SLABBED Daily – May 18

Now, it’s no secret we’ve got insurance problems here in Mississippi; but, Texas has one that I had not contemplated until I stopped by Merlin’s blog.  Over in the Lone Star state, insurance is making things tacky.

Suppose some shingles on a roof are damaged, but not all. Does a policyholder get a hideous looking checkerboard roof which affects the value of the structure and possibly the neighborhood? If part of a carpet is damaged, is it patched leaving a new part slightly different looking in the middle of a room? Many of these issues never arise because many insurance companies pay to match, trying to maintain a happy customer. Some pay for only the damaged amount, and end up fighting with their customers.

Catadjuster’s comment on the post tells more about Tacky in Texas:

I have one case in which State Farm is replacing only 2 sheets (8×4) of paneling in a bedroom of home where the paneling has been there for over 20 years. I have another case in which TWIA is replacing ceramic tile in the family room but not the breakfast area or the foyer even though the floor is continuous to both areas, this tile is over 30 years old. In each of these cases neither party can find these items available.

Merlin responded, we have heard more adjustment complaints regarding matching from policyholders and public adjusters in Texas than anywhere. That stands to reason because, as Merlin notes, Florida policyholders are protected.

§ 626.9744. Claim settlement practices relating to property insurance

Unless otherwise provided by the policy, when a homeowner’s insurance policy provides for the adjustment and settlement of first-party losses based on repair or replacement cost, the following requirements apply:

..2) When a loss requires replacement of items and the replaced items do not match in quality, color, or size, the insurer shall make reasonable repairs or replacement of items in adjoining areas. In determining the extent of the repairs or replacement of items in adjoining areas, the insurer may consider the cost of repairing or replacing the undamaged portions of the property, the degree of uniformity that can be achieved without such cost, the remaining useful life of the undamaged portion, and other relevant factors….

Since the market for Elvis painted on velvet would not be harmed, perhaps Commissioner Chaney will adopt the Florida language in regulation and spare us from the threat of tacky as hurricane season approaches.

3 thoughts on “SLABBED Daily – May 18”

  1. I watched a local cable access station interview this weekend featuring Jim Donelon (I know, I’m a loser). In the interview Donelon basically blamed the governor and legislature in Florida for creating a “hostile” environment that drove State Farm out of Florida.

  2. I think both Florida and Louisiana – just as TWIA has in Texas – have missed the point. You do not solve the insurance problem with the same thinking that created the problem in the first place.

    All of these state insurance programs are an attempt to make affordable insurance available. We had a discussion here on SLABBED some time ago about property rates and someone, Sup I believe, provided the historical perspective that the industry initially set property rates low to attract other business.

    In other words, the base was not actuarially sound and later efforts to make it so were often rejected. None of that changes the “smoke and mirrors” of setting up sham state-specific State Farm entities that “buy” [sic] services, including reinsurance, from State Farm Mutual.

    What it does mean, however, is that these state plans can not consider market rates when setting their own rates.

    It also means they can not adopt the same claims handling processes that the industry uses to control loss versus protect policyholder’s property.

    They do both and for added measure have adopted the WYO structure. The bottom line is not only have these state plans repeated the problem, they are feeding its growth.

    Gene Taylor’s plan may be imperfect but what Mexifrl didn’t realize is the reason it attracts opposition like flies is that it will solve the problem of states bankrolling the industry and perpetuating the costly problem that the states thought they were solving.

    Donelon, unfortunately, didn’t just buy “a piece of the rock,” he appears to be dumb as one as well. While you weren’t a “loser” for watching, there’s no way around the fact that it was a loser you were watching.

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