PORT ARANSAS, Texas – Take a stroll along a residential block in Port Aransas or Rockport and the ears are bound to come across a symphony of construction.
However, a few blocks away, there is silence.
Chuck Rowsey says it all goes back to TWIA, the Texas Windstorm Insurance Association, described by Rowsey as “probably the worst organization I’ve ever seen.”
TWIA is the insurer of last resort for property owners along 14 coastal counties and parts of Harris County.
Their post-Hurricane Harvey performance is under scrutiny by property owners who filed claims.
“Let me tell you want I want to say, I want to find a good word for clusterf*%$,” Rowsey said.
For 10 months now, Channel 2 Investigates has been following TWIA’s process for paying out Harvey-related claims.
One common storyline has been the performance, or lack thereof, by adjusters.
“It is a bright picture on one hand, but I think there are still some very difficult situations out there and some high costs,” said TWIA board member Georgia Neblett at a recent gathering for TWIA leadership in Galveston. Neblett, who is out of Port Aransas, offered praise and criticism of TWIA adjusters. “There are some bad apples that can spoil the whole bunch.”
David Williams, TWIA’s vice president of claims, pointed out the strengths of TWIA’s operations and staff during the meeting. “They responded very well, they’re adaptable and we’re very emphatic to the policyholders and all of our stakeholders throughout the experience.”
But ask Rowsey and he’s quick to point out weaknesses. “I see experienced professional staff and I don’t know who they are referring to, it’s certainly not their personnel.” Rowsey made the comments after examining an overview where TWIA made available at the Galveston meeting. When asked by Channel 2 Investigates if he could locate the word “adjuster,” Rowsey said, “Not once.” When asked how big of an issue adjusters had been for him, Rowsey responded, “That is the issue.”
Channel 2 Investigates asked to see emails from TWIA’s staff detailing the agency’s performance. TWIA refused to provide many of those emails until the Texas attorney general stepped in and informed TWIA through a ruling that they were required to turn over tens of thousands of emails.
The emails show TWIA established a goal in the immediate aftermath of Harvey to close 1,000 claims a day and as many as 2500 claims over weekends. In a Sept. 14 email, TWIA described the closing of 1,000 claims as a “critical benchmark,” while also stating customers deserved prompt attention and resolution.
Houston-based storm attorney Rene Sigman’s reaction to the emails?
“Quality does not equal getting it done quickly.”
Sigman described TWIA’s practice to Channel 2 Investigates as “turning and burning,” adding, “Their mind was on closing claims as early as September and that is a problem, because damages can’t all be assessed that quickly after a storm.”
Approximately six weeks after Harvey, a TWIA customer reached out to an examiner, writing in an email that TWIA had closed his claim without doing anything. A month later, the same examiner was questioned by a supervisor over files that “barely have notes” while also adding “past claims you have handled do not show you reviewed the claim.” The supervisor then offered to sit with the claims examiner the next day to help him understand the process.
Sigman, who has dealt with TWIA going back to its last major storm, Hurricane Ike, says the emails are concerning. “It is bothersome to look at some of these things and think that they were more interested in closing their claims out and what their numbers look like than their quality.”
While TWIA did not tell Channel 2 Investigates the exact number of cases reopened after Harvey, a TWIA spokesperson says claims are routinely reopened to address new information, questions and additional payments.
A different kind of additional payments are also on the minds of TWIA policyholders, as customersChannel 2 Investigates spoke with said they have seen a price jump in their TWIA policy even as some of them are still waiting to be made whole.
ST. THOMAS, U.S. Virgin Islands
Caines spent much of his life stockpiling his paychecks of up to $700 a week to buy a home. Now, the 72-year-old worries that the Category 5 storms that took his roof also blew him and an entire generation of Virgin Islanders out of the middle class.
“I’m now going to die in debt,” said Caines, who expects repairs to his home will cost $100,000, far exceeding his savings or expected insurance payout.
“It feels like hell,” he said. “I didn’t get the assistance I needed, and now I’m out here suffering.”
With similar stories of grief and hardship throughout St. Thomas, St. John and St. Croix — the three major islands that make up the territory — there
is growing concern that a decades-long drive to build up a broad middle class has been snuffed out by the storms.
If Congress and the White House fail to deliver a massive infusion of cash to the islands, analysts warn, this Caribbean paradise could quickly unravel into a permanent decline that would send thousands of economic refugees to the mainland.
Residents of the U.S. Virgin Islands are American citizens, but they can’t vote in the presidential general election and have no voting representation in Congress. That can limit the attention that the territory — with a population of 103,000 and a land area about the size
of Philadelphia — commands from the federal government.
“When a hurricane hits a small part of [a] very large state or country, you just move resources,” said Damien King, an economist and executive director of the Caribbean Policy Research Institute. “On islands like the Virgin Islands, there is nowhere to move resources from.”
These worries come after native-born Virgin Islanders, as well as immigrants from other Caribbean islands, made considerable strides in breaking into the middle class, taking jobs in the tourism industry that flourished throughout the 1990s.
Average salaries here nearly doubled from $21,000 in 1990 to $40,000 in 2016, according to government statistics. Poverty rates also dropped from 32 to 22 percent between 2000 and 2010, according to U.S. Census Bureau data.
With the islands’ economy, education and health systems now in tatters after Hurricanes Irma and Maria, Gov. Kenneth Mapp (I) says he needs $7.5 billion from the federal government to rebuild lives and buildings in the cash-strapped territory.
The storms damaged or destroyed about 18,500 homes and businesses on the islands, including multiple high-rise apartment buildings.
