The Joplin Globe, Joplin, MO

Local News

July 25, 2011

Insurance payout from tornado to be largest in state history

JOPLIN, Mo. — The payout by insurance companies for covered losses in Joplin will make the May 22 tornado the largest insurance event in Missouri history.

As of June 30, insurance companies had paid more than $509 million in claims for residential, personal and commercial property damage, according to the Missouri Department of Insurance.

The department is projecting that claims ultimately will total between $1.5 billion and $2 billion.

Within days of the tornado, Eqecat Inc., a company that specializes in catastrophe risk modeling, estimated that insured losses in Joplin could range from $1 billion to $3 billion.

The payout will eclipse the $800 million paid in connection with a hailstorm in 2000 in St. Louis.

“This will be the largest insurance event in Missouri history, and these numbers confirm that the insurance industry is playing a vital role in Joplin’s recovery,” John Huff, director of the Missouri Department of Insurance, Financial Institutions & Professional Registration, said in a statement. “This is half a billion dollars already reinvested into the local economy, and we expect it to be three to four times that amount by the time all claims are settled.”

Huff praised the insurance industry response to the tornado, calling it “commendable.”

At the same time, the department is continuing to receive consumer inquiries and complaints. Consumers may contact the department via the consumer hot line at 800-726-7390 or online at insurance.mo.gov.

“There is no charge for our service,” said Travis Ford, spokesman for the department. “If you are having problems, you need to give us a call. We get a lot of money back for a lot of people.”

The department said 734 complaints had been filed by Joplin residents since May 22, with 444 filed by homeowners. That total could have included complaints unrelated to the storm, such as car accidents, the department said. Of those complaints, 695 were “closed,” and nearly $1 million was recovered.

Mixed reaction

Some tornado victims, such as Liz Easton, were overwhelmed by the response from their insurance companies. Others, like David Gilbreth, were frustrated.

“Insurance has taken very good care of us,” said Easton. She had coverage with Amica for her home and with Columbia for her business, Cupcakes by Liz.

Of the house, she said: “They overnighted us a credit card for whatever need we had.”

A representative of the insurance company toured the damage the next day and bumped up the limit on the card. The Eastons’ house on Kingsdale Street was a total loss.

“We got more than we really thought,” Easton said.

Company representatives constantly checked on the Eastons to make sure they were satisfied and were being treated well by claims people on the ground in Joplin.

“They almost wanted us to feel loved,” Easton said. “It was weird, yet cool.”

The business at 2310 S. Main St. was destroyed. Easton said she plans to reopen the shop in the same spot.

The Eastons got what they expected for the coverage, and a little more.

“We were surprised,” Easton said. “We had loss-of-income insurance. They kind of knew to throw that in.”

Gilbreth, now living in Neosho, lost his home on East 22nd Street.

He said his insurance company, Travelers, treated him well on his car and gave him an initial check for his house within days, but he has wrestled with the company over the home’s contents during most of the past two months.

“They started depreciating things, but they wouldn’t appreciate anything, like antiques, that increased in value,” he said. “The things that appreciated they didn’t bring up.”

Gilbreth alleges that the company used a deliberate strategy of stalling in order to force a settlement for less money.

“What they do is drag their feet so long, they kept dragging it out so long so people say, ‘Oh, the hell with it, let’s settle,’” he said.

A corporate spokesman for Travelers said in a telephone interview Monday that he did not have specific details with which to comment about that case, but that he would look into it.

Large losses

Ford, with the Department of Insurance, said about 80 percent of the expected claims have been paid in Joplin, but the remaining 20 percent could take longer to resolve.

“A bigger claim can take longer and usually does,” he said.

The five companies with the largest liability in connection with homeowner claims in Joplin are State Farm, American Family, Shelter, AAA and Travelers, according to Ford.

Jim Camoriano, spokesman for State Farm, said the company represents one of ever four homeowners and auto owners in the state.

“We are the largest property and casualty provider in Joplin,” he said.

Camoriano said he didn’t have details on the Joplin payout, but that all storms nationwide this spring have cost his company $1.75 billion. State Farm has paid out $3.5 billion through June, which is close to the $3.8 billion it pays out in a normal year.

“If you add up all the tornadoes and storms, just during April and May, this would be the fifth costliest disaster in our 90-year history,” he said.

Uninsured

The numbers do not reflect uninsured losses or properties that are underinsured.

Ford said he recently worked at the department’s field office in the state’s Resource, Recovery and Rebuilding Center at Eighth Street and Illinois Avenue. He said he encountered a woman who is typical of the underinsured in Joplin.

“She had $95,000 in coverage on her house. A contractor told her it would cost $140,000 to rebuild it,” he said. “She was underinsured in that she did not have adequate insurance to recover from a total loss.”

Ford said people often do not update their limits on their homeowners insurance.

“If you bought insurance 15 years ago and never updated your limits, you will find that property values have gone up and building costs have appreciated,” he said. “A person, every three years, needs to make sure that they have enough insurance.

“There are a lot of people that have been sitting on policies for a number of years that are not sufficient to rebuild.”

U.S. Census Bureau figures from 2009 indicate that 77 percent of the dwellings in Jasper County and 80 percent in Newton County are insured.

Overall, 95 percent of the homes in the state are insured, Ford said. But the number of people in Missouri with renter’s insurance is far less: 27 percent.

That could prove to be an issue in Joplin. Census data from 2009 show that 42.6 percent of the housing in Joplin was rental. Owner-occupied dwellings totaled 57.4 percent. The statewide average is 70.3 percent for owner-occupied dwellings.

In the 64804 ZIP code, which is everything south of 15th Street, the area where most of the tornado damage occurred, census data show that 68.1 percent of the 14,220 residences were owner-occupied and 31.9 percent of the residences were rental.

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