Home Insurance Insurance claims mount as businesses recoup Sandy losses

Insurance claims mount as businesses recoup Sandy losses

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Many businesses in the area are still living under Hurricane Sandy’s cloud as they navigate the next phase of recovery: the insurance claims process.

There are a suffocating number of business-related claims for those covered in the region. According to state government figures, in Westchester County alone, 265,300 businesses were impacted by the storm. Compare that with the 18,700 businesses that took a hit in Louisiana during Hurricanes Katrina and Rita and it becomes a huge issue for the insurance industry.

The Stern Agency, an independent insurance firm with offices in Rockland County and New York City, has clients in Westchester, including The Capitol Theatre in Port Chester. The newly reopened theater took a financial hit after cancelling five shows scheduled for the week of and after the storm. Among other things, the company is claiming loss of business income.

“It’s an insurable risk,” said Adam Stern, senior vice president of the family-operated agency. The Capitol Theatre is not alone. In fact, Stern says, the insurance industry is overwhelmed not just by loss of income claims, but flood and wind damage that have made it necessary for business owners to file property claims as well.

Companies like Stern’s manage claims and 80 to 90 percent are Sandy related. “That’s the problem,” he said. “There’s such an abundance, we’re having a hard time getting adjusters. Adjusters for carriers are coming from Canada, even London, to handle claims.” The agency filters 90 percent of their claims for commercial clients mostly in the New York and New Jersey area. Stern said he remains hopeful that things will quiet down by the new year, but other insurance agents aren’t so sure.

Insurance industry professionals are well aware of the mounting cost of the damage done by Hurricane Sandy. Gov. Andrew Cuomo’s office completed a detailed statewide assessment of the financial damage caused by the storm and in Westchester that number exceeded $527 million. The figure makes some people especially nervous, because extreme weather is a growing pattern in the Northeast.

“I don’t think insurance companies have recovered from 2011,” said Linda Rey, partner at The Rey Agency in Sleepy Hollow. “We have had at least four catastrophic storms and then we got hit with (Sandy). I don’t even know what 2013 is going to look like. The insurance industry is crying poverty at this point.”

Rey said the region has experienced a catastrophe and it’s going to take a lot of time and a tremendous amount of patience to sort it out.

For business owners in particular, it’s an unfair process, Rey said, “but insurance companies don’t write blank checks. (Businesses) have to substantiate how much they’ve lost. So while they try to recover, they also have to get their receipts together to get something back.”

The slow-moving process has a ripple effect, making it difficult to tell when the industry will be able to whittle down the heap of Sandy-related insurance claims.

Stern believes the effects of Sandy will be felt in the insurance industry long after the last claim is paid out.

“After 9/11, prices for carriers went way up – they doubled,” he said. Right now, carriers are able to exclude things like flood insurance, Stern added, but he predicts the government will step in and make some drastic changes to the industry. Hurricane Sandy “will change our industry just like 9/11 did.”

Insured businesses also face a potential increase in rates. As Rey put it, the insurance industry is “crying poverty,” which means it will continue to file for rate hikes “because the industry can.” Rey said she understands why the industry is asking for more money from clients and she’s seen hikes across the board.

It’s up to elected officials, however, to allow for a price increase. So far, Cuomo is siding with consumers. He has also attempted to make the insurance process better for Sandy victims, offering insurance assistance throughout the state and even waiving deductible costs for homeowners. Some business owners have benefited from new rules, even from special Sandy-related business loans, but most continue to plod through paperwork.

Rey said the process is “frustrating” for everybody, and there’s no timetable for when it will get better. “The devastation is beyond words and the thing is there’s no one to blame. We need someone to blame.”

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