Category: Hurricane Maria

Insurance Companies

What Happens to Insurance Companies After A Major Disaster

When a major natural disaster occurs, such as a hurricane, much of our focus is on our families and our own safety. However, insurance companies can take big hits following major disasters, which often send their stock prices into immediate decline. With the aftermaths of both Hurricane Harvey and Hurricane Maria in the not-so-distant past, it’s important to examine why and how the insurance industry is impacted by large scale natural disasters and what it can mean for overall recovery after these major events.

According to published data about the property and casualty insurance industry, , 2017 had the highest catastrophic losses in recent years, falling between $50 and $125 billion, with losses from 2011 and 2005 rounding out the top three. Hurricane Harvey resulted in losses ranging from $10 to $25 billion and Hurricane Maria resulted in losses up to $48 billion, although these numbers are still being calculated—but what do these losses actually mean?

In the immediate aftermath of a catastrophic event, stock prices for property and casualty insurers can take an initial hit.  But usually, these stock prices lag for the first two to four weeks as investors assess damages and earnings per share adjusts downward. But that doesn’t last long, as a major catastrophe loss tends to mean higher near term premiums. And that expectation of higher premiums tends to drive stock prices back up. Within just a few months, stock prices are often higher than they were before the hurricane or other catastrophe event. The increase in premiums also benefits property and casualty brokers, who also benefit from the higher premiums.

For insurance companies, the profitability of storms isn’t limited to major events. During hurricane season in particular, property and casualty stocks routinely outperform on average, historically rising an average of 3.5 percent since 1993. This also takes into account the average amount of hurricanes that happen each year, with around 18 storms making landfall annually since 1851. The decade of 2000-2010 was particularly notable as it averaged 18 hurricanes per year, including seven major Category 3+ hurricanes making landfall in the United States. Though it might be easy to think 2017 was a busy storm season with Maria and Harvey, only nine land-falling hurricanes occurred between 2011 and 2017.

Though one may think insurance companies are at an overall loss when disaster strikes, they are still businesses who sometimes thrive off of these bad situations. While stock prices may decline in the immediate aftermath, once the disaster claims payouts become certain, premiums begin to rise and the stock price rebounds and actually becomes much higher, reaping more profits for insurance companies. This boon presents a stark contrast to the businesses and families that are left to rebuild.

Get Help With Your Natural Disaster Claim

Although insurance companies face millions of dollars in claims, the reality is that they try to limit payouts as much as possible by utilizing bad faith tactics. When this happens, you need an experienced natural disaster claim lawyer who can hold the insurance company responsible and get you what you are rightly entitled to under your policy. Contact Raizner Law today for a free consultation to discuss your natural disaster claim.

Hurricane Harvey Insurance Lawsuit Claims

Reinsurer Recalcitrance Slowing Down the Repair of Puerto Rico’s Infrastructure

While preparing for a natural disaster is a wise idea, there are some things that just cannot be anticipated. When Hurricane Maria ravaged Puerto Rico, few could have imagined the island would still be struggling with a fragile power grid ten months after the storm. One of Puerto Rico’s biggest struggles recovering after Hurricane Maria was the island’s damaged infrastructure. Unfortunately, repairs to the infrastructure are taking longer to make because of the slow response from insurance companies to pay out on claims.

Puerto Rico’s infrastructure wasn’t in good shape before the storm. The roads suffered from many potholes, the power grid was very temperamental, and a significant portion of residential construction was done informally by individuals rather than licensed contractors. But when Hurricane Maria hit, it caused a whole new set of problems. The roads and highways suffered further damage, which made it difficult to travel; and even where the roadways weren’t damaged, they were cluttered with debris and large trees that needed to be removed one by one.

For an entire island without power, running on generators was extremely important, but with the roads in impassable conditions, it was difficult to get fuel to the hospitals and other facilities that needed it for generators. Gas stations that would normally dispense fuel were damaged and left inoperable, leaving much of the island stranded without fuel.

But it wasn’t just fuel struggling to make its way across the island. All supplies, including medical supplies, food, building supplies, and electrical equipment to repair the power grid, are having trouble reaching towns across the island.

Reinsurer Recalcitrance

Reinsurance is insurance for insurance companies, and foreign reinsurers dominate most of the commercial insurance market in Puerto Rico. While reinsurance is a vitally important component of the insurance industry (it keeps insurance companies from becoming insolvent by spreading out the risks), most foreign reinsurers are dragging their feet when processing claims. If policyholders cannot get their rightful payments under their policies, they won’t have funds to begin or complete needed repairs.

Get Help With Hurricane Maria Insurance Claims

At Raizner Law, our experienced insurance lawyers are helping Hurricane Maria victims get their full compensation under their insurance policies. If you need help with Hurricane Maria insurance claims, do not wait to contact us. Our consultations are free, and there is no upfront cost for working with us. We work on a contingency fee basis, so you won’t owe us anything unless we help you recover compensation.

