Weathering the results: months after suffering through a record four hurricanes, the Sunshine State's insurance industry continues to pick up the pieces.

Key Points

* Florida's unusual hurricane season has spiked interest among some insurance clients for more coverage.

* Through November 2004, the Florida Department of Financial Services had received roughly 1,000 requests from homeowners for insurance mediation.

* An estimated 20,000 Florida homeowners will have multiple deductibles.

* Most observers were skeptical of the notion that the hurricanes could reverse the nation's migratory patterns.

Nestled in the heart of Florida's "Treasure Coast"--a stretch of shoreline once best known as the purported hiding place for troves of buried pirate booty--Stuart bears all the tell-tale signs of a typical Sunbelt edge city.

Towering palms stand guard at gated communities, behind whose thatch of foliage lie scores of prefabricated homes encircling manmade ponds. Cul-de-sacs and golf courses dot the landscape, while the city's wide avenues are lined by a procession of strip malls whose awnings are adorned with Christmas lights year-round. Signs weathered by hundreds of Florida thunderstorms invite passersby to enjoy scuba lessons, yacht rentals and the latest in bait and tackle technology.

But when State Farm adjuster Todd Douglas arrived in Stuart Sept. 8, he said, he found a site altogether different from the idyllic seaside paradise that greeted him two months later. Having just been battered by the landfall of Category 2 Hurricane Frances, Stuart was closer to a wasteland. None of the county had power, and there was hardly an intersection with a working street light. Curfews forced residents into their homes by dusk, as local officials feared looting, and the lack of refrigeration meant even store-bought provisions often couldn't be trusted as safe. With most of the county's gas stations suffering shortages, an 18-wheel gasoline tanker truck was parked behind State Farm's office on U.S. Highway 1, so that adjusters such as Douglas could fill up their vehicles and get out to survey the damage.

"On a hurricane, mobilizing a team starts even before it hits. Once they predict landfall, the section managers and the powers-that-be start looking at who's available to go," Douglas said, noting that his team was working a hail storm in Amarillo, Texas, when they got the call that Frances was approaching. "Just before it hits, they grab up every available hotel room they can, so we have somewhere to stay when they bring us in. You come into the office the first day, and they just give you a healthy stack of files and tell you to go to town on them."

What neither Douglas nor the more than 100 other adjusters in Stuart knew at the time, was a mere 20 days later, Mother Nature would send another surprise hurtling toward the Treasure Coast. This storm, Hurricane Jeanne, was the last of a record four hurricanes to strike the state last season. Douglas was still in Stuart more than two months later, his only reprieve having been when he and his team were told to head to Tampa to get out of Jeanne's path.

Having once worked a hail storm in Minneapolis for seven months, Douglas said he's accustomed to the lifestyle, noting that life has been easier since his wife and 2-year-old daughter began accompanying him on these sojourns.

"My wife, at first, didn't care for this at all," Douglas said. "She was a teacher, and she was used to working. When she had our little girl, she agreed to come on the road with me, only until our gift started school. But it's working out great. She makes friends wherever we go. My wife's met another woman with a daughter about the same age, so they've been running around, going to the beach, bookstores and the libraries."

With State Farm's Stuart adjuster staff whittled down to about 50 from the 100 who started in the city after Frances, Douglas was preparing to wrap up his stint, with a Dec. 12 target date to return home to Texas for the holidays.

"At this point, we're probably about 98% inspected," Douglas said in November. "All of the old stuff has been looked at, though we're still getting new claims trickling in. People might have, like, a fence damage and not turn it in initially, but after getting an estimate that was a lot more than they expected, they think, 'Well, maybe we ought to turn it in.'"

'This Can't Be Happening'

Roughly 100 miles north of Stuart, the Treasure Coast gives way to the "Space Coast"--so-named for the presence of the National Aeronautics and Space Administration. The scene is much the same, according to Paul Corbley, who manages Daytona Beach-based broker Brown & Brown's Titusville and Melbourne operations. But while Melbourne residents, who include a good number of "refugees" who fled Miami and points south after Hurricane Andrew hit in 1992, were perhaps better prepared than most to weather the storms, few were ready for what was to come.

"Emotionally, it was very taxing on everyone in ways that I haven't seen before, and I've seen more than my share of storms," Corbley said. "Here, we'd just barely dodged Charley, and then Frances hit, and just as you're starting to clean up from that, you hear the reports that Jeanne is on its way. The feeling is one of 'this can't be happening' ... but it is."

For Corbley, the immediate fear was whether affected clients would even be able to get in touch with their brokers and agents, given massive outages of both power and phone service across the county. Striking over the Labor Day weekend, Frances left Brown & Brown initially without power for the Monday following the storm--which, Corbley noted, was a scheduled day off. He said if the firm hadn't gotten power back by Tuesday; they were ready to work in tents in the parking lot as part of the company's disaster preparedness plan.

"We were without binding authority for 22 days, which was very tough on us, and clients who expected to have renewals bound didn't necessarily understand what the holdup was," Corbley said, adding that he remained curious about what changes would be seen, particularly in commercial coverages, as the Jan. 1 renewal season approached.

The trends in pricing before the storms had been softening and, as of November, there had been no contraction in capacity, Corbley said. "What we have certainly seen is a spike in interest among our clients for more coverage, particularly for things like business income and contents, and to stay abreast of changes in property values," he said.

