Blow back, blow out and a lot of hot air around state-funded insurance plans

Since state-funded insurance plans are a big money maker for the insurance industry and a deep money pit for the states, it will be interesting to see how this trouble in paradise plays out.

Louisiana Citizens Property Insurance Corp., the state’s insurer of last resort, should be abolished, the Commission on Streamlining Government said Tuesday. Our friend Jim Brown was there.

Brown called Louisiana Citizens Property Insurance “the biggest financial disaster in history. “If the old system had been in place, you and I wouldn’t be paying off a $1.5 billion bond issue” that bailed out Louisiana Citizens Property Insurance”.

What a blow back!  Meanwhile in neighboring Texas, the general manager of the the Texas Windstorm Insurance Association had a blow out: Continue reading “Blow back, blow out and a lot of hot air around state-funded insurance plans”

And the beat does go on, as in the beat down of the taxpayers and the NFIP by shady insurers

As the Houston Chronicle illustrated in their 1st anniversary of Ike coverage, not only do the taxpayers get stuck with the wind claims insurers dump on the NFIP they also get stuck for the bill for the living expenses these all perils contracts should cover but never do. As a between the lines reader stated in an email:

What this article leaves unstated is that these lengthy disputes over causation ultimately cost federal taxpayers billions of dollars unnecessarily. The federal government pays for trailers, housing vouchers, subsidized loans, tax deductions, grants, and other benefits to assist displaced residents who are engaged in legal disputes with their insurers or who have unintentional gaps in their coverage despite buying all that was recommended by their insurance agents. Meanwhile, because of the delay in the housing recovery, the federal government subsidizes local governments, schools, hospitals, and businesses for extended periods of time until the local tax and consumer base can be restored.

Gang does any of this sound familiar? One key difference is without expedited claims Texas homeowners are having to go after both the NFIP and their wind insurer to be made whole on the coverage they were sold that in theory should fully cover their losses but rarely does without having to sue.

Life in a trailer in his driveway is a daily reminder of Hurricane Ike for Michael Amoroso.

After waiting months for a response from the National Flood Insurance Program, he was declined a bigger payment that he had hoped to use to rebuild.

For Amoroso and other homeowners like him, the storm did more than damage their property. The unrepaired houses and pending insurance claims are a daily test of their will.

“For months they didn’t even return my phone calls or e-mails,” said Amoroso, who plans to sue for more funds. “I am so fed up.” Continue reading “And the beat does go on, as in the beat down of the taxpayers and the NFIP by shady insurers”

Merlin blows cover off roof damage in Texas

My wish is that somebody is going to read this Blog, call or write TWIA, and let them know that they need to write all their policyholders to alert them that the memo is wrong. However, my guess is that they will hire an attorney, and try to defend or explain the memo. (Chip Merlin)

I must admit to having similar thoughts about posts on SLABBED when I see a case lost for lack of information readily available to a non-lawyer researching the issue.  Frankly, I hold out virtually no hope of any insurer ever admitting to and correcting an error.  The field appears to be dominated by leaders who view themselves as Mr. Always Right.  Eager to shake the label “bureaucrat”, leadership of publicly funded windpools and other “last resort” options quickly forget such programs exist because of a related failure in the insurance industry and eagerly become “one of the boys” – a lapse that IMO is resulting in an overpopulation of these Mr. Rights commiting every possible wrong.

Merlin’s wish would be my command if I had such power; but, alas, I have only the power to join him in wishing  for a good outcome from his effort and, in the absence of a magic wand,  cross-post  The TWIA Roof Damage Memo: Checking Basic References to Resolve Adjustment Questions that contains a link to his equally excellent Internal Texas Windstorm Roofing Claims Memo Explains Damage is Not Covered.

