Homeowners Wait for Claims To Be Adjusted

Industry Chokes on Volume of Work

WIGGINS, Miss. -- Brenda Manning, whose home in Escatawpa, Miss., was nearly submerged by Hurricane Katrina, is resigned to the idea that her insurance policy probably won't cover much of the damage. Her homeowner's policy, like many, excluded flood coverage.

But the 34-year-old mother of two needs to know for sure before she can move on with her life. Before she can apply for help through the Federal Emergency Management Agency, she must demonstrate that her insurance company has investigated and denied the claim.

"I'm still waiting to hear from them," she said yesterday.

The one-two hurricane punch of Katrina and Rita has strained the insurance industry's ability to answer phones, investigate claims and get money into the hands of shattered survivors of the storms.

Some 10,000 insurance adjusters are deploying in the Gulf Coast region to handle more than 1 million claims expected to result from Katrina and Rita. But their progress has been slowed by their inability to inspect houses in inaccessible sections of the disaster areas and by the sheer bulk of the claims.

Katrina-related claims are expected to total between $35 billion and $60 billion -- an industry record even on the low end -- and Rita claims could reach $7 billion.

Many policyholders will pick up a major share of costs for their uninsured losses, and down the road, insurance premiums are likely to be higher -- for less coverage -- particularly in the regions where the hurricanes hit.

An insurance industry spokesman said it was too soon to know the extent of rate increases. J. Robert Hunter, a former Texas insurance commissioner who heads the insurance section of the Washington-based Consumer Federation of America, said premiums in some parts of Florida rose between 10 percent and 25 percent after last year's four hurricanes.

But for now, claims-handling is the most pressing issue for policyholders. While some homeowners report prompt service under difficult circumstances, others complain of busy signals, unreturned calls and dangling claims waiting for an insurance adjuster's visit.

Irate homeowners have flooded insurance departments with complaints about claims denied on the basis of the flood exclusion. "I'm just getting killed about it," George Dale, Mississippi's insurance commissioner, said three weeks after Katrina hit. "I'm the messenger, and I'm the one they shoot."

And Mississippi Attorney General Jim Hood has sued insurers, asking a state court judge to stop, among other things, what he described in a statement as "unscrupulous" adjusters from requiring policyholders to waive flood-related claims to receive immediate living expenses.

Robert Hartwig, an economist for the Insurance Information Institute, a New York-based trade group, said insurers had already fielded hundreds of thousands of claims and adjusted "large numbers" of them under extraordinarily difficult circumstances.