NY Companies Report In as Sandy Insurance Claim Numbers Climb

The majority of Sandy-related insurance claims in New York have been closed, with policyholders getting payments while tens of thousands are still open and unresolved, according to the latest statistics provided by the state’s Department of Financial Services (DFS).

In November, the DFS set up an online resource that listed statistics for 24 insurers that were paying back claims to victims of the disaster that struck New York in late October after it swept up through the southeastern and mid-Atlantic U.S.

The insurers covered in the report card represent most of the insurance market in New York’s Sandy-impacted areas, according to regulators. No breakdown between carriers of homeowners and car insurance coverage in New York was available.

The following information from the DFS is as of Dec. 27, with 375,500 claims received by insurers listed in what the department is calling a “disaster response report card.” The DFS also says consumers can expect regular updates to the report card.

Most Claims Closed, Most With Payment

Among all companies listed in the report, about 68 percent of the total claims reportedly received by insurers had been closed.

About 77 percent of the 257,000 closed claims were completed with payment. The nearly 23 percent of claims closed without payment represented almost 60,000 claims.

Allstate continued to lead the pack in claims numbers, as it did when the report card was first published. The latest figures show that the insurer has received a total of at least 79,330 claims. State Farm followed in second place with 53,090 total claims. Travelers had the third-highest total number of claims with 40,180.

There were two other companies that reported more than 30,000 claims: GEICO and Liberty Mutual. In the 30,000-plus grouping, Liberty Mutual showed the lowest rate of closed claims that resulted in a payment, at about 60 percent. GEICO showed the highest rate of closed claims ending with a payment, at almost 85 percent, but GEICO also had the lowest overall claim closure rate. Less than one third of GEICO’s 33,600 Sandy-related claims have been closed.

Six insurance companies reported between 10,000 and 30,000 claims: The Hartford, Nationwide, USAA, Metropolitan Group, Naragansett Bay and Tower Group. Nationwide sported a relatively high rate of closed claims ending in payment, at almost 91 percent; it not only ranked high among insurers with similar claims numbers but also outranked all insurance carriers listed in the report card. Meanwhile, The Hartford reported the lowest rate of closed claims resulting in a payment, at 64.5 percent.

In the 10,000-30,000 group, the overall claims closure rates ranged from 47 percent to 93 percent.

Complaint rates for insurers with large claims volumes stayed in the same range as before, though the DFS received markedly more complaints about large providers.

Insurance companies with the top 5 most claims had the following complaint-per-claim ratios:

–Allstate: 0.45 percent
–GEICO: 0.14 percent
–Liberty Mutual: 0.34 percent
–State Farm: 0.25 percent
–Travelers 0.56 percent

Complaint rates had wider ranges for insurance companies in the 10,000-30,000 claim range:

–The Hartford: 0.57 percent
–Nationwide: 0.5 percent
–USAA: 0.14 percent
–Metropolitan Group: 0.13 percent
–Naragansett Bay: 0.99 percent
–Tower Group: 1 percent

Out of all insurers reporting substantive claims numbers, the highest complaint ratio belonged to NY Property Insurance Underwriting Association (NYPIUA), which showed a complaint rate of 1.54 percent. The insurer reported receiving 9,507 claims through Dec. 27, and consumers filed 146 complaints against it.

Amtrust Financial Services Group reported a sky-high complaint ratio of a little more than 11.75 percent, but the insurer is incomparable because it reported receiving only 17 total claims.

From Report to Payment, Claims Process Averages Weeks

The DFS also reported average time periods in different stages of the claims process, with the lengthiest leg of the process being between report and inspection.

It took an average of almost nine days to get inspectors to a site after first receiving a claim, almost four days after that inspection to provide an estimate and almost six days from that estimate to issue payments.

That totals 19 days from submitting a claim to receiving payment.

The report highlighted significant differences between insurance carriers. Among the insurers receiving the most claims, State Farm, Liberty Mutual and Travelers took the longest to pay claims at about 26 days, 18 days and 20 days, respectively. As expected, those three companies had the highest complaint percentages among carriers with similar claims figures.

Meanwhile, GEICO, which received a relatively low complaint rate, also took a relatively short 15 days to get policyholders their payments.

Some insurance companies with smaller claims figures have been taking longer to pay claims, with Tower, The Hartford and Nationwide taking about 31 days, 24 days and 19 days to complete the claims process, respectively.

Policyholders with Tower likely took issue with the insurer’s higher-than-average length of claims process, as the insurer reported a 1 percent complaint ratio that was one of the highest among all insurers.

However, some insurers in that claims grouping also showed that they could pay claims quickly. USAA and Metropolitan took 12 days and nine days, respectively, to pay their policyholders, the latter being the shortest amount of time among all insurance providers.

Both showed extremely high rates in closing their claims, with USAA reporting that 84.7 percent of its claims were closed, while Metropolitan reported a little more than 93 percent, the highest of any insurer in the report.

Unsurprisingly, those two insurers also sported extremely low complaint figures.

In addition, higher numbers of in-field claims adjusters seemed to be unrelated to the length of time it took to process claims. Just as it had been when the report card was first published, Travelers showed the highest number of adjusters by and far, with 1,595 currently working on claims losses.

Travelers, however, still showed a claims process that was about average, at 20 days. It also had the highest complaint percentage of insurers that received a similar number of claims.

But the insurer also showed a higher-than-average closure rate among companies receiving similar numbers of claims, at 81 percent.

Industry Says Last Year’s Profits Helping Sandy Response

A year of robust profits will shield insurers from significant damage from Superstorm Sandy, according to an analysis from industry experts.

Through Sept. 30 last year, insurers reported a historic $583.5 billion in surpluses, giving carriers “more than enough capital to cover losses” from the catastrophe that would strike a month later, according to Robert Gordon, a senior vice president with the Property Casualty Insurers of Association of America (PCI).

“Results like those for nine-months 2012 provide insurers with the financial wherewithal necessary to absorb shock losses such as those inflicted by Hurricane Sandy last October and continue to fulfill their commitments to policyholders,” Gordon said in a statement. “The horrific damage and human suffering caused by storms like Sandy are truly tragic, but insurers can be proud of the part they play in helping people and businesses get back on their feet.”

Still, a sluggish economy with slim investment opportunities has left insurance companies with fewer options to offset underwriting losses, according to Michael Murray, an assistant vice president for ISO, an analytics firm that released the report with PCI.

Murray said that a slow economic environment and strong possibilities of a sudden rush of disaster claims has forced insurers to prioritize “sound underwriting and risk-based pricing” as they face narrower room for error.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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