On Jan. 31, in a sign of just how dire the economy is, Moody’s Investor Service said that the territory’s government is likely to default and that its employee pension system will be insolvent by 2023. It assigned the territory the third-lowest of 21 ratings, only one level above Puerto Rico, which declared a form of bankruptcy last year.
“We are not predicting a timing, but I don’t see the numbers adding up any way that they can avoid” default, said Ken Kurtz, a senior vice president at Moody’s Investor Service.
Although the response by the Federal Emergency Management Agency to disasters in the Caribbean was widely criticized initially as being too slow, the agency so far has processed more than 33,000 claims for assistance from the U.S. Virgin Islands and distributed more than $600 million for cleanup, emergency housing, rebuilding and loan-assistance programs.
Residents said authorities have made considerable progress in cleaning up. Roads once choked with thick tree branches, jungle vines and utility poles are open. Power has been restored to more than 95 percent of customers, although Internet and cellphone service remains spotty. And cruise ships that are the underpinning of the local economy are once again docking in ports, allowing some restaurants and tourist stands to reopen.
But that daily tourist foot traffic masks the slog facing residents enduring a triple whammy of setbacks — lack of insurance, federal aid limits and job loss as most major hotels remain closed.
For many Virgin Islanders, more than 75 percent of whom are black, the financial hardship now facing them is reinforcing their disconnect from the mainland, which has only hardened after President Trump’s recent slur against some of their Caribbean neighbors.
“Everyone was looking at Puerto Rico, and no one was thinking about us,” said Michael Walker, 48, who is living in a leaky apartment and lost all of his clothing and furniture in the storm. He’s waiting to hear from FEMA about the status of his aid application.
“FEMA does tell you, ‘I’m here to help you.’ But it just doesn’t happen, and what are you going to do? You can’t press them,” he said.
Manuel Broussard, a FEMA spokesman, counters that the federal government has been working with the territory to offer a plethora of assistance programs including emergency food stamps, reimbursement for lost clothing and furniture, and help finding temporary shelter.
The Army Corps of Engineers also affixed watertight blue tarps onto 3,658 damaged roofs, which offer a couple of months’ protection from the elements.
But as is often the case after a major disaster, Broussard said, many people fundamentally misunderstand the role FEMA plays in helping local residents recover from a storm.
“FEMA programs are designed to help the uninsured and underinsured, to help people get back on their feet,” Broussard said. “It’s not a program that will make you whole again. That is what insurance is for.”
Although insurance adjusters have disbursed more than $520 million to Virgin Islanders so far, many residents say their properties were severely underinsured. Policies for even a modest house in this hurricane-prone region can cost up to $1,000 a month, causing many here to take their chances with minimum coverage or high deductibles.
Direct assistance from FEMA is capped at $33,300 per household, as is the case stateside, although contractors say it is far more expensive to rebuild here because of limited supplies and human resources. The average FEMA grant payout so far ranges from $6,000 to $8,000, the agency said.
The result is that disparities between rich and poor that have persisted for generations have become even more glaring.
‘A HOUSE OF OUR OWN’
On St. John, where million-dollar villas cling to hillsides overlooking teal ocean waters and coral reefs, business owners estimated that overall revenue is down as much as 70 percent this winter. But second-home owners are returning to high-end restaurants for lobster dinners and $100 bottles of wine.
For Livio Leoni, who owns Da Livio Italian restaurant in Cruz Bay on St. John, the major lingering post-storm inconvenience is that the island’s U.S. Customs and Border Protection office has not reopened.
Without it, he said, he cannot import the cheese, cured meats and bottles of wine bearing his family name directly from Italy. He instead would have to take a 25-minute ferry ride to St. Thomas to pick up those goods.
“I usually buy the porcini directly from Italy, but now I cannot have it,” Leoni said.
Meanwhile, 25 miles away in Coral Bay, roofs and walls remain crumbled alongside roads. Some residents in this port town, known for sailors and a bohemian culture, sleep in tents on their front porch or in vehicles.
A few hundred yards from the bay, Pearlette Lawrence was sweeping the front porch of the house where she had lived with her husband. The house has no roof, and the couple has been living in a shelter, but they return each day to cook meals and hand-wash clothes.
Before the hurricanes, Lawrence had worked as a live-in maid and health-care aid for an elderly woman who owned the house, earning $900 a month. The homeowner died shortly after the storm, the couple said.
FEMA has approved an 18-month, $2,300 voucher to help the Lawrences find temporary housing. But rental units are hard to locate on a 20-square-mile island, 60 percent of which is a national park.
“We still need some help to build a house of our own,” Lawrence said, adding that someone offered the couple a plot of land but they cannot afford building materials.
Despite the overall income gains here in the years before the storms, the economy hit a setback during the 2008 recession and again after a large oil refinery on St. Croix closed in 2012. The slump saddled the territorial government with $2 billion in debt.
Still, the economy had been rebounding throughout 2017 until the hurricanes. In August, the unemployment rate dipped to 10 percent for the first time in five years.
Then on Sept. 6, Hurricane Irma’s eyewall plowed across St. Thomas and St. John with winds topping 100 mph, damaging scores of roofs. Two weeks later, on Sept. 19, Hurricane Maria scraped past the southern island of St. Croix, taking even more roofs there while dumping more than 10 inches of rain on the islands.
More torrential rain fell in October and November, leaving many houses, businesses and government buildings with extensive water damage. Both major hospitals sustained significant water damage, forcing critically injured patients to be airlifted to the mainland for treatment.
Eleven public schools were damaged or destroyed. The school system also lost a student-led chicken farm, two aqua farms used to produce fresh school lunches, and $3 million worth of musical instruments and band uniforms. As many as 58,000 books that had been sent home with students over the summer also remain unaccounted for, according to Sharon Ann McCollum, the territory’s commissioner of education.