The post from this morning, Internal Texas Windstorm Roofing Claims Memo Explains Damage is Not Covered, raised a number of interesting methods to research this coverage issue. Many risk managers and public adjusters will simply call me to get a quick opinion regarding many day to day coverage issues. I thought it might be interesting to see what adjusters may have in their basic training materials to answer the questions raised in the memo. I have no idea if the TWIA claims executives looked at any reference materials. I hope they authored the claims memo in ignorance, because the opposite poses a different set of problems. Continue reading “Merlin blows cover off roof damage in Texas”

Merlin’s blog cookin’ with news of Ike claims handling – SLABBED brings desert

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. Continue reading “Merlin’s blog cookin’ with news of Ike claims handling – SLABBED brings desert”

Merlin: The parable of Hurricane Ike insurance claims!

and the moral of this story is…

My good buddy, Tom Grail, told me the parable of Hurricane Ike Insurance Claims. To appreciate this, one must first understand that the total loss structures in Galveston and Bolivar receive uniform estimates of wind damage from the Texas Windstorm Insurance Association (TWIA). The amount of damage caused by wind for nearly every structure is approximately 11%. The reports are virtually identical for every total loss structure, despite differences in the age of the structure and quality of construction.

The parable is a story of two men, Larry and Moe, who were on the peninsula when Ike hit. Larry was struck by a flying 2X4 launched by the wind, then, when the surge came, he grasped a floating timber and made it to safety. He was treated for his injuries, estimated at 11% of his being.

Moe was not so lucky. He was killed instantly by a flying TV set. The storm surge subsequently swept his body away.

The medical examiner compared Moe’s corpse to Larry. After taking several months to consider the situation, the examiner declared that Moe was only 11% killed by wind, because that’s what happened to Larry. He opined that 89% of Moe’s death must have been due to flooding.

Merlin goes on to add: Continue reading “Merlin: The parable of Hurricane Ike insurance claims!”

Treading Water – claims handling in Texas following Hurricane Ike

While the National Insurance Law Forum waited a bit longer than most to ask Hurricane Ike Insurance Litigation: Will it be as bad as Katrina?,  the November 17, 2007 post also suggested the answer.

It didn’t take long for the first bad faith suits arising from Hurricane Ike to be filed in Texas. Last week, the first two Ike bad faith lawsuits that I am aware of were filed in Galveston and Ft. Bend Counties…These are first of several thousand Ike lawsuits expected to be filed across Southeast Texas over the next several years…

The big question being asked by carriers across the country is whether Hurricane Ike will generate the type and volume of litigation generated by Hurricane Katrina. In the three years since Hurricane Katrina, it has been estimated that between 27,000 and 30,000 hurricane insurance suits were filed in southern Louisiana alone. Of the 12,565 suits filed in federal court, only slightly more than half — 7,837 — cases, have gone to judgment or settled.

The seventh edition of the Hurricane Ike Insurance Newsbrief (January 26, 2009) quotes the Texas Department of Insurance reporting that in the three months after Hurricane Ike… over 730,000 insurance claims have been filed and the number continues to rise.

From the policyholder’s perspective, the numbers indicate a mixed blessing.  The longer it takes for a case to get to court the more likely it is that new case law will replace Leonard and other of the 5th Circuit’s poorly reasoned opinions on Katrina litigation.  Chip Merlin’s post on the 5th’s decision in Leonard, Fifth Circuit got it wrong,  points out where the Court’s reasoning failed.

In their rationale…the 5th Circuit provides a less than stellar (okay really absurd) example of non-coverage that virtually all insurance companies issuing an all-risk policy would heretofore pay. After finding that the anti-concurrent causation language was not ambiguous, Judge Edith Jones went too far and provided the following:

If, for example, a policyholder’s roof is blown off in a storm, and rain enters through the opening, the damage is covered. Only if storm-surge flooding – an excluded peril – then inundates the same area that the rain damaged is the ensuing loss excluded because the loss was caused concurrently or in sequence by the action of a covered and an excluded peril…

Where did that come from? Virtually every adjuster and claims manager I have ever deposed with that similar hypothetical situation in a Katrina loss has said coverage would be granted under the all-risk policy for the full amount of the loss…From a practical standpoint, where is there going to be any coverage if the flood policy has the typical exclusions regarding pre-existing loss or “roof leaks or wind-driven rain” as found in the National Flood Policy?

