For many storm victims, a long wait for insurance payments

RACELAND, Louisiana — Nearly six months after Hurricane Ida lifted the roof off Brett Gabriel’s home, filling it with rainwater, reconstruction seems almost as out of reach as the day of the storm.

Between gutting the mold-covered walls and replacing the waterlogged floors of his home about 45 miles southwest of New Orleans, it will cost more than $150,000 to make the house livable for M Gabriel and his wife, according to an expert he hired. But after her insurance company sent its own adjuster to inspect the damage, the company only offered $21,000 – enough to replace the roof, with $6,000 remaining.

The insurance policy “was meant to be a safety net”, said Mr Gabriel, who slept in the house for months after the storm even as he developed a cough and headache that he Attributed to black mold crawling up the walls. Although the state provided them with a trailer in January, they said it was barely big enough for them to sleep comfortably and still spend their days in their damaged home.

In the small church a few minutes from where Mr. Gabriel is pastoring, almost everyone in the congregation with home insurance has had the same experience, he said.

“We could finish each other’s story,” he said.

He tries to encourage patience, but his is running out.

“How do we rest? How to get some kind of peace? Mr Gabriel said, adding: ‘It’s like we’re stuck in purgatory.’

As storms, floods and fires batter homes across the country with increased intensity, homeowners are increasingly faced with disaster after disaster: the months-long struggle with insurance companies, even years, to obtain the funds necessary for the reconstruction.

There is little definitive data on whether an increase in extreme weather events and natural disasters is leading insurers to find other ways to say no.

But residents, lawmakers and advocates say delays and underpayments are becoming more prevalent, with insurance companies often sending in inexperienced claims adjusters and company-appointed engineering firms whose Damage estimates are well below the costs needed to make the repairs – especially as labor and supply costs have jumped.

Mike Fesi, a Republican state senator representing the Louisiana district hardest hit by Ida, estimates that about half of his insured voters have experienced late or underpayments.

“I don’t know what the deal is – if they’re doing it on purpose,” said Mr Fesi, who himself has experienced delays with his insurance claim. “I wouldn’t like to think that’s the case.”

But as insurance companies face near-record losses from back-to-back hurricane seasons as well as disasters like wildfires in the West, some are seeing more than random problems.

“What we see there, I see across the country,” said Doug Quinn, executive director of the American Policyholder Association, a watchdog organization he says regularly receives complaints from policyholders and employees. Of the industry.

The organization recently filed a criminal complaint against two Florida homeowners whose homes were damaged by Hurricane Irma in 2017, alleging denial and underpayment by the United Property & Casualty Insurance Company. The association of policyholders said the complaint could represent the experience of thousands of victims of the storm. The company, which said it had not yet received a complaint, declined to comment.

Insurance industry officials said companies have paid out huge sums after disasters in recent years: Insurers are expected to issue more than $20 billion in property loss claims to Louisiana residents affected by hurricanes in 2020 and 2021. With so many payments and so much damage, delays are to be expected, said Mark Friedlander, communications manager at the Insurance Information Institute.

“When there’s a catastrophic loss of this magnitude, you’re going to have owners who are definitely unhappy with how their claims are being resolved,” he said.

The vast majority of complaints are dealt with quickly, Friedlander said, citing industry data showing that 83% of Hurricane Ida claims had been “closed” by the end of the year.

But that data paints an incomplete picture, according to Jim Donelon, the Louisiana insurance commissioner, whose office collected and released the data.

“It’s the opinion of the company, it’s not necessarily the opinion of the insured,” he said of the term “closed.”

Across southern Louisiana, the delays not only prolonged the rebuilding process — with many storm victims still living in hotels or trailers in their backyards — but drove some people out for good.

“That’s what they’re hoping for: that you just put your hands up,” said Lynn Lewis, who finally began rebuilding her home in LaPlace, a suburb of New Orleans, after receiving disappointing damage estimates from a series of different adjusters. . “A lot of people have just left these houses. It’s going to be a ghost town,” she said.

Kerry Andersen of Lake Charles said she was offered a fraction of what she needed to rebuild after Hurricane Laura in 2020 after nearly a dozen surveyors and engineers hired by her construction company insurance have examined the damage. In January, she finally decided to sell her house at a loss.