When the school year resumed this fall, McCollum said, the system had 2,000 fewer students than it did in the 2016-2017 academic year, when about 13,000 students were enrolled, with families relocating to the mainland or elsewhere.
A $7.5 BILLION PROBLEM
Mapp, the governor, said his $7.5 billion funding request to the federal government would rebuild schools, hospitals, the energy grid and ports while helping to offset the loss of tourist revenue, which had accounted for 30 percent of the overall economy.
Congress hasn’t responded to the ambitious request, but it has promised $900 million over three years to shore up the territory’s finances. That lifeline could help stave off more-severe job losses because the government is the territory’s largest employer.
On Friday, the U.S. Department of Housing and Urban Development announced that it had awarded $243 million to help residents with damage not covered by private insurance, and Mapp’s government has secured $600 million in federal funds to help construct permanent roofs on about 12,000 homes.
“The recovery actually brings a strong level of revenue. It brings strong employment, and it brings serious consumption,” said Mapp, noting that skeptics also doubted the territory’s ability to recover from Hurricane Hugo in 1989 and Hurricane Marilyn in 1995.
Based on FEMA guidelines, however, the Sheltering and Temporary Essential Power program (STEP), launched by the federal government after 2012’s Hurricane Sandy, caps most applicants at $25,000 in construction costs.
Local contractors say it will cost at least $50,000 to repair many roofs on the islands, which is one reason Del. Stacey Plaskett (D), the Virgin Islands’ nonvoting congressional representative, is skeptical the program will get off the ground.
She wants Congress to consider individualized aid packages for the Virgin Islands and Puerto Rico, where Gov. Ricardo Rosselló (D) has requested $94 billion in aid.
“We are saying, listen, this is not like the flooding that occurred during Harvey,” Plaskett said in an interview, referring to the hurricane that struck the Houston area last year. “We had whole roofs blow off, plus enormous shipping and rebuilding costs, and the costs associated with building on volcanic rock.”
But Warren Mosler, a local economist who lives on St. Croix and is running for governor, notes that Mapp’s request for $7.5 billion equates to $75,000 per resident. He doubts Congress and Trump will agree to the request, noting a similar funding formula for Puerto Rico would amount to about $250 billion.
Instead, Mosler said, the territory needs to start “resizing everything” based on the assumption that its economy — and its population — is just going to have to get smaller.
“It’s very difficult to scale an economy down like that, but it has to be done before you get any meaningful bounce back up,” said Mosler.
On St. Croix, the debate about whether to stay or go already is taking place.
At Mahogany Road Chocolate, a roadside stand where well-off residents gather to buy $10 chocolate bars or mango cream sponge cake, Keith Moore and Glenda Smith said couples like them are starting to second-guess their decision to retire in the Virgin Islands.
“Things were hard before, and now you just don’t know what is going to happen,” said Smith, 63, who previously lived in Miami and runs an art project that seeks to beautify the islands by painting murals. “These are my retirement years. Do you want to be struggling the entire time?”
A few miles away in Frederiksted, where most traffic lights still don’t work, Cynthia Rivers said she does not have the option to leave.
A widow and retired cook, Rivers, 65, now takes home $500 a month in Social Security benefits. In early 2017, Rivers combined her life savings of $9,000 with a $5,000 loan to subdivide her house in hopes of earning rental income throughout her golden years.
But Hurricane Maria damaged her roof, meaning she cannot find a tenant until she comes up with at least $25,000 to repair it. She said FEMA gave her only $5,500.
“If you are not here, you just would never understand,” said Rivers, her eyes welling up with tears. “This was my retirement. This was my everything.”
Rep. Todd Hunter says TWIA needs ‘new makeup’
PORT ARANSAS, Texas – “Hurricane season is coming and I’m not back together.”
That’s the reality for people living in Port Aransas and Rockport nearly eight months after Hurricane Harvey.
The storm’s wrath is still being discussed and remains quite visible. The blue tarps coloring the landscape symbolize families not yet back to normal. Some are hoping for divine intervention, but the reality for many is they still cannot get answers from the Texas Windstorm Insurance Association, or TWIA.
Meredith Castor, from Port Aransas, summed up her struggles to Channel 2 Investigates by asking, “Where are they?”
TWIA is a primary insurance provider along the Texas coast, with more than 227,000 policies and nearly $5 billion in funds. Hurricane victims who paid on their TWIA policy for years said they are now being shortchanged.
“I have been given $65,000 now, but I am at a halfway point,” said Cherith Fenton during a recent interview.
Tired of being lowballed by TWIA, Fenton decided to advertise her frustration with a large sign on her property.
“Harvey knocked us down, but TWIA keeps us down,” Fenton said.
In the weeks after Harvey, Channel 2 Investigates began examining a growing chorus of complaints about issues families were having with TWIA’s adjusters.
“We’ve been through several desk adjusters. Then we find out someone quit or got fired, and we have to go through it all over again,” Castor said.
A TWIA workshop in Rockport put the struggles of many on full display.
Danile Drake said his daily routine for months consists of “just fighting TWIA, just like everybody else.”
His meeting with a TWIA representative was revealing. Frustrated because there is a tree sitting on his garage and the lack of payment, Drake, at one point, asked the TWIA representative, “Would you be upset if you were me?” The representative said, “I would.”
Drake, now on his sixth adjuster, is hoping for accountability.
“I would like to see TWIA audited,” Drake told Channel 2 Investigates.
According to Jennifer Armstrong, TWIA’s vice president of communications and legislative affairs, “We want to pay every cent that we owe.”
When Channel 2 Investigates informed Armstrong that a lot of people say the company has only paid them 40 percent, Armstrong replied, “And we are here to help. We are here to resolve those problems.”