That seems to be one of the big questions in Texas following Ike, according to Thousands waiting for windstorm payments, the article from the Galveston County Daily. h/t Dimechimes. Continue reading “Treading Water – claims handling in Texas following Hurricane Ike”

SLABBED welcomes Texas Windstorm Association and Ike victims to “the scheme”

Texas Windstorm Insurance (TWIC) has canned software programs that the Adjusters have to use for their estimates. The unit prices on the structures are about 40% low, old and outdated. The adjusters make choices on which unit price item to use and that usualy makes the estimate also low. Drawings must be made by registered Professional Engineers in the State of Texas. The engineer designs to the new codes but the costs in the software programs are not updated…

This gem of information was among the 74 comments to the Houston Chronicle’s story Homeowners battle for higher payouts to fix Ike damage.

Hurricane Ike blew some shingles off William Cognata’s La Porte home and loosened a lot more.

His roofer told him he needed to replace it, but his insurer offered $466 for repairs.

“Three roofers looked at it and told me to replace it. I’m no roofer, but I have some sense to know who to listen to,” he said.

Area homeowners have survived the storm, waited weeks in some cases for the lights to come back on and opened their homes to insurance adjusters.

Now, as residents slammed by Ike work their way through the recovery process, some are entering a new phase: the battle for what they consider a fair settlement of their claims.

Some are complaining to regulators, hiring their own experts and, like Cognata, turning to attorneys to get higher insurance payouts.

More than 1,700 Texans so far have complained to the state about their insurance companies — everything from claims delays to unsatisfactory offers and denials.

That’s a small percentage of the more than 530,000 claims filed already in the wake of Hurricane Ike, but state regulators say they’re monitoring the number of reports and how they’re resolved to make sure policyholders are treated fairly. The agency can require bigger payments if necessary.

“We certainly want to hear if there are any complaints about the claims process,” said Jerry Hagins, a spokesman for the Texas Department of Insurance.

Perhaps, Mr. Hagins will read the comments like this one in the Chronicle. Continue reading “SLABBED welcomes Texas Windstorm Association and Ike victims to “the scheme””

Reality hits Texas “…quick to take your payment but very slow to pay your claim.

Our home in Bridge City , Texas was flooded with six feet of water. We were one of the very few people who purchased federal flood insurance through Allstate. It has been since Sept. 13th and we still have not received a dime from Windstorm nor the flood policy. I cannot believe how crooked these insurance companies are. We had the same problem after Hurricane Rita. All of the insurance companies are the same………………….quick to take your payment but very slow to pay off a claim. (emphasis added)

Reader comments to the Houston Chronicle update on claims handling following Ike ditto many of those following Katrina.

After Ike raked Mike Hurlbert’s home on the Bolivar Peninsula to the slab, an adjuster was quick to come to his home.

Money from the Texas Windstorm Insurance Association, however, was slower to arrive. And then, when it did, it was only what TWIA considers an advance.

The agency told him it needed more time to figure out how much of the damage was due to wind, which TWIA covers, and how much was due to flood, which it does not. Continue reading “Reality hits Texas “…quick to take your payment but very slow to pay your claim.”

State windpools may offer little more than political hot air

And, here from Texas via the Sun Herald is news that further supports Congressman Taylor’s HR3121.

The Texas windpool can cover $2.3billion of the estimated $16billion it will take to cover claims from Hurricane Ike!

Hurricane Ike caused as much as $16 billion in property damage, by some estimates, but the state-led insurance pool that will pay much of the cost has only $2.3 billion, leaving the Texas government on the hook potentially for billions of dollars in claims.

Insurance companies all but stopped offering hurricane coverage for property on the Gulf Coast after hurricanes Katrina and Rita in 2005 cost them billions of dollars in claims and as property values soared, raising their exposure to disaster claims.

The pullout of commercial insurance carriers forced most property owners on the coast to turn to the state-run insurer of last resort, the Texas Windstorm Insurance Association, or the wind pool, as it is called. Continue reading “State windpools may offer little more than political hot air”