Nearly two months after destructive wildfires broke out in the Pacific Palisades, Altadena, and Los Angeles and Ventura counties, brokers in California said many claims have been paid out but that the “chaotic” and “confusing” aftermath of the disaster was incredibly challenging for policyholders.
Industry professionals told Insurance Business the claims process was fraught with delays, inconsistent communication, and policyholders realizing too late that their coverage was inadequate.
“The Commissioner's Office is trying to show accountability with tracking software for claims and payouts, which is helpful, but the past three weeks have been absolute chaos—very reactive rather than proactive,” said Joshua Morey (pictured on the right), president of The J. Morey Insurance Company, an insurance agency with offices in downtown Los Angeles and San Jose.
“Instead of asking, 'What should we be doing after this tragedy?' they’re responding to complaints as they arise.”
Morey, however, noted that legislation passed last year required insurers to pay four months of additional living expenses upfront and 70% of personal property coverage, up to $250,000, and that enough information is circulating for policyholders to demand those payments.
“Two to three weeks in, people (were) finally getting paid,” he said.
He also pointed out that while insurers are offering immediate financial relief, such as upfront additional living expenses and partial payments for personal property, the long-term recovery process will take years.
“The next phase could take a year just for debris removal, and the real test of insurance responsiveness will play out over the next six to 18 months,” Morey said. “I hope better information flows sooner instead of the reactive approach we've seen so far."
A major issue that surfaced post-disaster is the widespread misunderstanding of policy coverage. Many homeowners assumed they had wildfire protection, only to discover they were uninsured when they filed claims.
Randi Kasongo (pictured on the left), president of the Los Angeles chapter of the National African American Insurance Association (NAIAA) and senior manager, product operations at Travelers, emphasized that brokers and agents must take on a greater educational role amid natural catastrophes.
“Agents and brokers are the first advocates and sources of information for their clients,” Kasongo said. “It’s their role to ensure clients understand their policy coverage. But in my experience, many people don’t read their full policy – they just look at the declarations page.”
“If I could share one piece of advice, it would be this: Read your policy, now and always, to ensure you have the coverage you’re paying for and that it meets both your current and future needs."
Beyond education and paperwork, brokers and agents have an important role in guiding clients through the claims process.
Morey said securing essential resources like P.O. boxes for displaced homeowners and setting realistic expectations regarding settlement timelines can go a long way in helping clients through an impactful period of their lives.
“Independent and public adjusters may urge policyholders to sign quickly, warning they’ll be ‘last in line’ for debris removal, rebuilding, or permitting – but the reality is, this process could take three to five years,” he said.
“It's also important to communicate that California doesn’t have enough adjusters for all these claims. People may get frustrated when the adjuster they spoke to yesterday isn’t the same one next week. The reality is that adjusters are coming in from out of state and the turnover is extremely high.”
He also encouraged fellow brokers and agents to take on a “leadership role” in communications, stay ahead of updates from the California Department of Insurance, and understand how FEMA, the Red Cross, and debris removal programs fit into the process.
“Rather than waiting to react, they should engage in discussions before policies roll out,” Morey said.
New regulatory measures, such as allowing policyholders to request a single point of contact after dealing with multiple adjusters, are steps in the right direction. However, concerns remain about potential exploitation, especially following the emergency authorization of non-licensed adjusters.
For Kasongo, this raises the need for increased advocacy, particularly for vulnerable communities. “For communities of color, there's a real risk of being misled by unlicensed adjusters. It’s crucial for individuals who represent these communities to step up, serve in this space, and advocate for those who may not fully understand the insurance process or their potential benefits, ensuring they aren’t taken advantage of,” she said.
Kasongo also had a message for brokers and agents helping clients post-wildfire: “Have patience and share your knowledge with others. Don’t let this moment go to waste.
“We've been dealing with this underlying issue for so long, but recent events have brought it to light. Agents and brokers play a key role as the conduit between carriers, people, and regulators. They hold significant authority in that space, so use your voice to share your knowledge where it matters."
Are you an insurance broker or agent helping clients following the Los Angeles wildfires? Please share your perspective below.