TWIA uses field experts, including consultants, to determine how much to pay on each claim, but Channel 2 Investigates discovered that TWIA is also relying on unlicensed consultants to help determine payouts.
“We have building consultants who are not engineers, not licensed by the board. They have contracting experience, construction experience and they are determining how much the repairs are,” State Rep. Todd Hunter said.
Hunter, a former TWIA lobbyist, was stunned.
“That needs to be checked into,” Hunter said.
Hunter admits he did not know, but added, “The public needs to know. Everybody needs to know.”
He also said he is going to take a look at TWIA. Hunter believes the company deserves scrutiny.
When asked by Channel 2 Investigates if TWIA has enough money to pay people, Hunter said, “That is one of the questions I want to ask.”
The state representative also expressed his desire for change at TWIA, saying he wants to focus on policy and personnel. In his opinion, the TWIA board needs transformation.
“It seems to me we need to take a look at a new makeup,” Hunter said.
Hunter said he is in the process of creating a Coastal Windstorm Task Force that will focus on windstorm issues, insurance and TWIA.
Copyright 2018 by KPRC Click2Houston – All rights reserved.
In 1971 the Texas Legislature developed the Texas Windstorm Insurance Association to provide insurance coverage for Texas families, businesses, schools, and properties in ‘high risk’ areas along the fourteen coastal counties. Over the past decades TWIA has attempted on several occasions to receive immunity from both the courts and Texas Legislature to shield it from being responsible for damages (and causes of action) directly related to its own bad acts.
In the aftermath of Hurricanes Ike and Dolly in 2008, TWIA reached new lows. TWIA sent ill-equipped, untrained, unsupervised adjusters to assess Texans damages, and ultimately deny the same. As years went on more and more Texans began to sue TWIA, its adjusting companies, and adjusters, and more evidence of TWIA’s bad acts came to light.
Texans discovered alarming incidences of unlawful claims handling at the hands of TWIA and its adjusters. There, TWIA and its go-to primary adjusting companies – including ABJ, Brush County Claims, Crawford & Company Inc., GAB Robins, Eberl Claim Service, Pacesetter Claims Service, Schafer Wood & Associates, and Wardlaw – purposefully and systematically denied, delayed, and underpaid hurricane claims for families, businesses, and schools throughout Texas. TWIA and its primary adjusting firms were exposed for blatant racism, sexism, and overall improper claims handling procedures.
In 2011, rather than punish TWIA and its adjusters for their undeniable bad acts, the Texas lawmakers (elected officials) wrote new laws that protect TWIA (even when it commits bad acts) by granting immunity in part, and punished the policyholders (Texas homeowners & business owners) by writing laws that restrict legal remedies for policyholders mistreated by TWIA.1
TWIA claimed to be ‘reformed’, but TWIA’s claims handling practices for Hurricane Harvey continue to show that a zebra can’t change its stripes, and you can’t teach an old dog new tricks. Most would think that TWIA would cut ties with those adjusting firms under fire for extensive bad claims handling with TWIA after Hurricanes Ike and Dolly. Not the case.
In fact, in 2017 alone TWIA paid these adjusting firms millions while at the same time making an average claim payment of $6,587.14 for Harvey victims’ TWIA damage claims.2
For example, in 2017 alone TWIA paid Crawford & Company $1,574,965.27; TWIA paid Schafer Wood & Associates $4,396,287.22; TWIA paid Pacesetter Claims Services, Inc. $5,899,015.62; TWIA paid Eberl Claims Services $7,568,334.73; and most alarming, in 2017 alone TWIA paid Wardlaw Claims Service $11,409,092.34.3
As concerning is that the Texas Department of Insurance (“TDI”) has approved various TWIA Appraisal Umpires currently employed with these firms or other firms previously paid copious amounts of money by TWIA for work on various claims.
The Texas Department of Insurance developed criteria and requirements for appraisal umpires to resolve property damage claims on TWIA policies.4 However, it appears as though TDI is either not enforcing its rules as strictly as anticipated, or some applicants have slipped through the cracks and been approved as appraisal umpires.
TDI states that an applicant has a “disqualifying conflict of interest” if they (among various factors):
- Are a current TWIA contractor or contractor’s employee;
- Are an employee of the adjusting company or public insurance adjusting company that adjusted the loss;
- Have any other direct or indirect interest, financial or otherwise, of any nature that substantially conflicts with the umpire’s duties.5
TDI also notes there is a potential conflict of interest if the applicant is a former TWIA employees or contractor or contractor’s employee.
Many of TDI’s Approved Umpires for TWIA Appraisal should likely be disqualified. Unfortunately, TDI has approved (as TWIA appraisal umpires) many current or former TWIA employees and/or contractors and/or contractor’s employees. For example, TDI has approved appraisal umpires affiliated with Crawford & Company (who as stated above TWIA paid over $1 MM in 2017 as a contractor); and those affiliated with Engle Martin a/k/a Eberl Claims Services (who TWIA paid over $7.5 MM last year), Nelson Forensics (who TWIA paid over $1 MM in 2017).6
This further begs the question: Is the appraisal process ever fair? Does anyone win in appraisal? Both sides have to incur unnecessary expenses – to pay for both appraiser and umpire – and in these TWIA matters it is largely uncertain when appraisal is appropriate. The law in Texas states if TWIA accepts coverage for a claim in full or part, and the policyholder only disputes the amount of the loss then the policyholder may demand appraisal.7
The problem here is TWIA’s actions frequently don’t match up with its written words. For example, a homeowner in Victoria may file a claim for Harvey wind damage to her home (the roof was blown off the home and Harvey rains poured in through the opening for days). That policyholder may have a contractor’s or public adjuster’s estimate showing $75,000.00 to repair Harvey damages. TWIA sends an untrained ‘consultant’ to inspect the property, and then issues a letter that says “TWIA accepts your Hurricane Harvey Claim in Full. As a result of our investigation we have determined that wind damaged the roof of your home and we will pay $2,000 to replace the roof. The water damages to the interior are excluded as wear and tear…”An example of something similar is shown below:
This has become common for TWIA claims, and it is unclear what exactly TWIA is accepting – TWIA didn’t pay the amount necessary to replace the roof, as stated in the contractor or public adjuster estimate, and TWIA said that the interior damages were excluded. So, did TWIA accept the claim in full? Or did they actually deny it in full? Or did they deny it in part and accept it in part, and if so, what exactly is accepted?