“It’s a loss on a whole new level because you’re also losing your community,” said Ms. Andersen, who has been swinging between rental apartments in Baton Rouge and New Orleans since the storm.

Mr Friedlander said most of the problems were with smaller regional insurers, which he said “don’t have the same bandwidth as a large national or super-regional insurer to effectively manage a disaster like Ida”. Three small regional carriers have become insolvent in recent months and have gone into receivership.

But advocates said they heard about the same issues from policyholders at large and small companies. More than 450 complaints have been filed by victims of Hurricane Ida with the Louisiana Department of Insurance against State Farm, the state’s largest insurer.

Roszell Gadson, spokesperson for State Farm, said the majority of claims for recent storms in Louisiana have been resolved. “We are committed to treating each claim with care and concern, while respecting the coverage described in the insurance policy,” he wrote in an email. For the 2020 and 2021 hurricanes, “State Farm paid more than $2.5 billion on more than 140,000 claims received from our Louisiana customers,” he added.

Complaints filed against insurers are likely only a fraction of the number of people struggling, Donelon said.

“Most people go into the situation thinking they’re going to get an objective assessment and they’re going to get what they’re entitled to – and that’s the biggest misconception,” he said. Ted Patestos, a Texas-based Smart Claims Public Adjusting adjuster, whom Mr. Gabriel hired to assess the damage to his home. “I have yet to see a single policyholder who did not owe more money.”

Most others – who are unfamiliar with public adjusters or who don’t have the time or resources to fight their insurer – simply accept their insurer’s offer.

“It’s kind of a war of attrition,” said Mr. Patestos, who said he quit as a director for an adjustment company hired by insurance companies after Hurricane Laura in August 2020. because he disagreed with the way he and his colleagues were questioned. to process cases.

Lawyers and experts said underpayments and late payments, while not new, became more common after hurricanes Katrina, Ike and Rita caused a slew of damage to the coast of Gulf in 2005 and 2008.

“It’s gotten a lot more sophisticated and a lot more orchestrated and a lot more standardized,” said Jeff Raizner, an attorney who has handled insurance claims litigation for 30 years in Texas and Louisiana. “They have been very creative in responding to increasing environmental risks to minimize their own risk.”

Paul Newsome, managing director and senior research analyst at Piper Sandler, an investment bank, said companies were struggling to deal with cascading damage.

“I don’t think most insurers try to trick customers,” Mr. Newsome said. “But they’re not trying to be generous either.”

“The underlying business is so unprofitable,” he added, that “they just can’t afford to be more generous than they have to.”

And, he said, some policyholders only realize once a disaster strikes that the policy they purchased is insufficient. “Who reads the contract well? No one does until their loss occurs.

At the same time, many customers are struggling to afford adequate cover as insurers faced with declining profits have raised premiums and deductibles.

Homeowners’ experiences after hurricanes Laura, Delta and Zeta hit southwest Louisiana in 2020 prompted lawmakers to propose a series of bills in 2021 aimed at controlling insurer behavior.

But the insurance industry, a powerful presence in the legislature, fought many of the proposals, and few of those bills passed intact. A proposed penalty of $10,000 for failure to pay within 30 days of receiving a field expert’s report was reduced to $2,500.

But now, with the same struggles unfolding identically in more populous and politically powerful southeast Louisiana, supporters of the legislation are hoping for more success in the next legislative session. At a committee hearing on insurance in December, lawmakers from both sides expressed increasing frustration and called for reforms.

Although Mr. Donelon, the state insurance commissioner, said Louisiana could be more aggressive in regulating the industry, he also said the state should be careful to avoid driving out insurers altogether. of the market.

“We are responsible — each state is responsible — for making insurance affordable and available,” said Mr. Donelon, a Republican. “And we can kill the goose in the process of overregulation.”

But others say the concern about crowding out insurers is misplaced.

“What they’ve done to people – they shouldn’t have their politics if they can’t make them whole in a timely manner,” said Dustin Granger, who ran unsuccessfully for a Senate seat in the United States. state in southwest Louisiana last year with insurance reform as a key campaign issue. “If you can’t do business right, that’s not really insurance.”