Citizens Property Insurance Corp. says it has reopened about 37 percent of its Hurricane Irma claims, according to a statement from the Florida insurer of last resort.
The insurer says the reopening of claims is part of ongoing efforts to assist policyholders after the storm, which hit the state last September, by revisiting claims and making additional payments as repairs are made. The company hopes getting the word out about customer options will help deter costly litigation.
“Facing a shortage of contractors, which has led to delays in repairs, especially in the [Florida] Keys, some of our policyholders in the region feel abandoned and on their own – a dangerous combination that can lead to litigation and further delays,” said Citizens President and CEO Barry Gilway at the insurer’s April 11 Board of Governors meeting.
As of March 28, Citizens said more than 24,500 of 66,400 Irma claims, about 37 percent, have been reopened for supplemental payment and to allow policyholders or their representatives to provide additional information related to their claim.
Overall, Citizens has closed nearly 90 percent of all Hurricane Irma-related claims. Open claims include properties with extensive damage, disputes and those in which a contractor has yet to provide an estimate for repairs.
Citizens said field adjusters remain on the ground throughout the Keys and South Florida to revisit claims and revise damage estimates, when appropriate, to ensure policyholders are reimbursed for all covered losses associated with Hurricane Irma.
Michael Peltier, Citizens spokesman, said it is common for claims to be reopened and the claims are, by and large, non-AOB (assignment of benefits) Irma claims that are going through the process.
“It is not unusual for claims to be closed and then reopened as the repair process begins,” Peltier said in an email to Insurance Journal. “Typically, initial payments are made that reflect the actual cash value of the losses incurred (minus deductibles). Subsequent replacement cost payments are made as repairs progress. Some of our policyholders are mistakenly of the belief that initial payments are all they are going to receive for more extensive damage.”
Following standard insurance protocol, Citizens said it made initial payments immediately following the storm to policyholders whose losses exceeded their hurricane deductibles. Those initial payments were based on the actual cash value of damages incurred. Additional payments to cover the replacement costs of the covered loss are paid as repairs get underway.
Gilway said in some cases, policyholders “incorrectly assumed” that the initial payment was the only reimbursement they would receive for their claims and sought aid of public adjusters or law firms “who are more than happy to take their case.”
The insurer has seen a huge increase in litigation associated with a statewide issue occurring in Florida dubbed “AOB.” In January, Citizens said it expects AOB and litigation costs would account for about 23 percent of its 2018 operating expenses, up from 16 percent in 2017 – an increase of $17 million.
The company notified customers after Hurricane Irma to be on alert for fraudulent schemes and AOB scams and urged them to contact the insurer or their agent if they had a claim.
Peltier said about 3,190 of the 64,597 personal lines Irma claims the insurer had received as of the end of March had an AOB attached.
In an effort to avoid any additional increases in litigation, Citizens has launched an educational campaign targeting policyholders with Irma claims to remind them how the claims process works.
“We want to reinforce to people that what we have provided them is an estimate and that estimates may change as repairs begin,” said Jay Adams, Citizens chief of Claims. “The initial estimate and payment does not necessarily mean your claim has been concluded.”
Gilway said Citizens is now focusing on getting the word out to policyholders that “Citizens remains committed to working with them through the entire claims process.”
“Our message to policyholders is clear: It is important for you to continue working with your adjuster if additional covered losses are discovered or market conditions render the initial estimate insufficient to make covered repairs,” he said.
Supplemental payments are available for additional Irma-related damaged discovered during the repair process or if market conditions render the initial settlement inadequate to make reasonable repairs on covered losses. As repairs begin, Citizens said policyholders should contact the insurer before beginning repairs for damages not included in the initial estimate or if the contractor gives a higher figure for the repairs described in the initial estimate.
“The claims team is diligently working to resolve all open claims as we prepare for the upcoming 2018 Atlantic hurricane season,” said Craig Sakraida, Citizens senior director of Claims.
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