Florida, Alabama Get Tough on Unpaid Claims

Thousands of irate homeowners mobbed state insurance officials in Florida and Alabama to complain about a wait of more than six months for their claims to be settled from the 2004 hurricanes.

Tom Gall-agher, Florida Chief Financial Officer, called town hall meetings in Pensa-cola, Sebastian, Punta Gorda and Orlando; and Alabama Insur-ance Commis-sioner Walter Bell, also confronted by homeowners with unpaid bills, set a deadline of March 25 to pay claims.

“We want to direct all available resources to getting storm victims’ lives back to normal,” Gallagher said.

Almost 1,000 Florida Panhandle residents attended a March 2 town hall meeting in Pensacola at which Gallagher heard homeowners criticize insurance companies for being unresponsive, stalling payments and low-balling claims.

Gallagher listen-ed to stories about companies not taking care of their policyholders and heard the names of five insurance companies re-peated over and over. The CFO said he will contact the executive officers of Universal Property and Casualty Insurance Co., Van-guard Fire and Casualty Insurance Co., Capital Preferred Insurance Co., First Protective Insurance Co. and Citizens Property Insurance Corp. to come to Tallahassee to discuss why claims have not been paid.

“I don’t want to talk to them on the phone, I want them sitting in front of me, eyeball-to-eyeball to explain why these claims have not been paid,” Gallagher said.

David Reddick state affairs manager of the National Assoc-iation of Mutual Insurance Companies, after wide newspaper coverage of the meetings said, “CFO Gallagher has every right to be critical of any insurer for the way they may have handled hurricane claims; however, I suspect these smaller companies, like much larger insurers, were simply overwhelmed by the number of claims they received, and like everyone else, had to deal with issues like finding enough adjusters to help them process claims. I’m sure companies would be glad to sit down with the CFO and his staff and work out any lingering problems.”

Ala. has March 25 deadline
In Birmingham, Ala., Insurance Commissioner Walter Bell gave insurance companies with unsettled claims from Hurricane Ivan until March 25 to pay policyholders or explain why claims are unpaid. After claims are settled department regulations require policyholders to be paid in 30 days.

The mandate came after agency officials met with Alabama residents and business owners and heard complaints about widespread claims payment delays.

“The information we have collected has moved beyond the anecdotal to the concrete,” Bell said. “In the last month, we have seen an increase in complaints to the department on how claims are being handled. It could easily be construed that a handful of insurers are stalling their policyholders.”

No specific insurers were named, but Alfa Insurance, one of the area’s largest insurers, for example, has settled 50,570 Ivan-related claims with 2,510 left to go, J. Paul Till, an Alfa spokesman told the Mobile Register.

“There is nothing we would like better than to close our books on Hurricane Ivan and have all claims resolved within the next 30 days,” Till wrote in an e-mail.

In the five months since Ivan’s Sept. 16 landfall, the insurance department has received 3,500 complaints about handling of storm-related claims, said Ragan Ingram, assistant commissioner. About 200,000 Alabama claims are linked to Ivan.

Although about 95 percent of those claims have been resolved, he said, a recent spike in complaints paired with a stagnant settlement rate led the agency to act.

Insurers unable to settle Ivan-related claims by March 25 must provide the department with a report for each unsettled claim detailing their reason for not acting along with a timeline for resolution.

Although the department can’t prosecute or fine businesses it regulates, it can revoke an insurer’s Alabama license.