Insurance companies not out to 'put the screws' to people of VI- Michael A. Fusco
However, a professional insurance adjuster does not believe the insurance companies in the Virgin Islands are necessarily out to cheat anyone, and stated that the problem lies in many persons not understanding what their insurance entailed from the beginning and that in many cases properties were not insured for the proper value.
"I don't belive that anyone is out to put the screws to the people of the Virgin Islands. I think the people of the Virgin Islands are caught in the middle of a problem that they do not understand or know how to deal with it. The biggest part of that is this issue of how to insure my property for the proper value," said Mr Michael A. Fusco, Chief Executive Officer of World Claim, an organisation dedicated to helping residents, where they operate, to address insurance claim procedures with knowledge that may change the outcome of insurance claims that are presented.
Mr Fusco, who has been in the insurance business for more than two decades, was speaking at a forum organised by social commentator and former Managing Director of the BVI Ports Authority (BVIPA) Mr Claude O. Skelton-Cline at the Save the Seed Energy Centre's Basketball Court, in Duffs Bottom, on the main island of Tortola on Tuesday, December 19, 2017.
The aim of the forum, which came at no cost to residents, was to allow persons who have yet to settle and accept the proposed amount of money, to ask questions and get answers to better position themselves during the sometimes difficult insurance conversations.
Just over 40 persons attended the meeting, which saw property owners sharing their experience with the insurance companies.
Under insured & under insured
One of the main complaints of persons with insurance is that their properties were found to be under-insured following the recent natural disasters to hit the Territory, giving rise to suspicians of being cheated by the insurance companies.
Mr Fusco believes; however, that this may not necessarily be the case and that some property owners were under-insured from the time they bought insurance.
"I am saying that the math says they are underinsured and they were under informed when they purchased their insurance. Had they known differently they would have made a different choice I believe."
Mr Fucso said too that many persons are not familiar with how insurance works and this would have worked against them. He recommened to those persons to take ownership of the problem and take on a good negotiator to help.
Ignorance
A resident at the meeting, who said he was a property consultant, had earlier stated that "ignorance" is one of the main reasons for many of the problems now faced by residents.
He said people, mainly because of ignorance, have not been asking the insurance companies the right questions when buying insurance. He also advised that properties be re-evaluated every year.
One woman said her home was badly damaged and while she was deemed under-insured the insurance was still not coming forward with a favourable figure as they were only proposing 1/3 of her insurance, lamenting that "I can't do anything with that" due to the cost of materials, adding that she is desperate to make her home livable again.
Mr Fusco encouraged persons with similar problems to not give up and to consistently fight for every dollar due to them; however, he urged them to do it respectfully and with a smile.
It was noted too by the private adjuster that the recent hurricanes have been a learning experience for both insurance companies and their clients.
Advice
Going forward, Mr Fusco advice persons to buy Blanket Policies for an agreed value and, rather than insure for 100%, to insure to just 80%.
Noting too that he was not there to solicit customers but to help them to hopefully approach the insurance companies in a more informed manner. Mr Fusco did say; however, that his company, World Claim, would assist once persons feel their service would still be needed.
He said World Claim never charges more than 10% of claims successfully made.
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29 Responses to “Insurance companies not out to 'put the screws' to people of VI- Michael A. Fusco”
You cant have a house valued at $700,000 with a mortgage of $100,000 and have the customer insure the property for only the loan amount $100,00). That is unacceptable. The property is underinsured if something happens hurricane, earthquake, flood or whatever the property is underinsured. So please don't just focus on the insurance companies blame the banks also.
Lastly we need to do what is best for the customer, here we have two sets of professional organizations that are allowing persons to underinsure their properties for their own gain....where are the laws? Both the banks that allows their customers to underinsure their properties and the insurance companies that sold the insurance to the customers need to find a remedy to assist the customers who have this problem. And I don't mean give them another loan and charge them interest!
That's my two cents.
We are not just talking about the uneducated man on the street but Doctors, Lawyers, Business people who built from nothing who have masters degrees are all victims to the insurance folly and misinformation. This is the first major storm to hit these islands since insurance came to these islands.
The companies and the banks are behaving like only the people owe them something and not that they too owe the people. But we will see what the Government and the FSC will do in coming months good I hope. Insurance companies , Banks you all are playing with peoples lives and future.
1. Most didn't understand what their policy coverage entailed.
2. It was the insurance company's job to make sure their clients truly understood what kind of coverage they were getting for their premiums. Some agents didn't fully understand what they were selling the client themselves or the implications.
