Puerto Rico under tsunami of insurance claims caused by Hurricane Maria
Editor’s note: The following article originally appeared in the May 10-18, 2018, issue of Caribbean Business.
Nearly eight months after Hurricane Maria struck Puerto Rico, thousands of personal and commercial insurance claims continue in limbo amid payment delays by insurers.
Throughout the island, thousands of businesses are still unable to resume operations due to their insurers’ refusal to disburse payments to policyholders—when a multimillion-dollar injection of this kind would benefit the island’s battered economy and could mean the beginning of real economic recovery. Compounding the issue is that insurers lack sufficient personnel to assess damages in the avalanche of claims received after the event.
Even though the Insurance Commissioner’s Office (OCS by its Spanish initials) has issued millions in fines to several insurers for their delays, the truth is that the penalties do not seem to serve as an incentive for these companies to accelerate the process of fulfilling their contractual responsibility with clients.
The past two rounds of fines, issued in February by the OCS, amounted to $2 million and $714,000, respectively, and were imposed for violations of Article 27.162 of the Insurance Code of Puerto Rico for delays in the resolution of claims and payment within the 90-day period established by law.
Among the insurers fined were Triple-S Property, Mapfre Praico Insurance Co., Mapfre Pan-American Insurance Co., Cooperativa de Seguros Múltiples of Puerto Rico, Caribbean American Insurance Co., Multinational Insurance Co. and Universal Insurance Co.
For Brandon Lewis, public adjuster & general manager of Georgia-based Strategic Claim Consultants, the fact that two powerful hurricanes hit states before Maria struck Puerto Rico could be the main reason for the lengthy delay since thousands of industry resources were diverted to Texas and Florida. Strategic Claim Consultants has been in Puerto Rico since October to assist the thousands of affected people who have yet to receive payments related to their respective insurance policies.
However, Lewis also acknowledged that postponing payment is a strategy that many insurers use to try to reduce the amount paid to policyholders to settle their claims.
“The first thing I realized as soon as I arrived here, and had to sleep in a hotel without electricity, was that the resources of claims experts…were going to be extremely limited in a situation like this because, before Maria hit the island, other hurricanes affected the continental United States,” said Lewis, who has 22 years’ experience as a business leader and executive in Atlanta, as well as nine years working in the insurance industry.
“Texas is a big market, like Florida, so many of the resources were to provide assistance to the victims of the hurricanes that impacted those states, and there is a finite number of claims experts,” he added. “When you have a hurricane like Harvey or Irma, those resources first go to these places because they are already established in [those jurisdictions]; by the time Maria hit the island, the vast majority of these professionals were already up to their knees [knee-deep] with commitments. I know some of these engineering firms were seeing 500 and 800 cases at a time when they only have staff to address 300.”
Lewis explained that after assessing the situation in Puerto Rico and determining how he would address it, he had to source a stateside work team because there were not enough professionals available on the island, given the great number of claims being dealt with at the same time.
“No offense to local talent in any way, but the reality is that Triple-S, for example, can give its engineers work for life with the number of claims they are addressing, so I don’t see the possibility that we could use them. Our experience with Mapfre during the earthquake in Chile was precisely that: Due to the enormity of the event, the resources were so limited that to get an engineer it could take up to six months,” the claims expert said.
“But that’s not acceptable. Your building is there, and you can’t even enter it because it looks like it will collapse at any moment, and the insurance company tells you it can’t get a report on the damage until six months have passed due to a lack of engineers. What does one do in the meantime? You don’t have money, you can’t pay the rent, you can’t pay your people, you are in a very bad position. So, we decided to deal with the situation and managed to identify an excellent workgroup of over 200 professionals, [who were] recruited through some of the engineering firms with which we had previously worked.”