Tag: Reinsurance

What Is Xactimate and How Could It Help Hurricane Maria Victims?

Posted by Jeff Raizner on March 12, 2019

It’s been nearly a year and a half since Hurricane Maria, and victims are still struggling with insurance companies over property damage claims. Commonly used insurance software could help policyholders get their rightful compensation, but some insurance companies in Puerto Rico are refusing to use it. It’s called Xactimate, and while you likely have never heard of it, it’s crucial to the insurance claims industry.

What is Xactimate?

Xactimate is software used by insurance adjusters, insurance companies, and contractors, among others, to estimate the cost of building and repairing properties. Many insurance companies use Xactimate or a similar software platform to value insurance claims. Xactimate contains pricing databases for all sorts of materials, labor, products, and consumer goods so an estimate of damages can easily and quickly be put together. Xactimate also adjusts prices for specific to locations to ensure estimates include objective pricing. Xactimate’s calculations are considered an objective industry standard for valuing insurance claims.

Insurers Refuse To Use Xactimate On Hurricane Maria Insurance Claims

Insurance companies in Puerto Rico are frequently refusing to use Xactimate, instead, relying on subjective, non-standard methods to value insurance claims. Insurance companies are doing this in an effort to devalue claims and reduce the amount of money they have to pay out to policyholders. For an island already devastated by a natural disaster, this unfair insurance practice comes as yet another blow.

Puerto Rico has had an incredibly slow recovery in part because the island’s infrastructure was damaged in the storm, but mainly because of the dilatory tactics of many insurance companies. To compound the problem, foreign reinsurers dominate most of the insurance market in Puerto Rico, and they are reluctant to process and pay out on claims. This has led to policyholders waiting for months to hear the outcome of their claims, extreme undervaluation of damages, and outright denials. The only choice for many policyholders is to pursue a legal claim in order to obtain their rightful compensation.

Helping With Hurricane Maria Insurance Claims

Raizner Law is helping policyholders with Hurricane Maria insurance claims. We believe insurance companies have no right to withhold the funds property owners need to rebuild. Contact us today for a free consultation to see how we can help.

New Bill Seeks To Investigate How Federal Government Failed Puerto Rico

Posted by Jeff Raizner on January 24, 2019

Over a year has passed since Hurricane Maria devastated Puerto Rico, but the island is far from achieving a complete recovery. Puerto Rico’s slow recovery has been surprising to many; and, now lawmakers will formally investigate the exact cause of the island’s slow-paced recovery process.

Senator Kirsten Gillibrand, D-N.Y., has reintroduced a bill that would establish a third-party investigation into the actions and response of the federal government after Hurricane Maria. Specifically, lawmakers want to know why the government’s estimated death toll is so far below other estimates, why there was a lack of disaster preparedness, and how the telecommunication system became so inadequate. The investigation would also look into other matters that slowed down Puerto Rico’s emergency response.

Considering the disparity between the government’s estimated death toll and the death toll estimated by independent researchers at George Washington University commissioned by the Puerto Rico government, there appears to be much to sort out. Researchers at George Washington University conservatively estimated that as many as 3,000 Puerto Ricans died in Hurricane Maria and her aftermath, but President Trump has refused to acknowledge this as an accurate death toll and has stated he believed it was a conspiracy created by the Democratic Party.

The investigation would also look into how ten trailers filled with supplies for Puerto Rico were left to rot at a state elections office. The supplies were discovered months after the storm and were deeply needed by victims.

Slow Recovery For Puerto Rico

While the government’s actions or inactions play a huge part in Puerto Rico’s recovery, it is only one part of the puzzle. Insurance companies in Puerto Rico have been slow to process and pay out on property insurance claims, meaning Puerto Rican business owners have been forced to pay for repairs themselves, or worse, close their doors. The Puerto Rico Commissioner of Insurance has already levied millions of dollars in fines against the insurance industry, but that has done little to encourage them to process claims.

Helping Hurricane Maria Victims

The experienced lawyers at Raizner Law understand that Hurricane Maria victims are still struggling. We are representing condominium associations, business owners and real estate investors in delayed and disputed insurance claims in Puerto Rico. Contact us today for a free consultation to discuss your options and see how we can help.

New Study Finds Hurricane Maria Cost Puerto Rico $43 Billion

Posted by Jeff Raizner on December 27, 2018

Hurricane Maria devastated the island of Puerto Rico over a year ago, but the true cost of the storm is still being determined. According to new estimates, original damage calculations for Hurricane Maria are coming up quite short. A new study has found the shortage equals at least $1 billion.

The Puerto Rico Planning Board determined that total damage estimates from Hurricane Maria exceed $100 billion. Yet even after federal aid and insurance payouts, it was previously calculated that there was still a $42 billion deficit from damages to Puerto Rico from Hurricane Maria. However, a new report from The Puerto Rico Planning Board determined the $42 billion figure was short – by $1 billion. The Board also stressed the figure takes into account the millions of dollars the island received in federal insurance funds and insurance payouts.

The $43 billion economic impact figure was calculated based partly on questionnaires issued to the public and private sectors. According to Puerto Rico economist Jose Caraballo, federal aid and insurance payments have only covered 24% of the losses reported in the aftermath of the storm. Some of the industries hit the hardest included manufacturing and agriculture. Additionally, there was catastrophic damage to the island’s infrastructure.

Hardship In The Capital

The new report also listed the cities on the island that were hit the hardest. The capital, San Juan, suffered devastating losses, from damage to buildings to destroyed infrastructure. The report estimated the city of San Juan was one of the cities hit the hardest. There were reports of deaths in nursing homes and hospitals while the power grid was down and unable to provide needed electricity. There was also an outbreak of leptospirosis, which is a bacteria that spread through the city in the flood waters. While the city has received federal aid, other cities have been less fortunate. Many business owners are waiting for insurance companies to pay valid claims, but insurance companies have been keeping them waiting.

Anytime a natural disaster strikes, insurance companies work hard to delay or mitigate payouts even if it means acting in bad faith. This has left many Puerto Ricans without the means to rebuild and recover. Although some insurance companies are operating in bad faith, policyholders do have legal rights and they can pursue their rightful compensation with the help of an insurance attorney.

Lawyers For Hurricane Maria Victims

If your insurance company has delayed, underpaid, or outright denied your Hurricane Maria claim, contact Raizner Law today. We are helping Hurricane Maria victims get the compensation they deserve. Call us today for a free consultation to discuss your case.

What Happens to Insurance Companies After A Major Disaster

Posted by Jeff Raizner on August 21, 2018

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

Posted by Amy Hargis on August 6, 2018

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.

Reinsurance Issues In Puerto Rico After Hurricane Maria

Posted by Amy Hargis on April 23, 2018

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.