May 9—When her property insurance company went insolvent in November,
The 74-year-old had fought for more than a year to get
But by the time the carrier went out of business, Whittaker had received only a fraction of what she needed to fix up her home.
She couldn’t afford to purchase new insulation, to keep “the cold air in — or out,” so her daughter covered their walls and ceilings with contractor plastic and they used their kitchen oven to heat their home.
Created by the Legislature in 1970, the state-sponsored nonprofit promises to pay policyholders up to
After two years of costly, catastrophic storms, LIGA is facing its biggest test in decades.
In November, the
Together, the trio of carriers had around around 25,000 active claims when they went belly-up, requiring LIGA to swoop in and pick up where they left off.
Since then, LIGA has paid out roughly
And LIGA’s work is just getting started. In April, a fourth insurer,
But so far, the safety net has been little help to Whittaker. Six months after State National went under, she hasn’t received a dime from LIGA. Her home remains in shambles, down to its studs.
It’s an all-too-familiar feeling for Whittaker and other policyholders, who say that LIGA has been slow in handling their claims. After waiting months for their insurers to respond, they’re now waiting on LIGA.
“I love this house,” Whittaker said. “I’m just hoping that before I die, I get to see it fixed, and that I get to live a normal life again … This is not normal.”
It’s also bulked up its staff in recent months from around a dozen people to more than 500, mostly through contracts with independent adjusting firms. Wells said each policyholder has been assigned a dedicated adjuster “to hold that person’s hand through the process.”
Officials with LIGA say policyholders’ frustrations are understandable. Many of them have already suffered multiple adjusters and are “out of patience by the time it gets to our door,” said
“We’re the ones holding the hot potato when the buzzer goes off,” she said.
‘That hammer is not available’
But critics say LIGA doesn’t have an incentive to move quickly. Unlike insurance companies, it is not subject to bad faith penalties for delays.
The threat of having to pay attorney’s fees and a penalty worth 50% of unpaid claims is usually what gets insurers to act, said
“But that hammer is not available in these LIGA claims,” Guidry said.
Last week, a pair of state lawmakers presented legislation that would make LIGA liable for penalties if it didn’t pay a policyholder within 120 days of receiving satisfactory proof of loss.
The author of House Bill 881, state Rep.
The proposal failed to advance out of the
That’s because LIGA supports itself through assessments on solvent insurers, who often recoup those dollars from the state, over the course of a decade, through tax credits. Insurers can also offset those payments through rate hikes on policyholders.
Under state law, LIGA can issue assessments — worth 1% of insurers net direct written premium — once a year.
For the first time since 2004, LIGA exercised that authority in December, collecting around
Given the quantity of claims, LIGA will likely need to borrow money later this year, against future assessments, to continue making payments to policyholders, Wells said.
But just because LIGA doesn’t have to pay penalties or attorney’s fees doesn’t mean it won’t face lawsuits.
Hair said suing LIGA is a “lose-lose scenario”: policyholders have to pay for the attorney’s fees out of pocket, and taxpayers have to pay for LIGA’s defense costs.
But, given the difficulties policyholders are facing, Hair said litigation is “exactly where this storm is headed.”
Reasons for delays
Part of what’s slowing LIGA down is that much of the failed carriers’ data is messy, often requiring staffers to spend time manually processing it to get it into a workable format, Wells said.
LIGA might have received satisfactory proof of loss from a policyholder, but if it doesn’t have a copy of the policy, or information on past payments, it can’t determine a claim is ready to be paid.
It’s also not always clear, at least initially, which policyholders need assistance.
After making an initial payment, insurance companies will often mark a claim as resolved, even if supplemental payments may be needed. That can make it difficult for LIGA to know whether that policyholder needs additional attention.
When he learned that LIGA was taking over his claim, Malcombe breathed a sigh of relief: “A lot of people told me the state was easier to work with than the insurer.”
In December, Malcombe sent the independent estimate to State National. And in February, an adjuster hired by LIGA inspected his property.
Since then, he’s received no communication from LIGA on his claim. In the meantime, Malcombe, 71, has spent
“I thought the state would take care of us in a timely fashion,” Malcombe said. “Nobody has come back with us with an offer.”
A spokesperson for LIGA said State National had marked Malcombe’s case as “resolved, and as such it was not among the open/pending items when LIGA began helping policyholders.”
Whitaker’s home in
She needs around
“She’s been waiting a very long time to get what she’s owed,” said
Whittaker spent around a year renting an apartment in Beaumont, but moved back home in October, after exhausting her coverage for additional living expenses.
For now, she can’t do much else but wait for LIGA.
“It’s like I’m never going to see the light at the end of the tunnel,” Whittaker said. “Is it ever going to end? Am I ever going to have a house again?”
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