In the six months since Hurricane Maria devastated Puerto
Rico, much progress has been made. Water
service has been restored to 99% of the island and electricity to 93%.
Of the total losses in the Caribbean from Maria, about 85% are in Puerto Rico, which the local government estimates at $100 billion. Insured losses are
estimated between $40 and $85 billion.
There are many news reports on how the Puerto Rican people
are faring today. Most residences are
uninsured. Uninsured homeowners are
relying upon assistance provided from other sources to regain some semblance of
their standard of living.
Both large and small businesses are struggling. The business interruption is enormous, and
even large businesses like Sam’s Club (owned by Wal-Mart) are having a tough
time getting on their feet again. That
company announced in January that it was closing three of its ten stores on the island, albeit as part of a broader slate of U.S.
closures.
Almost half of all small businesses in February were still
operating under reduced work hours, and 5,000 to 7,000 of the 45,000 Puerto Rican small businesses were still
closed. Although infrastructure projects
and general construction tend to spur economic activity after a catastrophe,
Puerto Rico’s return to a normal economy has been hampered by the exodus of
about 135,000 residents who have relocated to the continental U.S. since the storm. Large businesses are having to contend with
substantially lower customer volumes, while small businesses are being squeezed
by much smaller operating margins.
So what does all this mean for Maria insurance
claims? On the whole, they are still in
the thick of being resolved. As of
January 31, about $1.7 billion had been paid – total – in residential and commercial property
claims. Just over $1 billion of that was for Puerto Rico.
Puerto Rico’s Insurance Commissioner advised at a hearing in early
February that the resolved claims represented roughly 37% of reported claims for Maria damage in September. The bulk of these resolved claims are likely residential,
as commercial business interruption and contingent business interruption claims
take longer to adjust and resolve, especially when the island is just now
getting its utilities and other infrastructure operating again. As of January, about 225,500 claims remained open pending insurer action.
The Puerto Rico Insurance Commissioner has expressed
particular concern with claims sitting unresolved for more than 120 days. His office has already levied more than $2.4 million in fines against six insurers, based mostly on these
claims involving substantial delay in resolution. Through early February, more than 3,000
violations of the Puerto Rico Insurance Code were discovered.
Not all lengthy delays are unjustified, however. Insurance companies are still encountering problems with access to insured properties, along with some lingering
telecommunication issues hindering contact with claimants. Power quality still poses a problem, even in
areas where electricity has been “restored.” Insurers are coping with these problems by
establishing customer service offices in different regions and extended service
hours.
Policyholder attorneys are gearing up for Maria business, just as public adjusters have, by establishing dedicated websites for Hurricane Maria
claims and local offices in Puerto Rico.
Their Hurricane Maria marketing information includes checklists of tips
for supporting insurance claims, and no-obligation free initial
consultations. With legal
representations already arising out of Maria claims, insurers can expect
initial demands and letters of representation to start arriving over the next
few months. But this will be just the
tip of the iceberg. Large commercial
losses with BI and CBI claims are still ramping up, so carriers should have a
little later in the year before they begin seeing increased numbers of those
claims from policyholder lawyers.
Posted by Eric Bowers
