June 25, 2020 by Greg Meckbach
The industry’s reputation could take a beating in the aftermath of the devastating June 13 Alberta hail storm if misleading rumours are spread by people who do not understand how insurance works, an official with the province’s broker association warns.
“It could get ugly quickly,” Barry Haggis, president elect of the Insurance Brokers Association of Alberta, said in an interview. “We could see something similar to the 2013 floods, where people were marching around the streets with big signs” naming and shaming individual insurers.
Haggis is concerned about people spreading rumours about what insurers are and are not paying, without knowing the details of what specific insurance contracts actually cover and what coverages specific clients decline.
The June 13 storm dumped hail the size of tennis balls, mainly in the northeast quadrant of Calgary. The Insurance Bureau of Canada reports more than 20,000 claims have been filed. In many cases homeowners suffered major damage to roofs, siding and windows; and there is reportedly a shortage of rental cars because so many vehicles suffered major damage.
Haggis recalls the reaction of some to the 2013 floods that hit southern Alberta. Overland flood was generally not available on homeowner policies until 2015, and so many Alberta flood claims were not insured in 2013 simply because the policies excluded overland.
Haggis is president of Calgary-based Young and Haggis Insurance Services Ltd. About 45 of his clients submitted claims from the June 13, 2020 storm. Haggis told Canadian Underwriter he is pleased with how quickly insurers have responded to the disaster so far. All Young and Haggis clients who made claims were contacted within 24 hours by an adjuster; in most instances, a restoration company was lined up quickly to start assessing damage, Haggis said.
But last week, Haggis read some reports alleging that some insurers were only paying 10% or 20% of damages and imposing high deductibles.
“That doesn’t make any sense to me,” Haggis said. “If the deductible on your house is $1,000, then that is what your deductible is. So I think there is a bit of misinformation going on out there among the public. That is scary, because if that starts spreading around – and you are hearing these things about insurance not paying out, or they are only going to be paying 10% of damages, and how they are charging higher deductibles than they should be – that just gives the entire industry a terrible name.”
Although hail damage may have been the most visible result of the June 13, 2020 storm, Haggis reports many properties also suffered overland water damage. This did not happen so much on floodplains, but rather because the sewers got overwhelmed. So water simply flowed over the land and into basements through windows.
“It wasn’t rivers, which is the creepy thing,” said Haggis. “The ones that my clients have experienced, they have purchased the overland water coverage up to the full limits, so they will be fine subject to their deductible of course. But it scares me to think how many people declined overland flood, thinking, ‘Oh, I am up on a hill’ or ‘This is never going to happen,’ or ‘I am far away from the river,’ or whatever the case may be.”
Insurance is about “Murphy’s Law,” said Haggis. “If anything could happen, it will. So I am sure there are going to be quite a few clients out there who had overland water claims but didn’t purchase the coverage, and they are going to be pretty devastated by it.”
It is part of an agent or broker’s due diligence to tell homeowner clients on renewal if they lack overland flood coverage and whether it can be added, said Haggis.
But the problem is, some homeowners may decline overland water coverage. Then they suffer an overland water loss and go to the media saying a certain insurer is not covering a claim – without making it clear it was the client who denied the coverage, Haggis suggests.
“Especially in this day and age, with information being traded so quickly on social media, somebody can make a statement. Then it gets re-tweeted 5,000 times and then all of a sudden people are thinking this company is not going to be paying claims, when they really don’t know any of the circumstances behind it.”
Feature Image: The Canadian Press/Jeff McIntosh