Insurance payment delays investigated in hurricane-hit Puerto Rico
SAN JUAN – The wave of insurance claims in Puerto Rico following the devastating impact of hurricanes Irma and María in September has apparently hindered their processing, especially those lodged by island businesses.
Dozens of small and midsize companies are unable to run as their owners await their claims to be processed. This situation has contributed to an unprecedented commercial stagnation that keeps experts in suspense on an island that is already in its 11th year of economic recession.
Puerto Rico Insurance Commissioner Javier Rivera acknowledged the delays but said they were the result of several factors, not all related to insurance companies.
In order to gather this information, Rivera explained that since Dec. 4 his office has been conducting an audit to identify these reasons. However, he pointed out that insurers have a 90-day deadline to deal with claims.
“There can be many things. It may be that insurers have a process to mitigate debt payments; that could be happening. We aren’t saying that one in particular has it, but we will be able to identify that. We will also be able to identify if the claim file isn’t complete or if it’s a problem with adjusters who aren’t visiting clients. There is also the fact of reinsurers, but these have advanced over $50 million, so the money is there,” Rivera said.
“We are identifying what’s happening in the process, whether it’s a lack of documentation, if they have closed claims without payment because the customer was not insured as they thought. We also measure the effectiveness of producers, to see if they did a good policy or not, whether they gave an orientation or not. There are many aspects, and as we identify situations, we are taking disciplinary measures against those responsible,” he said, adding that these sanctions vary depending on the case and include fines.
Rivera said his office is not expecting this event to be handled like a typical one, given the circumstances, and that six days after María made landfall, the Insurance Commissioner’s Office issued a directive ordering insurers to respond to the commercial sector within 15 days, instead of the usual 90 days.
“In the commercial sectors, advances have to start and are not happening and this audit measures that,” the commissioner said.
“We have no way of knowing what happens with each claim unless the policyholder picks up the phone and calls our Investigations Department and files a complaint. Consumers have to know that the office’s work is for that and it is their responsibility to file a complaint if it merits one, “he added.
Meanwhile, the House of Representatives is considering Resolution 671, authored by Rep. Samuel Pagán, which orders the Integrated Development of the Northeast Region and the Integrated Development of the Eastern Region committees to investigate the processing of damage claims by insurance companies operating in Puerto Rico.
According to the explanatory summary of the resolution filed on Dec. 1, the lower chamber has received “countless complaints from business owners in the northeast and east of the island, who say they have lost their business or their main household income…this eventuality was a direct consequence, due to the delay in the intervention of the insurance companies, of the poor processing and passage of the claims on the contracted policies….”
The legislative piece also indicates that on Dec. 1, 82 days after the passage of Hurricane Irma, the payment of claims to these businesses had not been issued, which is “unreasonable and inexcusable,” and assures that is having a devastating effect on the local economy.
Regarding the House investigation, Rivera explained that the author of the measure contacted his office for suggestions before presenting it.
“The legislator had the deference to call us before producing that resolution. We gave him the recommendation that there was no problem because one of the Legislature’s main powers is precisely to investigate, and what is better than working hand in hand with our initiatives so the Legislature knows it can work un alignment with us,” Rivera said.