Puerto Rico’s Power Grid

Nearly A Year After Hurricane Maria, Puerto Rico’s Power Grid Still Failing

When Hurricane Maria ravaged Puerto Rico on September 20, 2017, few realized how long lasting the devastation would be. It’s been over ten months, and power has still not been completely restored to the island, making it the longest power blackout in U.S. history. Officials are projecting repairs will be completed by the end of August 2018, but experts believe the repairs will not hold up against another Category 4 hurricane.

According to Puerto Rico’s Commissioner of Public Safety, Hector Pesquera, “The grid is there, but the grid isn’t there. It’s teetering.” Mr. Pesquera warned that the grid is so fragile, even if it was hit by only a Category 1 hurricane, the island would probably lose power.

The country has been desperately trying to complete repairs, and has awarded over one billion dollars in contracts to electric companies to rebuild the power grid. Despite this, thousands of Puerto Ricans remain without power, and generators are still powering vital infrastructure buildings including hospitals and police departments. For those Puerto Ricans that do have power, it is often fleeting. All it takes is a blown transformer or a snapped line for the power to go out again.

Puerto Rico’s fragile power grid has many worried about the 2018 Hurricane Season. This season is estimated to be similar to the 2017 season, meaning the island could easily see another storm that undoes the currently incomplete repair work done on the power grid since Hurricane Maria.

Unfortunately, a fragile power grid isn’t the only thing slowing down the island’s recovery. Insurance companies have been extremely slow to process and pay out on valid claims. This means many businesses cannot conduct repairs, often leading to additional lost income and further property damage.

Get Help With You Hurricane Maria Insurance Claim

Raizner Law is now evaluating commercial property claims in Puerto Rico. There is no upfront cost for working with us, and our consultations are free. We can help you understand your legal rights. We’ve achieved significant wins against some of the largest insurers in the world, and we can help you too.

Tropical Storm Beryl

Tropical Storm Beryl Tested Storm Ravaged Puerto Rico

It’s been over ten months since Hurricane Maria, but the entire island of Puerto Rico is still struggling with recovery. Unfortunately, nothing can stop the 2018 hurricane season and Puerto Rico has already been tested by one tropical storm early on in the season.

Meteorologists closely watched Tropical Storm Beryl because of its path toward Puerto Rico. On Saturday, July 7, 2018, the National Hurricane Center issued its first warning about the storm. While tropical storms are not always cause for concern, Puerto Rico remains extremely vulnerable after Hurricane Maria in September 2017. Hurricane Maria caused significant damage to the island’s infrastructure, and as a result thousands of Puerto Ricans remain without power now, even almost a year later. To make matters worse, many Puerto Ricans don’t currently have homes that can stand up to hurricanes and other storms. Many roofs are still covered by plastic tarps and some buildings still have unrepaired major structural damage, including missing walls, as the insurance industry has been slow to make necessary claims payments.

Slow Recovery

Despite ten months of effort, Puerto Rico still has a long road to recovery. Damage to the island’s roads and highways, in addition to its power grid, is still creating huge barriers to recovery. The biggest obstacle to Puerto Rico’s full recovery from Hurricane Maria has been the slow response from insurance companies to pay out on legitimate claims. Without receiving insurance claims payouts, property owners don’t have the money to begin repairs. The slow action from insurance companies has actually violated Puerto Rican insurance law, and in response the Commissioner of Insurance, Javier Rivera, issued a whopping 2,587 violation orders to six different insurers. These violation orders also came with over $2 million in fines. Unfortunately, the fines have not helped speed up recovery.

Heading Into Hurricane Season

Because Puerto Rico remains extremely vulnerable, the 2018 Hurricane season could cause further devastation. Puerto Ricans have the legal right to have their insurance claims handled in a timely manner, but insurance companies are simply refusing. The only way to force an insurance company’s hand is to file a bad faith insurance lawsuit. With the help of an experienced insurance attorney, policyholders can get what they are rightfully entitled to under their policies.

Raizner Law Now Helping Hurricane Maria Victims

Raizner Law is now helping commercial property owners in Puerto Rico with their Hurricane Maria insurance claims. There is no upfront cost for working with us, and our consultations are free. Contact us today to see how we can help.

Reinsurance Issues In Puerto Rico After Hurricane Maria

Practically every insurance company utilizes reinsurance to pass on the risk of claims to other insurance companies, or reinsurers. Reinsurance is basically insurance for insurance companies. In principle, the practice of reinsuring risk should help policyholders get their rightful payments without fear that the insurance company will become insolvent. However, in practice, reinsurers are typically foreign based companies that have no incentive to expediently investigate or pay claims. Most primary insurance companies in Puerto Rico cede the vast majority of the liability from their insurance policies to reinsurers. Since Hurricane Maria, insurers have been so slow to act that Puerto Rico’s Commissioner of Insurance has levied over $2 million in fines to insurers who are delaying the processing and closing of claims.