While he believed insurers have "generally been very responsible and responsive" following the storms, Corbley said, there were a few cases that he would term "horror stories" where claims simply weren't getting paid appropriately. "Usually, you make one phone call to the Department of Financial Services, and that clears that up real fast," Corbley said.

Reviving a process he introduced following Hurricane Andrew, when he served as the state's insurance commissioner, Florida Chief Financial Officer Tom Gallagher began mediation meetings between policyholders and insurers in late October 2004. Centers were opened in Punta Gorda, Orlando, Jupiter and Pensacola to give Floridians access to mediation that would save them the expense of hiring an attorney. According to a report prepared by Gallagher's office, the department had received roughly 1,000 requests from homeowners for mediation, through November.

To Litigate or Not to Litigate

Pensacola-based attorney Samuel Bearman, who filed more than 50 so-called "bad faith" suits in the wake of 1995's Hurricane Opal, which struck along Florida's Gulf Coast, agreed that contacting an attorney should "be saved for the last option" when it conies to resolution of storm claims.

"You have to try to see what the insured can do on his own first," Bearman said. "The squeaky wheel seems to get the grease, and so, the insured needs to stay in touch with the adjuster to get a response as to what he thinks in terms of the claim, and get a final decision from the adjuster. If that final decision is not acceptable, then it's time to consider getting an attorney."

Thus far, Bearman has filed only one suit based on bad faith claims arising out of Hurricane Ivan, which hit Pensacola on Sept. 16 before tearing through the other Gulf states. He is preparing to file eight more suits, and has another 10 he expects to file eventually, he added. In his first suit, Bearman's clients charge United Services Automobile Association with not paying for the total loss of their home, not covering contents damage from Ivan, and failing to advise the insureds of the desirability and need for flood insurance.

"The wind adjusters seem to blame flood, and the flood adjusters seem to blame wind, and that happened with Opal as well," Bearman said. "The adjusters are not handling things in a timely manner, in terms of getting responses to the insureds as to the insureds' claims."

Gallagher set Nov. 22 as the deadline for insurers to assess, process and settle hurricane claims filed by Oct. 21 as a result of Tropical Storm Bonnie or hurricanes Charley and Frances. For claims filed by Nov. 8 as a result of hurricanes Ivan or Jeanne, the deadline was Dec. 8. Bearman, however, remained skeptical of what impact the new deadlines would have.

"As I understand it, within 30 days of filing the claim, the adjuster is to provide the insurance company's response, which would be nice, but I don't know that there are any teeth to support it," Bearman said in November. "It's only now that the insureds are realizing, based on the final decisions by the insurance companies, that they're not going to be paid reasonably and fairly."

Among other concerns is how insurers were treating deductibles, given that many areas of the state were hit by more than one storm. The Florida Legislature was planning a special session for December, requested by Gallagher, to consider whether insurers should be required to give homeowners the option of a deductible on a per-event basis, or one deductible for an entire season. An estimated 20,000 Florida homeowners were expected to have multiple deductibles, according to Gov. Jeb Bush's office, which estimated the total impact of second and subsequent deductibles at between $150 million and $300 million.

According to Douglas, any State Farm policyholder who reported initial damage with Frances and additional damage with Jeanne, was treated as a single file. Additionally, he noted, due to the relatively high homeowners deductibles in the state, many people chose not to report damage after Frances, but subsequently reported more extensive damage after Jeanne. In either scenario, the company would treat the issue as a single deductible.

"Now, a lot of the new claims came in with additional damage, but unless they had very little damage from Frances and then catastrophic damage from Jeanne--which we really didn't see--we didn't try to separate it," Douglas said. "That would be the only way I could see where we'd keep two files open with two losses, two adjustments and two deductibles."

Given a shortage of contractors, the state also revived an emergency rule originally instituted after Hurricane Andrew, and effective until Dec. 31, that prohibited insurance companies from canceling insurance policies until 60 days after repairs were completed.

"For the most part, contractors have been so busy that, of all the claims that I've worked, I've really only met with one, because very few policyholders have actually secured contractors already," Douglas said." They may have gotten several bids for the work, but it's going to be a while."

Still, despite the inevitable headaches brought on by an unprecedented storm season, most observers were skeptical of the notion that the hurricanes could reverse the nation's migratory patterns. The lure of warm winters, palm trees and crystal blue waters sometimes makes it easy to forget the downside, even for those whose job is to chronicle that downside.

"After Christmas, they'll bring some people back and, heck, I might come back, too," Douglas said, taking a sip of his iced coffee as he gazed off into the Florida sunshine. "I really like it here. I could sure think of worse jobs than this."

Defining Boundaries

The working environment for insurers and adjusters in Florida is influenced by the following actions taken by the Florida Department of Financial Services:

* Instituted a moratorium on insurance companies canceling or non-renewing homeowners during hurricane season or because they have filed a storm claim.

* Placed a 10% cap on what public adjusters can collect on a homeowners insurance claim and prohibited them from charging fees up front.

* Required Florida's health insurers and HMOs to waive restrictions on prescription refills to enable citizens to fill prescriptions in advance.

* Set deadlines for insurance companies to respond to policyholders and process claims.

* Established a mediation program to help storm victims and insurers resolve claim disputes.

Source: Florida Department of Financial Services

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