And more important, what is the next step – does the policyholder need to invoke appraisal? Can they file a lawsuit? Is TWIA responsible for its misrepresentations? Why did our Texas Government pass laws that protect TWIA’s bad acts?
These important questions must be answered by TWIA and by our Texas Government officials.
Texans, don’t sit by and let TWIA and its adjusters (or any insurance company or adjuster for that matter) treat you unfairly. Texas policyholders are owed a duty of good faith and fair dealing. TWIA and its adjusters must be held accountable – the Texas Department of Insurance allows consumers/policyholders to file a complaint if they’ve been treated unfairly by an insurance company, adjuster, or agent. Do not hesitate to go to https://www.tdi.texas.gov/consumer/complfrm.html to file a complaint today – help bring awareness to the Texas Department of Insurance and our Texas Government about these issues.
As always, an experienced insurance attorney may help offer guidance or representation on these complex legal questions.
1 See House Bill No. 3 “HB 3”
2 See https://www.twia.org/news-and-announcements/twia-ultimate-losses-harvey/; see alsohttps://www.twia.org/wp-content/uploads/2018/01/HB3-List-Final-2017-V2.pdf.
4 See https://www.tdi.texas.gov/forms/pcgeneral/pc406umpireapp.pdf.
6 See https://www.tdi.texas.gov/commercial/documents/umpires.pdf.
7 Tex. Ins. Code §2210.574.
Shhh. There’s a term state insurance officials apparently dare not use right now.
That term is “public insurance adjuster.”
Public insurance adjusters are often seen by insurance companies as adversaries because — unlike regular claims adjusters who work for insurance companies inspecting damages and working up repair cost estimates — public adjusters work directly for policyholders and often challenge estimates by insurance companies’ adjusters.
In a tip sheet presented as a list of “myths” and “facts” about hurricane insurance released last week, Jimmy Patronis, Florida’s chief financial officer, avoided using the term even as he urged policyholders confronted with a claim denial or inadequate claim payment to “always get a second opinion to verify the cause of loss and/or the cost to repair or replace the damage.”
Providing second opinions — then helping manage the claim to ensure policyholders get every dollar to which they are entitled — is what independent public insurance adjusters do.
They work for a fee or percentage of the claim and, yes, they often work to the chagrin of insurers who would prefer policyholders accept their decisions as the last word. Disagreements cost more money — whether they result in expanding the scope of the repair, or fighting it out in court.
When it calls for new laws aimed at reducing costly litigation against insurers, state-owned Citizens Property Insurance Corp. often points out how much more money claims “with representation” cost the company. Its description of “with representation” refers to claims in which policyholders have hired either plaintiffs attorneys or public insurance adjusters.
Claims with representation cost Citizens, on average, three times as much as when customers don’t challenge estimates by Citizens’ adjusters.
It’s not just Patronis who apparently doesn’t want to be connected to the term.
The Sun Sentinel asked Patronis spokeswoman Anna Alexopoulos Farrar whether the “second opinion” that Patronis urged claimants to “always get” was an endorsement of hiring a public adjuster. Farrar responded with this statement:
“As with any major repair, the CFO recommends consumers get a second opinion from a licensed contractor or other licensed professional on repairs made to their home. For example, making sure you are getting the right types of repairs made, and the appropriate amount of repairs (not over repairing).”
Asked whether her response about getting a second opinion from a licensed contractor or “other licensed professional” could be interpreted as advocating hiring a public adjuster, Farrar said “yes” but again did not include the term in her second response: “Yes it could include but also licensed professionals like roofers or plumbers.”
Even Erin VanSickle, deputy chief of staff for Florida Insurance Commissioner David Altmaier — whose office is overseen by Patronis — refused to use the “p” term when asked whether Patronis’ tips sheet could be interpreted as endorsing use of public adjusters.
“If a claim is denied or if the claim payment is inadequate to effectuate covered repairs, a consumer has a number of options to pursue, including a followup call to a contractor or engineer, the consumer’s insurance agent, the [Department of Financial Services] Consumer Services helpline, or other professionals qualified to render an opinion on coverage or scope of damages,” VanSickle said.
Every occupation has its share of bad apples, and some public adjusters have been caught committing claims fraud. Insurers also don’t like when public adjusters solicit business from policyholders by advertising or canvassing neighborhoods — creating claims where none might have otherwise existed.
Earlier this decade, complaints by insurance companies led to new regulations governing public adjusters, which are compiled on the chief financial officer’s website.
A database on that same website shows there are about 1,800 public insurance adjusters licensed in the state of Florida, indicating there’s plenty of demand for the service they offer.
Paul Handerhan, who is senior vice president for public policy at the Florida Association for Insurance Reform and a licensed public adjuster, says the mainstream of the public adjuster industry takes a dim view of adjusters who canvass neighborhoods, “knocking on doors, saying, ‘I want to come in and look at your pipes and flooring,’ and incentivizing a policyholder to file a claim.”
