “We have 50 file reviewers and it will take some time to get to each file.” This is a clear misunderstanding of logistics for a storm that created more than 75,000 claims. They should have tried for 500 file reviewers and provide the service the policy holder paid for.”
Honest and fair claims handling requires adjusters to fully and honestly explain how an estimate is calculated. None of these TWIA customers have been given this information. I do not expect the full, honest reason will be revealed until TWIA management is put under oath to explain the adjustments.
Merlin didn’t just write, he went into action and held a seminar for Texas Public Adjusters:
On Friday, one hundred and forty-eight Texas public insurance adjusters attended a seminar our law firm sponsored in Houston. I am pretty sure it was the largest ever gathering in Texas of people dedicating themselves to the study of helping property insurance policyholders. It was thrilling, exciting, and taxing for me. I loved every minute of it, and several public adjusters have asked us to hold another seminar this summer.
Based on past experience and seeing the misinformation regarding wind speeds from Hurricane Ike, we thought a presentation by a meteorologist would be interesting and relevant. We are finding that some insurance companies are providing engineers with low estimates of wind and gusts in the Houston area. The insurance company engineers seem to rely upon these outcome-biased reports of wind speed to come up with improper findings that damages were not caused by Hurricane Ike . We wanted to show the public adjusters the value of having an experienced meteorologist who can dispel those reports.
Texas has some unique issues regarding construction, building codes, and building regulations. An engineer with experience in certified wind inspections gave a presentation on these issues. Retaining engineers, meteorologists, architects, estimators, and other experts should be common place in claim presentation of serious loss cases. Frankly, the insurance companies should be doing this as well, if they truly want to fulfill their obligation to conduct a full investigation.
You may recall Tina Nicholson was in the process of opening Merlin’s Houston office when McIntosh settled. I’m glad to know we’ll be hearing more from Merlin on Ike claims handling and Tina’s current work.
Now, for a little desert. Many in Galveston were unable to evacuate and I retold the story of one Ike survivor in a post following the storm. I’m sorry to say this desert is bitter sweet; but Margaret Winters is sweet as ever; and, a follow-up story was in the Houston Chronicle today.
When Ike’s rising floodwaters trapped Margaret Winters in her first-floor apartment on 61st Street in Galveston, the 79-year-old retired teacher curled up on her bed with her cat, Sherpa, and said a little prayer: “Lord, if it’s time for me to go, that’s fine. I’ve had a good run. But if it’s not, please send somebody to come get me out of here.”
Minutes later, the wind stopped howling and Winters heard someone knocking on her door. Her neighbors had waded through the storm surge during the eye of the hurricane to rescue her.
Winters normally uses a motorized scooter to get around, but with her neighbors’ help, she found the strength to cross the courtyard in a walker and climb upstairs to safety.
“I don’t know what I would’ve done without them,” she said. “I would’ve just floated, I guess.”
Two days later, Winters was evacuated in an ambulance. Paramedics thought she might be having a heart attack, and they wouldn’t let her take Sherpa.
“I lost him,” she said. “The last thing I saw was my cat looking out the window, watching me leaving.”
Over the next five months, Winters bounced between three hospitals, two nursing homes and a friend’s trailer. She had salvaged nothing except the clothes on her back and the contents of her purse. Warding off hopelessness felt like a tougher feat than climbing those stairs in the storm.
“All those months of not knowing where I was going to go, not knowing where I was going to live, I was just emotionally exhausted,” she said. “I was desperate to get back on the island.”
Winters returned to Galveston in January, to an apartment a few blocks from her old one. She wonders what became of her neighbors. The complex where they lived has been gutted for renovation.
“I have thought about them every day and wondered where they went and how they are,” she said. “They were such dear people.”
Any question about the validity of claims for mental anguish when cases drag on for years could be easily answered by the story of Margaret Winters just six months after Ike.
Thanks, Chip, we certainly enjoyed ourselves. Keep cookin’ and we’ll keep coming!