Puerto Ricans still fighting with insurance companies

DORADO, Puerto Rico -- Thousands of Puerto Ricans have been forced to drain their savings, close their businesses or resign themselves to living with structural damage as they fight insurance companies over millions of dollars' worth of claims unanswered or unpaid more than a year after Hurricane Maria.

Experts say the Category 4 storm caught insurance companies off-guard and left them reeling financially after they were hit with nearly 279,000 claims, a number one expert called "extraordinary." One major insurer has already folded, leaving more than 1,500 claims worth a total of $70 million up in the air. Many worry other companies might follow.

"The industry has never faced such an astronomical number of claims," said Iraelia Pernas, executive director of Puerto Rico's Association of Insurance Companies. "No one was prepared for that, not the federal government, not the insurance companies, no one."

The Office of the Insurance Commissioner of Puerto Rico has already issued fines totaling more than $2.4 million against at least seven companies for delays in resolution and payment of claims. All companies in the U.S. territory had bought reinsurance, but it was insufficient for some.

Commissioner Javier Rivera said it's too early to say what will happen with Real Legacy, the company that folded. But he believes the other company exceeding its reinsurance limits, Triple-S, has enough capital to avoid a similar fate.

"There will definitely always be a risk that some claims might not be addressed," he said. "But we will do everything that is possible."

Michael Barry, with the New York-based not-for-profit Insurance Information Institute, said exceeding reinsurance limits is highly unusual: "It tells me that was an extraordinary event that even in the companies' worst-case scenario, Hurricane Maria was difficult for them to envision."

Two insurance companies in Puerto Rico are also under review with negative implications, said Brian O'Larte, director of the property and casualty ratings division for A.M. Best, an insurance rating firm.

Hurricane Maria was the strongest storm to hit Puerto Rico in nearly a century, and it did so amid a 12-year recession, causing more than $100 billion in estimated damage, destroying the power grid and forcing businesses to remain closed for months. Overall, Maria was the most expensive catastrophe for the insurance industry last year, with losses amounting to $32 billion, higher than hurricanes Irma and Harvey, according to a report from Swiss Re, a reinsurance company based in Switzerland.

Insurance companies in Puerto Rico have paid a total of $4.4 billion in claims, but more than 13,600 claims have not been closed, according to a report from Puerto Rico's government. The report shows 65 percent of overall claims were closed with payment and 30 percent without payment.

The commissioner's office recently launched an audit into all companies, and Rivera said he is looking at some more closely than others, although he declined to name them. His office has received some 1,600 complaints, which is nearly three times the number it reports receiving in a normal year.

Pernas, of the insurance association, said it took insurance companies two years to pay a total of $1.2 billion in claims following Hurricane Georges, a Category 3 hurricane that hit in 1998. She also said the pending claims from Maria are complicated and involve mostly businesses, municipalities, government agencies and condominiums.

"They have to be reviewed with great care because they're big," she said.

According to Barry, the number of pending claims is normal for a disaster of such size, but lawsuits are already being filed.

"We're talking about businesses that have disappeared," said attorney Lee Sepulvado, who has filed a class-action lawsuit. "This obviously impacts people's lives."

Edwin Rosario is among those who were forced to close a business: He shuttered a restaurant in the northern coastal town of Dorado he opened four years ago. The 48-year-old reported damages exceeding half a million dollars, but has received only $93,000 from the insurance company and has used up all his savings, sold his home and transferred his daughter to a more affordable school.

By December, he expects to decide whether he will leave Puerto Rico and join the estimated 155,000 people who fled to the U.S. mainland after the hurricane.

"It's been an incredibly frustrating process," Rosario said as he recalled the moment he entered his restaurant and saw the damage. "That day was one of the few times where I sat down and didn't stop crying."