Fires test new insurers, homeowners’ policies

May 15, 2008

Agents go to work for owners of burned homes

Florida Today--May 15, 2008

Wildfires probably were not the catastrophe Brevard County homeowners feared most as thousands scrambled in recent months to find companies to insure their homes.

But as hurricane season nears, the devastating fires have posed an early test of the new mix of insurance companies covering our losses in Brevard — including the small outfits that scooped up policies dropped by the majors and the much-maligned (but improving) Citizens Property Insurance Corp.

All look stable on paper.

But how quickly would their adjusters show up to check damage? And would our new insurers willingly pay claims?

Their performance this week offers a glimmer of positive news as revised tallies showed more than two dozen homes completely destroyed in the Palm Bay area and more than 100 with significant smoke or fire damage.

“I was at Our Lady of Grace Church where we gave checks to people who were out of their homes, and we handed out checks at two of our agencies,” said Walt Zehnder, vice president for claims for sister companies Royal Palm Insurance and Security First.

The former had received 15 claims by Wednesday and the latter 10, totaling more than $2 million. Six homes were total losses. All but two claims had been paid, and those checks were in the overnight mail, Zehnder said.

“We looked at it as a test,” he said. “We really do take it personally.”

Smaller Edison Insurance Co. also treated the fire losses as a major catastrophe, Chief Operating Officer Bob Gantley said.

“We have adjusters in the market, primarily concentrated in the 32908 and 32909 areas,” he said of ZIP codes covering much of Palm Bay.

Edison received three claims and paid for damage and living expenses, he said.

“We stand ready,” he said. “We anticipate more claims.”

Citizens responsive

Meanwhile, state-chartered Citizens received seven claims in Brevard by Wednesday, three for total loss of property and four for smoke damage.

“All seven of those should have initial action done by today,”
public-information manager John Kuczwanski said Wednesday. “We’ve reached out to our independent adjusters. We’re addressing them pretty quickly at this point.”

But this is merely a test.

As vast and heartbreaking as the fires have been, their scale can’t compare with the hurricanes the Space Coast suffered in 2004 and, to a lesser extent, in 2005. After another “storm of the century,” with thousands of claims pouring in, some of the smaller operators would be hard pressed to match this week’s pace of settlements. Citizens, too, would be pushed to the limit now that market cast-offs have made the nonprofit company Florida’s largest home insurer.

And no financial-rating agency can predict how any company will respond under such circumstances.

But for clues, we’ll keep watch in days to come on Citizens and other growing companies including St. Johns and Cypress and Universal Property & Casualty.

Service standard

And, to be sure, we’ll also track the big guys. After Frances and Jeanne in 2004, we learned which ones drove the hardest bargains with homeowners and which ones, such as State Farm, offered mostly excellent service in keeping with mostly gold-plated prices.

“I already got a check,” Palm Bay resident Matt Burchinal told reporter Kimberly C. Moore on Wednesday. Fire melted the siding on his family’s Fiske Road house, for which State Farm paid $5,076, he said. Fire also ruined his children’s backyard play set and a trampoline.

“They told me to get prices, and they’ll get me a check,” Burchinal said.

I’ve criticized State Farm plenty for its business tactics. But the company still sets the benchmark for responsiveness in a crisis — a standard by which we’ll be sure to measure others.