3. Some truly could not afford the premiums to cover the full value of their home that they built cash out of pocket over the years or homes they inherited.
4. Real estate Appraisers and expat realtors in the BVI have significantly undervalued traditional local/native communities. Now the chickens are coming home to roost as all have to pay the same price for the same goods to repair their homes. So the under valued appraisals impacted the insurance coverage. This is an issue the government needs to address moving forward.
5. Some people who could afford it and understood what they were purchasing willfully took the cheap route out and didn't insure their homes for the appropriate replacement cost...I spoke to at least one or two about this and they fluffed it off.
6. People should build smaller in the future so they can afford full coverage without wrecking their financial plans. Stop trying to out do one another and live below your means.
7. The next storm waiting is some of those expensive universal life insurance plan agents sold to locals, they could have gotten better plans shopping around and putting the premiums they saved towards better coverage on their home. IT IS HARD HAVING THESE CONVERSATIONS WITH BVISLANDERS. THEY DON'T respect or believe their own who have the knowledge to help them. They always take the cheap way out unless it is designer hand bag or clothing that they can be seen in. As a BVIslander I threw my hands up and decided not to open my financial planning practice on Tortola, it was too much of a tough sell, but the folks readily listened to others of different hue who swindled their money out of them. I cry now for the situation my people are in.
Moreover, insurance companies must be in the forefront to educate customers on the negative consequences of under insuring their property(s) Further, if the replacement value of a property is $500K and the owner has a $100K mortgage on the property and insures it only for $100K, the insurance company may only cover losses up to $100K; the property owner is self-insured for $400K. What can be done to improve insurance companies and customers relationship? The following are some suggestions 1) establish a consumer protection agency, 2) create an insurance commissioner position as the insurance watch dog, 2) offer basic insurance workshops at HLSCC, 4) customer seek out an advocate to represent them when purchasing insurance, if needed, 5)banks as part of the terms and conditions of awarding a mortgage should encourage/require mortgagee to insure property for at least 80% of replacement value, 6)construction cost goes up so the replacement value and insurance should be adjusted periodicall, 7) insurance companies must be responsive and payout claims as quickly and 8) insurance set a target response time to respond to claims.
Some may see insurance as legal thievery but insurance companies provide a valuable service. Insurance in essence is customers pooling resources to share covered losses. Nonetheless, currently some insurance companies have a tarnished image problem that they need to turn around. True, Hurricanes Irma and Maria may result in big payout for insurance companies. But that is way the ball bounces. Some years very little is paid out and in other years payout can put companies at the brink. Make the consumer whole!
On your definition that is every for profit business goal..maximize revenue and reduce cost.
Thus, to provide lower premiums yet provide insurance protection, coinsurance/under insurance/insurance to replacement value clause is inserted in many contracts. Simply, for partial losses to be funded at a 100%, the property must be insured for at least 80% of the replacement value. For example, if the full replacement value of a property is $500K and it is insured for $300K, the minimum insurance needed is $400K (0.8x500=400) to avoid being under insured. Further, let’s say an insured peril, ie, a fire caused $250K in damages to a property. The insurance company will pay the property owner $156.26K, though the loss is less than $300K; there is a penalty for under insurance. How was this figure derived? It is loss incurred divided by 80% of replacement value times the loss (250/400x250=$156.25K). On the other hand, if the property was insured for at least $400K, the $250K loss would have been 100% covered. On another note, there is a difference between market value and replacement. Happy holidays!
Here are some questions that I would ask an insurance agent(s). They are not in priority order.
1. What does the policy cover or not cover? More importantly what is not covered.
2. How are claims filed and processed? What is the target response time on claims?
3. What is the minimum coverage needed to avoid being under insured?
4. What is the minimum coinsurance needed for a 100% reimbursement on partial losses, ie , 80, 90%......etc of replacement value?
5. What is the cost of the policy? How can cost be lowered and attain adequate coverage?
6. What causes premiums to go up? Will filing a claim cause premiums to automatically go up?
7. How are rates determined?
8.Is the company solvent?
There were two hurricanes we should have put in an estimate for intact three. 1 for flood August, 1 for Irma and one for maria. Insurance fool us but they taking out two deductables by disguising it saying we under insured. Tricks they already know how much they want to pay us from time they get estimate. Insurance trickier they play with your mind to get what they want. One good one so far. I believe this company didn't do enough to educate workers and clients. Was too busy making money,trying to see who get the most customersand forgot the real issues of their product.