Homeowner's Insurance, Insurance, Insurance Brokers

Insurers under Critical Observation in Puerto Rico

As if Hurricane Maria hasn’t already taken a toll on most Puerto Ricans. Insurance companies are under scrutiny in Puerto Rico with 13,600 Hurricane Maria claims still open. This has resulted in thousands of Puerto Ricans being forced to close their businesses, drain their savings, or accept the idea of living with structural damage as they fight insurance companies over millions of dollars’ worth of claims. Claims that have gone unanswered or unpaid more than a year after Hurricane Maria.

What the Experts Have to Say

According to experts the Category 4 storm caught insurance companies off-guard and left them reeling financially after they were hit with nearly 279,000 claims. Real Legacy, a major insurer has already folded, leaving more than 1,500 claims worth a total of $70 million up in the air. It’s not a surprise that many worry other companies may follow. Commissioner Javier Rivera believes that it’s too early to say what will happen with Real Legacy. He also believes that the other company that exceeded its reinsurance limits, Triple-S, has enough capital to avoid the similar outcome. Executive Director of Puerto Rico’s Association of Insurance Companies, Iraelia Pernas, said “the industry has never faced such an astronomical number of claims.” “No one was prepared for that, not the federal government, not the insurance companies, no one.”

Hurricane Maria Caught them Off-Guard

Fines have already been issued by the Office of the Insurance Commissioner of Puerto Rico totaling more than $2.4 million against at least seven companies for delays in resolution and payment of claims. Exceeding reinsurance limits is highly unusual and indicates that even in the companies’ worst case scenario, Hurricane Maria was difficult for them to envision. There are two insurance companies in Puerto Rico that are also under review with negative implications.

The Aftermath of Hurricane Maria

Not only was Hurricane Maria the strongest storm to hit Puerto Rico in nearly a century, but it caused more than $100 billion in estimated damage, destroying the power grid and forcing businesses to remain closed. Hurricane Maria has taken a toll on the insurance industry, with losses amounting to $32 billion. Insurance companies in Puerto Rico have paid a total of $4.4 billion in claims, but more than 13,600 claims have not been closed.

Taking a Closer Look into Insurance Companies

An audit was recently launched into all companies by the commissioner’s office, and according to Rivera he is looking at some more closely than others. His office has received about 1,600 complaints, which is triple the amount of reports received in a normal year. Pernas says that the pending claims from Maria are complicated and involve mostly businesses, municipalities, government agencies and condominiums – which have to be reviewed with great care because they’re big.

Businesses that have Disappeared

Many people were forced to close their businesses due to Hurricane Maria. Among those was a 48 year old man who owned a restaurant in the northern coastal town of Dorado that he opened four years ago. He reported damages exceeding half a million dollars, but has only received $93,000 from the insurance company. Due to these circumstances he has used up all his savings, sold his home and transferred his daughter to a more affordable school. By December he will make the decision between staying or leaving Puerto Rico and joining the estimated 155,000 who fled to the U.S. mainland after such a catastrophic hurricane.

No Responses from Insurance Companies

Gov. Ricardo Rosello has already sued various insurance companies after officials said they did not respond quickly enough to claims filed after Hurricane Maria. These lawsuits help because they aim to prevent companies from dropping claims that have allegedly expired. The lawsuits seek $2.6 billion in damages for those who have not been compensated. Attorney, Francisco Amundaray is representing several clients pursuing a response from insurance companies. Among those waiting for full payment is a woman, who owns a pharmacy in the southern coastal town of Salinas. She reported $50,000 in total losses after Maria. She has called the insurance company several times about her claim but has only been told that it’s being processed. This has resulted in her being forced to refinance her house, cancel her daughter’s university housing, cut her staff at the pharmacy by half and reduce operating hours.

Planning for the Future

By law, insurance companies in Puerto Rico have 90 days to resolve a claim. Companies are now making contingency plans and expect to fly in claims adjusters ahead of any major storms in the future.