Insurance reps get earful at flood forum

PHOTOGRAPHER: Edward Munger Jr.

Insurance industry representatives on Monday heard a long list of complaints about what New Yorkers faced when they turned to their insurers after their homes were devastated by tropical storms Irene and Lee.

The New York State Senate Insurance Committee held a roundtable discussion led by committee chairman Sen. James Seward, R-Oneonta. The discussion led off with a horror story from one resident of the hard-hit village of Schoharie — William Cherry, who is the Schoharie County treasurer.

He had flood insurance on his 1800s home, but it took more than five months to get his claim paid, and he got only pennies on the dollar.

“Unfortunately I don’t have anything good to say,” Cherry said to representatives from insurance companies, the Federal Emergency Management Agency and state legislators and officials.

Cherry, who was evacuated from his home on Main Street in the village only to return and find it was inundated by the Schoharie Creek, met with at least six different insurance adjusters during the claim process.

He said just when he got to the point where he felt he had satisfied one insurance adjuster’s voluminous requests for information, he learned a new adjuster was in charge of his claim.

In once instance, the adjuster wanted proof Cherry purchased a hearing aid.

He got proof in the form of a letter and set it to the Allstate insurance adjuster to learn “that adjuster was no longer assigned to the case, and you start all over.”

“It was always something different,” Cherry said.

He was told flood insurance would pay $1.95 per unit of carpeting. He had to find the carpet dealer and get them to write down that they’d purchased a higher-quality, $30 per-unit carpeting.

With that in hand, Cherry learned “that adjuster was gone and it was somebody else.”

“It was a brutal, bruising process,” he said.

It wasn’t until after Allstate insurance sent out an engineer to review his home that Cherry said he was ready to give up.

Allstate wouldn’t provide their engineer’s report without a hassle, and when he got it, it stated “there was no structural damage to the house.”

Cherry said the floodwater took out an 18-foot section of his home’s foundation and, standing in the basement, he could see the outdoors.

He hired a private engineering firm, which determined there was $96,000 in structural damage to the home and sent that report to Allstate.

“That still wasn’t enough. What they wanted was the engineer’s notes, the scratch notes. That was the final straw for me,” Cherry said.

U.S. Rep. Paul Tonko, D-Amsterdam said he’s heard countless tales of difficulties from residents in the disaster zone.

“The pain continues to impact the people of the district that I represent,” he said.

Tonko said it’s been a battle over semantics and the question of whether “it was a hurricane or a flood” and people are saying they paid for flood insurance for 25 years only to have “heartache instead of help.”

“Not a pretty picture, not an acceptable outcome,” he said.

Tonko questioned whether there should be rules limiting the number of insurance adjusters that get involved in a claim and whether there should be a “not to exceed” response time for those with insurance to get their payments.

“To get more heartache unnecessarily is what I think is compelling a lot of people to ask for a lot more demands placed on the system,” he said.

One insurance industry representative opined during the meeting that much of the discontent voiced since the disaster is because people are confused about what their insurance policy actually covers and what it doesn’t.

But Cherry said that was clearly not the case in his situation.

He said his local agent was SEF-

CU and “they bent over backwards for me. They sent emails to Allstate saying that they had never seen such a dysfunctional process in their entire lives,” he said.

“It wasn’t just me, as a homeowner and ‘gee, I think I’m covered and it turns out I’m not.’ There were insurance professionals fighting on my behalf and even they could not get through this mire of a process and they knew exactly what was covered even if I maybe didn’t,” Cherry said.

State Department of Financial Services Superintendent Benjamin M. Lawsky said his office estimates the insurance industry paid out about $550 million in claims since Irene and Lee but less than a third of that money — $150 million — was from flood insurance policies.

“I think that points up an obvious conclusion we all learned but I’ll say it anyway … not enough people in the state of New York have flood insurance and we need to figure out why,” Lawsky said.

Seward later Monday said several important ideas came out of the meeting, including the suggestion that insurance companies have one point of contact and one adjuster for claims.

Another good idea is “having the details of the policy in plain language so people would know up front what’s covered and what isn’t covered.

“My bottom line is I want to make this user-friendly,” Seward said.