Posted On: August 2, 2007, 9:08 am CDT

Posted By: Barb Polsky

Rather than resorting to name calling, insults, etc. Wouldn't it be much more beneficial to everyone reading and writing in this group to just simply discuss the facts, try to come up with answers on how to fix the problems in the insurance industry. There are problems in the insurance industry and the consumer is the one left holding the bag in most instances. Consumers pay their insurance premiums in good faith thinking that when they have damage that the insurance company will fulfill its obligation in good faith and pay for the damages. Very few people that I've spoken to that had problems with their insurance carrier after the storms of 2004 were expecting to come out on the other end of their claim with money in their pockets, they simply wanted to get their house repaired and made livable again. Our insurance company (probably in an effort to get out of paying us) sent not one, not two, but three adjusters to our house to inspect our damages and every single one of them said that our claim was valid and we would be receiving a check to repair the damages and put the house back the way it was. Not one of them ever mentioned the word "flood", not one but yet we ended up in the wind vs. flood category. The last adjuster that the insurance carrier sent out stood on our front lawn with us and our independent adjuster and a neighbor and told us that our claim was a "slam dunk".
When we first called our carrier after Frances and explained our damages we were told by them flat out that it wasn't flood it was wind because we didn't have "rising water". Yet two years later they were fighting us saying that we had a flood. There was no flood within our community or anywhere near us for miles, so how could we have had a flood? The two storms that affected us were Frances and Jeanne and our damages may have been much worse had we evacuated but since we did that for Charley and Charley didn't come anywhere near us we decided to "hang in there" for Frances and Jeanne and were glad we did so that we could move things out of the areas that were getting the most water on them.
I started doing research after our company had our claim for 3 months and still we had not received a check, not even a dime and we were living in what I called a "warehouse".
The things I discovered were appalling. Just about every insurance carrier, large and small, was using or trying to use the "wind vs. flood" issue to avoid payment. There were laws on the books in 2004 (Florida's VPL) that covered that issue clearly and concisely, but rather than follow the law the insurance industry used their lobbyists and money to either fight the law by requesting appeal after appeal when they lost in court time and time again or to try to get the laws changed. (As an example what happened with the Value Policy Law?)
While most middle class policy holders in FL had to fight their insurance carriers to get payment in the "wind vs. flood" issue I discovered that a man in Gulf Breeze sat with a $4 million dollar settlement check in his hands for his home damaged in Ivan. How did his home get damaged? Its called "storm surge" and that's what he got paid for, storm surge. But yet other policyholders were fighting an uphill battle (some with the same insurer that paid the above claim)when insurers claimed "storm surge" was flood and not wind and they therefore were refusing to pay their claims. The link to story is below http://www.fldfs.com/PressOffice/Documents/Their%20Risk,%20Our%20Money06.htm
I have on my computer tons of documentation and reams of information concerning the tricks that the industry (as a whole) used on unsuspecting consumers to avoid paying them for the damages they incurred. Investigative reporter Paige St. John did a series after Charley hit and it ran in USA Today on the front page, people that hadn't had any resolution to their claims, etc. suddenly started getting phone calls and checks from their insurance carriers. Here is the link to that series http://www.floridatoday.com/insurancestorm/day1.htm It wasn't just us that were over a barrel with our insurance claim, there were thousands all over the state and then after Katrina even more. All you needed to do was read the papers and watch the news to see clearly what was happening.
Even the independent adjuster that we hired to help us try to resolve our claim said he had never before encountered what was happening to us (and he had been in the business for many years). He even volunteered to give up his fee at our mediation hearing if the company would just give us our money. The "umpire" at that meeting ended up telling the adjuster representing our insurance carrier "These people are entitled to justice. Go back to (carrier's name) and tell them to settle this claim. These people have multiple grounds to sue" Still nothing happened. Just about all carriers, not just a few were guilty State Farm, Nationwide, Allstate and others.
As far as reinsurance goes. I know exactly what it is. And btw several of the top insurance carriers that have subsidiaries or pups in Florida and elsewhere reinsure themselves through their parent company. And there are other ways to purchase reinsurance rather than from off shore carriers.
The bottom line is that insurance carriers are making billions of dollars in profits while claiming their losses were hurting them, granted not all of them but the majority (especially your major insurers). That might be true on a state balance sheet but the true balance sheet is that of the parent company. Robert P. Hartwig, Ph.D., CPCU said "The financial and underwriting performance of the property/casualty insurance industry during the first quarter of 2005 was the best in many years. Results through the first six months of the year (at least) are likely to be very good as well." See the Fact sheets & Resources paper at this link http://www.atla.org/pressroom/research/insurerfinances.aspx
Also from that same paper…
Industry's Surpluses and Profits Have Increased Dramatically Over the Last Three Years. Since 2002, the insurance industry has seen a 40 percent increase in its surpluses, to a record $401.8 billion in 2005. The industry's profits also saw a dramatic gain, as well, increasing from $2.9 billion in 2002 to $38.7 billion in 2004.
From a table in that same report-
In 2002 Surpluses were $285.2 billion and by 2005 (1st Quarter) Surpluses were $401.8 billion
In 2002 After-Tax Income was $2.9 billion and by 2005 (1st Quarter) After-Tax Income was $17.3 billion
And there are many more resources you could check into if you'd like more on all these issues and more. Many are right here in the Insurance Journal.
I am sorry if any agents, etc. take this personally, I certainly do not mean it that way. I'm just trying to get more facts into the issue besides the losses that the industry encountered due to storms, etc.
The insurance industry seems to be accountable to no one and does as they please. Every business needs to be accountable somehow, someway to someone.

Barb Polsky