Florida Officials Say Insurers Not Doing Enough to Settle Hurricane Michael Claims

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It’s been just over a year since Hurricane Michael made landfall in the Florida Panhandle, devastating the region as a Category 5 storm with 161-mph winds and causing more than $7.2 billion in estimated insured losses, according to the Florida Office of Insurance Regulation.

As of Sept. 27, 88.4% of the nearly 150,000 claims related to the storm have been closed, but more than 17,000 claims remain open and lawmakers and regulators say insurers need to do more to get those claims resolved.

“As we mark the one-year anniversary of Hurricane Michael, OIR recognizes the tremendous work that still needs to be done to close insurance claims and allow Florida’s Panhandle residents and business owners to rebuild and recover from this devastating storm,” Insurance Commissioner David Altmaier said in a statement on the storm’s one year anniversary on Oct. 10.

A one-year analysis of Hurricane Michael released last week by OIR stated that 12,145 of the 17,347 open claims are personal residential. OIR said that policyholders have continued to file new claims through its latest data call reporting period, including 1,571 in the last 90 days. It noted that per Florida law policyholders can file a claim within three years of the hurricane’s initial landfall or when the windstorm caused the covered damage, in accordance with policy terms.

The analysis found that more than 82,000 Hurricane Michael claims were closed in the first two months following the storm, and since October 2018 an average of 3,300 claims per month claims have been closed.

Of the current 17,347 open claims, 9,330 of those are claims that have been reopened, OIR stated in the report, with 3,313 of those open claims in litigation and 2,996 open with an assignment of benefits. Just 191 of the open claims are both wind and flood claims.

OIR said when compared with Hurricane Irma, which affected a much larger area of the state, Hurricane Michael was a costlier storm when comparing the number of claims with the amount of paid losses. Irma had more than 1 million claims totaling more than $10.8 billion with an average claims cost of $10,800 while the average claims cost for Michael is around $44,831.

Insurers appear to have been quicker to pay Irma losses, according to the OIR analysis. Just over 7% of the 2017 storm’s claims remained open 14 months after Hurricane Irma while 11.6% of Michael claims are still open 12 months later.

Lawmakers told Florida Insurance Commissioner David Altmaier this week that they are unhappy with the response to Hurricane Michael claims from the insurance industry.

“It is extremely important to this committee and to the people of Florida that insurers are handling these claims properly,” Florida Senator Doug Broxson said in a Florida Senate Banking & Insurance Committee meeting on Tuesday.

The committee asked Altmaier to expand OIR’s current investigations into why claims are taking so long to close and requested the office work with the Florida Department of Financial Services and the Florida Insurance Consumer Advocate Tasha Carter to look into consumer complaints and what companies are seeing the most complaints.

Carter told the committee one of her first priorities since being appointed last month has been to review, analyze and monitor open hurricane Michael claims in an effort to gain a better understanding of why so many claims are still open and what is causing them to be delayed. She has sent a letter to companies who represent 75 percent of open hurricane Michael claims asking them to provide additional data.

Panhandle native and Florida CFO Jimmy Patronis, who heads up the Department of Financial Services, has been outspoken on the insurance industry’s handling of Michael claims over the last year, repeatedly calling on insurers to step up their efforts to help consumers recover.

He reiterated that message last week on the one-year anniversary of Michael and said the region’s recovery “has been hampered by the more than 17,000 outstanding insurance claims left open a full year after the storm.”

The DFS Consumer Services Team held a Hurricane Michael Insurance Village in Panama City this past weekend, it’s second village in the last two months, as part of its efforts to get claims resolved. Patronis said 30 insurance companies were in attendance with an estimated $1.5 million in claims payments made to consumers who met with their insurance company in person.

“While this is great progress in paying out remaining claims, it’s past time insurance companies step up for the consumers who pay their premiums faithfully month after month,” Patronis said.

Hurricane Michael’s Destruction in Photos

The industry, however, says the reason for so many open claims does not entirely fall on insurers’ shoulders. Many factors have been at play that have stalled claims resolutions for consumers, representatives from the industry told Insurance Journal.

“The biggest difference in this storm recovery effort and others is the severe shortage of contractors to perform the work. This has resulted in claims staying open longer than desired,” said Jeff Grady, president and CEO of the Florida Insurance Agents Association (FAIA). “We routinely hear stories of 1-2 year wait times for roofs/rebuilds in the Panama City area. That obviously means the claims will have to stay open for an extended period of time.”

The Florida Property Casualty Association (FPCA) which represents 12 domestic Florida insurers, said in a statement its companies are working to resolve any open claims “in an expeditious manner,” including participating in the CFO’s latest insurance village.

“Hurricane Michael impacted almost 200,000 structures. Although insurers have adjusted and paid the vast majority of claims, the most difficult claims remain, including those that involve flood damage or are under the control of public adjusters,” William Stander, FPCA executive director, told Insurance Journal. “The Florida Property & Casualty Association’s member insurance companies continue to do their best to help Floridians pick up their lives and rebuild their homes. As Floridians ourselves, we recognize that we are all in this together.”

Michael Carlson, president and CEO of the Personal Insurance Federation of Florida (PIFF), said the vast majority of Michael claims are resolved, but noted there are many reasons why some claims remain open, including a lack of contractors and other tradesmen, and a lack of engineers and other specialists to help evaluate and estimate damages. He said there are also other barriers that may force a claim to go beyond the 90-day “prompt pay” period.

“A claim may remain open if the homeowner cannot find a contractor to perform repair work or if they are waiting to pay a vendor,” he said. “In the case where you cannot remain in your home and need living expenses from your insurer while your home is being rebuilt, the claim may remain open.”

He stressed insurers are committed to working with consumers in their recovery from Michael.

“While the existing open claims are being resolved, we know claim filing does not stop when the wind stops – new claims from Michael may continue to come in up to three years after the event. We will keep our commitment to rebuilding Northwest Florida. That work will not be complete until every Hurricane Michael claim is resolved,” he said.

Regardless of the reasons for the delays, Altmaier said his top priority is getting Hurricane Michael claims closed as soon as possible.

“We will review claims handling practices and identify unwarranted claim delays or denials, and take swift action against insurers violating the law,” Altmaier said in a statement Wednesday. “I understand there is a human story behind every claim and every complaint. I encourage consumers to tell their stories by calling the CFO’s Consumer Helpline at 1-877-693-5236 if they are experiencing any issues whatsoever with their claims. We are committed to making consumers whole to the fullest extent of the law.”