Book Review: Secrets of the Insurance Game

Review of Secrets of the Insurance Game; What You Need to Know About Property Damage Claims, by Sean M. Scott. Available from the Red Guide To Recovery website:

Reviewer: Heather Korth, Architect & Cofounder of Our Front Porch

Having witnessed the limitations of insurance policies firsthand with clients, this book definitely peaked my interest. My organization, Our Front Porch, works with families displaced from home fires and I have seen their insurance policies span the spectrum in terms of coverage, limitations, and customer service.

The first chapter includes survey data that presents a grim story: most people are underinsured, short changed by their adjuster, and/or experience significant delays in their rebuilding process. Coupled with my own data that 50% of my clients are underinsured, it’s no surprise that dealing with insurance is indeed a game.

Mr. Scott describes the insurance claim process in detail, identifying each place where adjusters have an opportunity to underpay a claim, leaving people far from being made whole again. The book is very thorough, but having knowledge in construction contracts and estimating projects will prove beneficial to the reader. However, Mr. Scott includes several real-life examples that help to explain the concepts and where to look for red flags to anyone who finds themselves in this scenario. In addition, there is more than enough justification as to why someone would want to educate themselves or hire a public adjuster to represent them through this process.

Most of the book is geared towards homeowners, but renters can benefit as well, especially from the chapter on Personal Property. I have had several clients, renters displaced from home fires, who have had to endure yet another level of loss when repair contractors stole their personal property. Mr. Scott’s vast experience and honest advice will benefit not only those who have experienced a disaster, but help all of us be better prepared and informed.

I highly recommend this book as a resource to anyone going through the insurance claim process and encourage everyone to read it as part of their preparedness effort.

 

Recovery Reveals Major Issues After H. Harvey in TX

From a business insurance source: Harvey damage illustrates need for disaster preparedness: Study. Excerpts:

Hurricane Harvey served as a stark wake-up call about the need to enhance flood resilience, including limiting or preventing federal insurance coverage of new properties in flood zones, according to a study released Thursday.

Harvey made landfall near Rockport, Texas, on Aug. 25, 2017, as a Category 4 storm and dropped more than 40 inches of rain over the next four days, causing catastrophic flooding. Total economic damage from the hurricane is estimated at $125 billion, according to the National Oceanic and Atmospheric Administration Office for Coastal Management, making it the second-costliest tropical cyclone on record after Hurricane Katrina.

But only a small fraction of these Harvey losses, about $19.4 billion, were insured, including $8.4 billion in flood losses insured by the National Flood Insurance Program, $2.7 billion in insured vehicle losses, $4.9 billion in insured commercial losses and $3.4 billion in other losses, according to a Post-Event Review Capability study on the Houston floods resulting from Harvey conducted by Zurich Insurance Group Ltd., ISET-International — a nonprofit organization committed to building resilience — and the American Red Cross Global Disaster Preparedness Center.

Disaster Insurance

From Bloomberg News: Disasters Are Costing Us More. Why Aren’t We Insuring More? Climate change and our insistence on building in high-risk areas may force us to reconsider whether our losses are natural or man-made.

Last year was the second-costliest year for disasters since 1970, according to a new analysis from reinsurance firm Swiss Re AG. Global economic losses from these events reached $337 billion in 2017, behind only 2011’s total losses, and less than 40 percent were insured. A close look at Swiss Re’s data reveals several worrying trends. Losses from natural and man-made disasters are increasing, markets are not getting better at insuring them, and our own choices aren’t helping.

Insurance – Different in FL and TX

The insurance issues in FL are quite different from those in TX. See this article from the NYTimes: Irma May Force Florida Insurers to Turn to Deeper Pockets  

When the storm is over and the streets are safe again, Floridians will be checking what has become of their homes. They may also want to check on their insurers.
The big national carriers like State Farm and Allstate pulled out of Florida’s homeowners’ market years ago, citing catastrophic risks and unhelpful state regulators. Those departures left a vacuum that the state filled, initially, with a state-owned insurer, Citizens Property Insurance. Eventually, the state offered incentives to coax some brave new insurers into the market.

As a result, all that may seem to stand between Florida’s homeowners and potential ruin is one state-owned insurer and dozens of relatively little-known companies that do all or most of their business in the state. They all have the benefit of the Florida Hurricane Catastrophe Fund, which, with no major storms in the past 12 years, has $17 billion at the ready — a sum that may not be nearly enough.

New Report on Resilience from the White House

From the White House Office of Management and Budget a new report titled  Standards and Finance to Support Community Resilience.  This 29 page report is  the culmination of collaboration with leaders in re/insurance, catastrophe modeling, and building science to advance community resilience and insurability.  The office also announced additional commitments by leaders in the insurance industry to help identify and reduce the risks and costs of disasters.