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