An honest public adjuster will explain to policyholders, before filing a claim, that they will be responsible to pay a deductible and the public adjuster’s fee of up to 20 percent of the claim before they receive any claim settlement check, Handerhan said. An honest public adjuster will tell the policyholder that an insurance policy isn’t meant to be used as a home warranty contract, that all claims show up on the insurance industry’s equivalent of a credit report, and that filing three claims within 36 months could trigger a non-renewal and make it difficult to find another willing insurer, he said.
“They’ll tell [policyholders] that they need to be careful about filing claims,” Handerhan said.
State officials have sided with insurers over public adjusters before.
In 2008, the state Legislature enacted a law barring public adjusters from soliciting policyholders within 48 hours of a hurricane or other major event. In 2012, the state Supreme Court overturned the law, ruling it was unconstitutional and violated free speech.
Responding to a request for comment about Patronis’ tip sheet, Jimmy Farach, president of the Florida Association of Public Insurance Adjusters (FAPIA), pointed out that Patronis’ two predecessors didn’t hesitate to use the words. Farach provided videos of former CFOs Alex Sink and Jeff Atwateracknowledging the importance of public insurance adjusters.
“I understand the important place public insurance adjusters have in the whole scheme of the world of insurance. What would we do without public adjusters? Where would people go if they had no other place to turn?” said Sink, speaking at what a Florida Association of Public Insurance Adjusters spokeswoman said was a “political event” in 2010.
And Atwater, serving as keynote speaker at the association’s 2013 annual dinner, said: “The work of public adjusting is defined by the noble work of helping somebody navigate a path they have no way of knowing how to navigate themselves, and don’t believe they can.”
Plus, said Handerhan, not all policyholders use public adjusters for adversarial purposes. Some claimants who have busy work lives find it worth the fee to hire a public adjuster to handle complicated claims, he said.
“That can also benefit the insurance company,” he said, “to work with a public adjuster who understands the terms and coverages in the insurance contract and has the ability to evaluate damages.”
Here are Patronis’ “myths” and “facts” about hurricane insurance:
MYTH 1: I already have homeowner’s insurance, so everything on my property is covered and I’m financially prepared for the storm season.
FACT: All homeowner’s insurance policies contain limitations and exclusions. Also, you may need a separate policy for windstorm or flood if these coverages are not included in your homeowner’s policy. It is important to review your policy to understand your coverages and exclusions.
MYTH 2: When an insurance company denies a claim, or provides an inadequate claim payment, I must pay out-of-pocket to cover any additional expenses from damages that occurred to my property.
FACT: You should always get a second opinion to verify the cause of loss and/or the cost to repair or replace the damage.
MYTH 3: When contractors offer to waive my insurance deductible to provide repairs at a discounted rate, this is simply a kind gesture.
FACT: Waiving the deductible or providing a discounted rate directly to you is a form of insurance fraud.
MYTH 4: An Assignment of Benefits (AOB) agreement is the only way to get immediate assistance for Floridians who have damage to their property.
FACT: You do not need to sign an Assignment of Benefits to get your residence repaired, even for emergency repairs. You should make first contact with your insurance company by immediately reporting the claim.
MYTH 5: Insurance companies can take as long as they want to respond to an insurance claim filed by Floridians.
FACT: Typically, insurance companies must acknowledge your insurance claim within 14 days from the date the claim was reported and they must pay undisputed amounts of your claim within 90 days from the date of damage.
MYTH 6: If my neighbor’s property is blown into my yard and damages my own property, my neighbor’s insurance will cover the cost of damage.
FACT: The damage to your property is covered by your own homeowner’s insurance policy, unless you can prove your neighbor was negligent, then the damage would be covered under their homeowner’s policy.
MYTH 7: My insurance agent is the only person I need to contact when filing an insurance claim.
FACT: While you may call your agent, you should immediately report the claim to your insurance company. Most insurance companies have a toll-free claim number to report your claim.
A CBS News investigation reveals that a federal fund intended to protect flood victims often. The National Flood Insurance Program, run by FEMA, is $25 billion in debt. In some years, up to two-thirds of the money that’s supposed to help flood victims goes to private insurance companies and the attorneys they hire to fight flood claims.
When record floods hit Louisiana in 2016, 150,000 people had damage to their homes with an estimated cost of $15 billion. Two years later, many homeowners are still struggling to rebuild – and fighting the same companies and lawyers that they fund with their premiums and taxpayer dollars, reports “CBS Evening News” anchor Jeff Glor.
Ricky Wall and Melissa Miles were trapped in their home for three days when flooding hit Louisiana in 2016.
“It was coming so fast, it was white-capping over the roads,” Wall recalled.
Covered in sewer water, they thought things couldn’t get worse. Their home was ruined, but they had a flood insurance policy, that they were required to buy, worth $176,000.
“The insurance company was a nightmare,” Wall said. “It was–”
“Almost as bad as the flood,” Miles added.
“I about had a stroke fighting with them people every day,” Wall said.
“This is ridiculous that I’m paying for something that I have to fight for,” Wall said.When insurance didn’t pay enough to fix their home, they had to come up with the cash themselves to do it. So they decided to fight the National Flood Insurance Program for lowballing them. They are still fighting for $40,000.
Run by FEMA, the National Flood Insurance Program is responsible for all flood policies in the U.S. Insurance premiums and taxpayer dollars fund the program, about $3 billion a year. But FEMA doesn’t administer all the policies. It outsources to private insurance companies called Write Your Owns – or WYOs. They and all of their agents get paid out of the same pot of money as flood victims.
