Insurers Can Handle Calif. Losses Okay, Say Rating Firms

Rating firms said today that they believed insurers providing property coverage in California have the ability to weather the losses inflicted by the wildfires there.

Catastrophe modeling firms have estimated the insured losses could exceed $1 billion. More than 1,500 structures were reported burned today.

Fitch Rating said carriers are well positioned to absorb these losses, since catastrophe claims have been well below average this year.

Standard & Poor's said it is maintaining its current stable outlook on the property-casualty insurance sector in the face of the wildfires.

Meanwhile, as damage claims poured in an attorney warned homeowners to be on their guard against insurers.

John N. Ellison, managing partner in the Anderson, Kill & Olick Philadelphia office, issued a statement cautioning policyholders they should be watchful of their claims, taking care to document and fight for full recovery of what they are owed under their policy.

"The insurance industry has not had a great track record in dealing as squarely as they could with policyholders," he said.

In fact after wildfires tore through California in 2003 and inflicted a record $1.06 billion in insured losses, then Insurance Commissioner John Garamendi assailed the carriers for their treatment of insureds, an attack that the companies said was unwarranted.

"Customers need to stick by their guns and get the full value of their claim under their insurance contract," said Mr. Ellison.

When asked if there could be a repeat of 2003 when insurers were accused of undervaluing homes, he said it is too early to tell how carriers are doing.

"It will take a couple of weeks to see how the response will develop," he said.

Sam Sorich, president of the Association of California Insurance Companies, said the reports of disputes over claim evaluations are overblown, and those cases that went to court resulted in a finding for insurers.

It is too early at this point to know if claims handling controversies will develop as they did in 2003.

Mr. Sorich said insurers reacting to the latest wildfire damage have made an impressive response in working to adjust a huge volume of claims spread all over the state.

He noted that insurers have placed teams in emergency centers to make it easier for customers to access them and get the claims process working. Mr. Sorich said some are calling policyholders checking to see if they need assistance.

State Insurance Commissioner Steve Poizner has already taken action, issuing an emergency declaration yesterday that allows state-licensed adjusters and insurers to call in nonstate-licensed adjusters to help speed up the claims process.

Paul Hering, chief executive officer of the Barney & Barney agency in San Diego, related some of the difficulties for agents dealing with the latest wildfire destruction.

His firm has more than 200 employees and, he said, about half of them had been forced to evacuate their homes and many are still unable to return including.

While the flames did not threaten Mr. Hering's offices, the lack of staff forced the business to shut down for three days, except for a skeleton crew who were on hand to take care of immediate customer concerns.

No employees lost their homes, but Mr. Hering said he believes about 20 of the firm's clients did. The exact number of homes destroyed is unknown, he said, since many neighborhoods are still inaccessible to residents.

He said this fire is comparable to the 2003 Cedar Fire in California if not worse.

That fire, according to the Insurance Information Institute, was responsible for $1.06 billion in insurance losses.

The state data released early today listed 10 fires burning, covering more than 375,000 acres. A total of 1,526 homes, businesses and other buildings were reported destroyed.

Mr. Ellison said that while policyholders should guard their interests, they may also find agents and brokers can be a great help with paperwork and taking the imitative in the claims process.

"In times of tragedy, they can perform what customers view as miracles," he said.