With the six-month anniversary of last year’s Superstorm Sandy recently passed, the latest report on claims numbers in New York show that more than 95 percent of claims are closed as the insurance industry is seeing a clearer picture of the disaster’s full impact.
The latest figures in a regularly released report from the New York Department of Financial Services (NYDFS) show that, out of almost 398,600 Sandy-related auto and homeowners claims from 24 insurers, 95.3 percent were closed as of April 26.
A total 81 percent of the closed claims ended with a payment to the policyholder.
The National Insurance Crime Bureau (NICB) reported in February that the disaster generated 150,000 New York insurance claims, the highest number for any state. The Insurance Information Institute (III) reported that Sandy brought about “a quarter million” in total car claims.
GEICO has the highest claims closure rate and the highest proportion of claims closed with payment out of the major coverage providers. The insurer has closed 99.7 percent of its more than 32,200 claims, with only about 7 percent of closed claims ending without payment.
Nationwide had the lowest closure rate of the 10 largest insurers included in the report: 90.7 percent.
Tower Group showed the lowest rate of closing a claim with payment in that grouping, with 70.3 percent.
GEICO also showed impressive complaint figures with just 1 complaint of every 350 claims, the best rate of any insurer in the top 10. The worst rate was Tower Group, which has 1 complaint for every 52 claims.
Allstate still leads insurers in total claims numbers by far, handling more than 82,800 claims with a 94.7 percent closure rate. The next highest total was State Farm with 57,231 claims and a 95.3 percent closure rate.
Trade Org. Pegs Sandy’s Disaster Losses as Third-Highest in U.S. History
The III also reported $18.8 billion in claims losses from Superstorm Sandy. The total, as of Jan. 18, likely means that Sandy will be the third-costliest hurricane in U.S. history. The top five priciest hurricanes are:
Katrina (2005): $48.7 billion
Andrew (1992): $25.6 billion
Sandy (2012): $18.8 billion
Ike (2008): $13.4 billion
Wilma (2005): $11.1 billion
Despite the “historic claim volume,” however, the Property Casualty Insurers Association of America (PCI) said that the “vast majority of claims [were] paid quickly.”
Robert Gordon, vice president for policy development and research for PCI, said that Sandy “severely affected” insurers’ financial performance last year, weighed down with heavy disaster-related losses in the fourth quarter.
Although the industry was able to boost profits in 2012, according to a joint study from PCI, III and analytics company ISO that was released late last month, Superstorm Sandy hurt the industry’s long-term rates of return, a measure of overall profitability.
“If catastrophe losses in fourth-quarter 2012 had been the same as they were in fourth-quarter 2011, insurers would have posted $2.4 billion in net gains on underwriting, instead of $10 billion in net losses,” he said in a statement.
Federal Mediation Begins for Non-Flood New Jersey Claims
The Department of Banking and Insurance (DOBI), New Jersey’s regulatory agency, said last week that a federal mediation program through the American Arbitration Association (AAA) is now open for policyholders seeking to close their non-flood insurance claims.
Under the program, homeowners and auto policyholders with claims higher than $1,000 are eligible as long as the claim is not deemed reasonably suspicious. Insurers cover the cost of the mediator.
Sandy-related flood claims are handled through the federal National Flood Insurance Program (NFIP), which could become a part of future mediations, according to the DOBI.
Application forms are now available online at www.adr.org, by phone at 855-366-9774 or via email at email@example.com.
The NICB reported that New Jersey generated 60,000 Sandy-related vehicle claims.
In an effort to expedite the claims process, both New York and New Jersey have altered typical business practices since the storm passed in late October.
In February, Ken Kobylowski, DOBI’s commissioner, shortened the amount of time insurers had to respond to claims and number of extensions they could request.
The new mediation process would be another option to resolve claims quicker without “costly and time-consuming litigation,” he said in a statement.
New York Gov. Andrew Cuomo announced the regularly published “report card” shortly after Sandy ended, saying that it would provide transparency and accountability to the industry during recovery efforts.
“There simply is no substitute for speed when it comes to insurance payouts after a storm,” said Cuomo at the time while also authorizing the use of out-of-state claims adjusters in an effort to expedite claims work.