Some years up to two thirds of that pot goes to WYOs and the attorneys they hire to fight against flood victims. In effect, by paying their premiums on time every year, homeowners like Wall and Miles help fund the very lawyers fighting them in court.
“How can they sleep at night doing us what they done?” Wall said.
Wall’s insurance company hired the Louisiana law firm of Gerald Nielsen to fight Wall and Miles’ claim. Nielsen’s firm has been fighting flood claims on behalf of insurance companies for over 30 years, not without controversy.
After Superstorm Sandy, Congress criticized Nielsen’s firm for how it defended WYOs whose engineers allegedly altered reports to avoid paying claims.
“He dealt with Sandy victims like they were the perpetrators, enriching himself at their expense,” New Jersey Sen. Robert Menendez said at the congressional hearing.
A New York judge called Nielsen’s firm “misconduct” in one Sandy case “remorseless” for delaying cases at taxpayer expense.
To give you an idea of the costs involved here, you can rent a 1965 Bentley Silver Cloud for just under $1,000 for the afternoon. Nielsen’s office spent five times that to ship documents to a law office from one that’s half a mile away.
CBS News obtained a budget, drafted in 2014 for a Sandy case, showing Nielsen’s firm estimated that a single case would cost $188,000 taxpayer dollars if it went to trial. The cap on any home flood policy is $250,000.
Nielsen didn’t want to talk to us about his fees and expenses when we caught up with him in the parking garage by his office.
“I’ve got to go through ethics counsel because some of which you’ve asked clearly is privileged,” Nielsen said.
A public information request revealed FEMA paid Nielsen’s firm at least $29 million for Sandy cases alone.
“Things need to change. Somebody needs to do something about it,” Wall said.
Wall hired attorney John Houghtaling; his firm represents flood victims and fought in court against Nielsen’s firm during Sandy.
“There was no effort to mitigate the costs. In many cases we were asked to have experts reinspect for a third time homes that were totally destroyed,” Houghtaling said.
FEMA said it has no authority to fire lawyers hired by private insurance companies.
“They’re jacking around policy holders. That’s unacceptable and somebody’s gotta do something about it, and by God it’s supposed to be FEMA,” Louisiana Sen. John Kennedy said. He has a bill to change that.
“Once they get that authority, I will chase them like a hound from hell until I find out that they’ve fixed this problem because I believe that there is a problem,” Kennedy said.
Homeowners like Wall wish FEMA had tightened its belt before making him pay out of his own pocket.
“That’s not fair. And they say that’s the American way? That’s not fair,” Wall said.
Nielsen said in a letter to CBS News he could not talk about his fees and expenses, but that he was acting at the direction of his clients and that all of his firm’s bills were reviewed by the clients and FEMA. FEMA responded to our report, saying it will pay “every dime” policyholders are due and that it has created an oversight team to address billing and other litigation matters.
TEXAS WINDSTORM INSURANCE ASSOCIATION — THAT SHE’S PUT UP A LARGE SIGN STEPHANIA SHE CLAIMS THAT TWIA ISN’T HELPING HER OUT
EVEN AFTER SHE SPENT YEARS PAYING HER INSURANCE KRIS-6 REPORTER SYLVIA MARTINEZ SPOKE WITH HER SHE TELLS US WHY SHE PUT UP THAT SIGN
PKG SYLVIA WX PLASMA 00:09:20 SHE PUT UP THE SIGN BECAUSE SHE SEES SOME FOLKS REBUILDING AND SHE’S READY TO REBUILD, BUT SHE CAN’T BECAUSE THE INSURANCE WON’T PAY, AND SHE WANTS HER COMMUNITY TO KNOW SHE’S NOT GIVING UP PKG CHERITH FENTON SAYS SHE IS FED UP AND FRUSTRATED WITH TWIA SOT 12:24:43:00 “it’s mind-blowing How can you look at this and tell me oh I can rebuild that for the amount of money they gave me It’s pretty unbelievable” 12:24:52:00 VO FENTON OWNS THIS PROPERTY WITH FOUR RENTAL HOMES
HE’S FRUSTRATED THAT SHE CAN’T REPAIR OR REBUILD BECAUSE SHE’S STUCK WAITING FOR A CHECK SOT 12:24:52″all these years i’ve been paying insurance and I finally have to use it and they’re not helping me” 12:24:59 VO THE DAMAGE IS ALL WIND-RELATEDAND FENTON SAYS TWIA WILL ONLY GIVE HER 25 PERCENT OF WHAT SHE NEEDS ONLY ENOUGH TO REPAIR ONE OF HER FOUR HOMES SOT 12:22:06 “they’ve inspected the property two or three times they have now told me they are going to send out another engineer but not for another 30 days
” 12:22:15 VO BEFORE THE STORM, THESE HOMES WERE FILLED WITH FAMILIES SOT 12:23:11 “They were all occupied and every renter lost their home and all their belongings” 12:23:18 SOT 12:40:55:17 “fenton says residents had to get out so fast they left a refrigerator full of food Six months later, they’re gone and Fenton is still waiting on TWIA” SOT 12:21:13 “I’m at a complete standstill and i’m looking for some help and any way I can get it” 12:21:18:27 VO AND FENTON’S NOT THE ONLY ONE LOOKING FOR SOME HELP
WE SPOKE WITH SEVERAL OTHER RESIDENTS WHO ALSO FEEL STUCK WAITING ON TWIA WX PLASMA A SPOKESWOMAN FOR THE TEXAS WINDSTORM INSRUANCE ASSOCIATION SAYS IT FOUND OUT ABOUT THE SIGN ON FRIDAY AND IS ACTIVELY WORKING ON THIS AND ALL OTHER CLAIMS SYLVIA MARTINEZ KRIS 6 NEWS
This is a re-print of the article form The Port Aransas Jetty, Scott Burroughs, Jan 31, 2018
We just received a bill for our 2018-2019 Texas Windstorm Insurance Association (TWIA) premiums. Attached is the first draft of a letter to accompany our payment.