The Power of Maria

Hurricane Maria was the most powerful storm to hit Puerto Rico in almost 100 years, and it came right on the tail of Hurricane Irma, which had already knocked out power on parts of the island. The island faces billions of dollars of damage and is still, eight months later, not fully recovered. Sadly, with the trend over the last 35 years of increased natural disasters more storms like Maria are to be expected. The problem of reinsurer recalcitrance after natural disasters is not going away.

The Reinsurance Traffic Jam After Hurricane Maria

Many business and commercial buildings were damaged by Maria, and thousands of business policyholders filed claims with the insurer they received their policy from, only to find their insurer had ceded the vast majority of their coverage to a reinsurer. While there is nothing unique about that process, the way the insurance market is structured in Puerto Rico has created a traffic jam preventing insurance capital from flowing back into the economy. Here’s why: the insurance market in Puerto Rico is dominated by thinly capitalized domestic insurers who ceded almost all of their risk to European reinsurance companies. But the primary obligation to inspect properties and handle claims falls to these marginally capitalized primary insurers, some of which are nothing more than fronting entities. Given the vast numbers of claims filed after Maria, these domestic insurers lack the resources and expertise to handle the volume of claims they are being presented with, and many continue to do absolutely nothing with those claims.

Meanwhile, in the United Kingdom, German, Switzerland and elsewhere, the reinsurers who bear the vast majority of the risk on Maria claims are simply watching, waiting, and investing money they should be paying out to rebuild Puerto Rico. The reinsurer generally doesn’t have an obligation to pay until the primary insurer completes its investigation and requests payment; and the primary insurers don’t have the resources to accomplish these basic tasks.

The policy holder now has two companies either unmotivated or incapable of paying out on claims. Recalcitrant, slow paying insurance companies are causing policyholders additional economic hardship in a time when it matters the most. Without prompt payouts some businesses are unable to make the repairs necessary to rebuild and reopen.

Know Your Rights

Recalcitrant reinsurers have been a huge issue in Puerto Rico in the aftermath of Hurricane Maria. There are many ways recalcitrant insurers can slow down the claims process. They have every motivation to do so: most profits for an insurance or a reinsurance company come from the “float,” meaning the cash difference between premiums and claim payouts. Insurers invest the float, and make money on their investments. Even though the insurers are being fined for their wrongful conduct, it is still cheaper for them to pay the fines than to pay the claims. This is a gross violation of the legal rights of the insured. Under Puerto Rico’s insurance laws, policyholders have the right to have their claims handled in a timely manner. Policyholders in Puerto Rico can report abuses by their insurance company to the Commissioner of Insurance. Once reported, the Commissioner of Insurance will investigate these claims and levy fines if the insurance company is found to be acting in bad faith.

Hurricane Maria

Puerto Rico’s Commissioner of Insurance Fines Insurance Companies For Unnecessary Delays After Hurricane Maria

For the island of Puerto Rico, recovering after Hurricane Maria has been incredibly difficult. In the six months since the hurricane ravaged the island, millions of Puerto Ricans have struggled to rebuild among an island-wide power outage, scarcity of clean drinking water, and slow response from insurance companies. However, Puerto Rico’s Commissioner of Insurance has made it clear that insurance companies will not be able to shirk their duties.

Last month, Commissioner of Insurance Javier Rivera issued a whopping 2,587 violation orders to six different insurers. Under Puerto Rican law, insurers are expected to handle claims promptly and in good faith. If a policyholder in Puerto Rico does not agree with an insurance company’s determination of their claim, they can request an investigation by the Commissioner of Insurance. These investigations have already illustrated a widespread issue of unfair dealings on behalf of the insurance companies.

To address this dishonest behavior, the violation orders also assessed fines to the insurers. The Commissioner of Insurance has issued over $2 million in fines to insurers for unnecessarily delaying processing Hurricane Maria claims.

Insurers Acting In Bad Faith

Insurance companies are first and foremost businesses. So when natural disasters occur, insurance companies face millions of dollars in claims payouts. Most companies are not in a rush to pay out, and in fact many will use bad faith tactics to limit or completely deny payouts. Insurance companies try to limit payouts to save on their bottom lines, but this is not just morally wrong – it is also illegal. Policyholders that pay their premiums regularly deserve full coverage under their policies delivered in a reasonable timeframe.

Know Your Rights After Hurricane Maria

Even under the best circumstances, rebuilding after a natural disaster is challenging. After Hurricane Maria, property owners faced substantial hurdles from the lack of electricity and damage to the island’s highways. Many property owners are still facing significant issues, but dishonest insurance companies shouldn’t be one. Puerto Rico’s Insurance Code provides numerous protections for policyholders, but insurance companies often count on policyholders being unaware of their rights. In Puerto Rico, insurers are expected to resolve claims in a 90-day claims window unless there are extenuating circumstances. Failing to meet his deadline can result in fines like the ones issued by the Commissioner of Insurance.