Hurricanes Force Company Into Rehab

American Superior's move to rehabilitation status was voluntary on the part of the Plantation, Fla.-based carrier, officials said. The company writes homeowners insurance for less than 60,000 of the state's residents, representing less than one percent of the market, or $34 million in premium volume in 2003.

The department said the company is not writing any new policies and no policyholders will be cancelled under terms of the order. Under the plan, the department will take over the company's operations and work to get claims resolved.

Nina Bannister, a spokeswoman for the department, said the company could not cope with the number of claims it was receiving?which jumped from an average of 300 to 7,000 and counting?and needed help.

"American Superior is in rehabilitation, not liquidation," she said. "We have every reason to believe that they can get back on their feet."

The state is overburdened with claims, she said. There are more than 35,000 adjusters in Florida working to handle more than one million claims. One result of the demand is an order to carriers to report any independent adjusters who appear to be trying to overcharge for their services.

Bob Lotane, a spokesman for the Florida Office of Insurance Regulation, which is part of the Department of Financial Services, said there are no companies currently under supervision, the step before rehabilitation. A small number are being monitored, he said, but they were under that status prior to the hurricanes.

He noted that one problem with American Superior was that it had a huge exposure in the Florida Panhandle, which it was in the process of correcting before Hurricane Ivan hit Sept. 15. If American Superior is liquidated because of inadequate reserves, the state's guarantee fund will assume losses, "which will be seamless to policyholders if it takes over."

I.I.I. said in 1992, Andrew claim payments totaled $15.5 billion, or $20 billion in today's dollars. Current estimates put payments from the four hurricanes at between $22- and $23 billion. Four of the top-ten most costly hurricanes in U.S. history have now occurred this year, the institute noted.

In Alabama, which took a significant hit from Ivan, Ragan Ingram, assistant commissioner for Alabama Department of Insurance, said that there "is no indication that companies are unable to meet their obligations."

As of last Friday, there were 65,000 claims filed in the state, and he said the number would easily exceed 100,000. Close to 30 percent of the claims have been closed, and more than half have had an adjuster inspect the claims.

He said that the expectation is that insured losses, which have been estimated by modelers to fall between $1 billion and $4 billion in the state, would probably come in on the high end of the estimate.

The state's residual market, its Beach Pool with $330 million in reserves, has seen $26 million in losses, and would result in much smaller assessments to insurers than was previously expected, he noted.

Lee Harrell, deputy commissioner with the Mississippi Insurance Department, said losses there were not significant and consisted of mostly wind and crop damage. As of last week, he said, the department was estimating insured losses at around $50 million, and is in the process of working up more current numbers.

Louisiana released its insured loss estimates, which it said would total $7.17 million, $3.1 million of which belongs to the Louisiana Citizens Property Insurance Corporation, the state's high risk insurance pool. The figures include a total of 3,720 claims.