We are in receipt of your invoice for our 2018 Windstorm Insurance policy. We are so impressed by the way you are still handling our Harvey claim (five months after we filed it) that we have decided to employ your same protocols in paying this bill.
Although we would like to fulfill our obligation to pay you immediately, we have a few internal policies that we had not previously disclosed to you, that may cause some delays. We have no legal, moral or business reason to follow these policies, but we will follow them anyway because, after all, they are our policies.
Prior to issuing you a check our adjuster (me) must review your invoice. Once the initial review has been completed, our adjuster will forward the bill to his supervisor (my trophy wife) for final approval. This process generally takes seven to 10 business days, but may need to be extended with or without cause.
If your bill is approved by the supervisor, it will be returned to the adjuster for processing. This may take an additional week to 10 days. Even though his supervisor has already approved your invoice, the adjuster may insist that you provide further documentation to justify your costs. The requirements will likely be arbitrary, but you will still have to provide the documentation for the adjuster to proceed with your claim. Once the supporting documents are received from you they may sit on the adjuster’s desk for a week or two. After the adjuster gets around to reviewing them (assuming they are not lost in the interim), the 10-day processing period will begin again.
At some undisclosed time after the adjuster is satisfied that you have met all of the requirements to justify paying the bill in full, and there is no reason for any further delay, the supervisor will authorize payment of about 10 percent of the amount that you are entitled. If you would like additional disbursements, you will have to file supplements. If you have any questions on how to file a supplement you may send us an email and or call us directly. If you send us an email we will not acknowledge receipt, nor will we respond to your correspondence. If you choose to call us, you will have to wait in an automated phone queue for at least seven minutes. (You will be required to wait in this queue every time you call. Under no circumstance will you be provided a number to contact your adjuster without first waiting in the queue.) While on hold, you will be repeatedly instructed to email us. If you make it out of the automated queue without being disconnected, you will be transferred to voicemail, and we may or not respond to your message. If we don’t respond you will be required to start the process over. Despite your best efforts, we are still not sure if you will ever receive full payment.
At first glance these protocols may seem a little asinine, but after five months of dealing with TWIA we have learned that this is your preferred method of conducting business.
The Burroughs Family.
HOUSTON – “You can’t fix anything until insurance comes through. Well, we haven’t heard anything from insurance, so how do you keep moving on? You’re just frozen.”
The sentiments of Jeni Kite are common for many in the aftermath of Harvey.
Talk to anyone in Rockport and Port Aransas and they will tell you rebuilding is at a virtual standstill.
“It’s so slow it’s unreal,” is how David Lee describes the process.
The culprit according to them?
Not so much Harvey, but rather TWIA, the Texas Windstorm Insurance Association. TWIA is an insurance provider serving counties along the Texas coast with more than 234,000 policies totaling $67.6 billion.
TWIA policies only cover wind and hail damage.
While their mission statement touts being committed and reliable, policy holders like Kevin Baker in Rockport told Channel 2 Investigates they have been anything but that.
“I’m on my third claims examiner, my second field adjuster and I have yet to receive their report,” he said.
Baker is not alone.
Kite said TWIA does not have answers — even after an adjuster came to their home and told them to gut it.
“We went to get the information, the adjuster didn’t turn it in, they thought maybe, he took off maybe he moved on we don’t know,” she said.
TWIA scheduled a new adjuster for Sept. 25.
There was one problem, though.
“I have not heard a word from him,” said Kite while standing in the skeleton frame of what is the first home she purchased.
It all comes as blue tarps are now landscape fixtures. Public adjusters like Clay Morrison out of Kemah said TWIA has failed to deliver for customers who paid policies for years.
“We have a lot of files down in Port Aransas and I know numerous people down there and very few have even gotten their first check a month after the storm,” he said.
Morrison represents home and business owners when insurance companies fail to step up.
He is also the former president of the Texas Association of Public Insurance Adjusters, and while he and other adjusters like David Lee are shocked by what they say are grossly low estimates, they say they are more stunned by the actions of private onvestigators hired by TWIA, “I’ve been through several of these storms and I have never, ever seen an investigation unit like this.”
TWIA admits it has been working with Veracity Research Company (VRC) Investigations for years — to investigate fraudulent claims. However, Channel 2 Investigates discovered these private eyes are asking to see contracts between public adjusters and the clients who hired them, “My problem is if they are a private investigation group, they have zero authority in any kind of process of getting any kind of information like that.”
Several Public Adjusters tell Channel 2 Investigates this is simply harassment to disrupt the process and ultimately delay a payment. Morrison says it is also TWIA wasting its customers’ time, many of whom have paid thousands in premiums over the years, “I don’t know why they would be investigating the claims themselves when there are so many people with so much damage that need so much help, it seems counterproductive to me.”
Kite is one of those waiting for help, while she and others feel they should be moving forward at time when their lives are turned sideways, stopped dead in their tracks.
“A normal day is so far out there that you can’t see a normal day coming and that breaks your heart,” Kite said.
In response to Monday night’s report, the Texas Department of Insurance reached out to Channel 2 Investigates to assist in informing the public to contact the following if they are having troubles with their insurance carriers:
- Texas Department of Insurance Consumer Help Line: 1-800-252-3439
- Click or tap here to learn how to how to file a complaint
TDI wants to ensure that individuals receive the proper assistance. They also state that those calls and complaints will help TDI monitor how claims are being handled.