When peculiar, heavy rainstorms began drenching Southern California last winter, Isaac Park noticed his phone ringing more than usual. 

Park is a public adjuster, meaning his job is to represent homeowners who think they didn’t get a fair payout after filing a claim with their insurance company. And in recent years, Californians more familiar with droughts and wildfires have found themselves filing insurance claims for flooding and roof damage instead. As risk has grown along with a changing climate, their insurance companies now offer less coverage for a higher price. 

That means public adjusters like Park have been busier than ever. 

“It’s getting worse and worse with this insurance claims process,” Park said. “There’s been an increase in the public adjusting space because there are many insurance companies that aren’t paying a fair payout.”

One hundred thousand adjusters, appraisers and workers in similar roles have joined the US labor force since 2010, about a 32% increase, Bureau of Labor Statistics data show.

But simply filling a growing demand for public adjusters is a Band-Aid solution for a gaping problem. Insurers are responding to the rise in storms by raising premiums and deductibles, dropping clients and dropping out of certain areas completely. And while there is increased risk as storms in the US get stronger and more frequent, some consumer advocates believe insurers are overestimating projections to limit coverage further. That’s when public adjusters try to help. 

Earnings reports for public insurance companies show climate-related events haven’t hurt their profits yet.

State Farm “experienced growth in policies while also reporting underwriting losses due to continued elevated claims severity and significant catastrophe activity,” according to its 2023 financial results. Allstate’s profitability “reflects the benefits of strong operating capabilities, decisive actions to improve shareholder value and lower catastrophe losses,” the company’s CEO Tom Wilson said about glowing first quarter results. Nationwide reported another year of record sales in 2023 “while paying out nearly $23 billion in claims and benefits to members in a year marked by stubbornly high inflation, increasing interest rates and severe weather.”

This isn’t surprising to Amy Bach, the executive director of United Policyholders, a nonprofit that serves as a resource for insurance consumers. She says the insurance companies are just behaving like rational capitalists.

“They’re not social workers. They advertise, oh, ‘State Farm is there’ and all that, but they’re cold hard corporations,” Bach said. “Money is their blood that flows through their veins and they’re going to act this way. They’re acting predictably.”

The changing insurance market may be contributing to rising inequality. Seven of California’s largest home insurance providers have pulled out of areas of the state. That is a problem for many would-be homebuyers because it’s impossible to get a typical 30-year mortgage without insurance. This is causing people to buy homes in risky areas in all cash, according to Shan Ge, a finance professor at New York University who studies the intersection of climate and insurance.

“I definitely think with premiums going up, it probably is better, more beneficial for really wealthy people, because they can afford to self insure,” Ge said. “And for these lower-income people where they are liquidity constrained, they are more likely to buy less coverage of insurance when insurance premiums go up. That’s going to have people bear more of this risk.”

After storms roll through, many policyholders whose insurance disproportionately covers the risk where they live have found themselves hiring public adjusters for the first time. Public adjusters don’t work for individual insurance companies, but are licensed with the state they practice in. They rely on the amount of coverage in the policy and the damage reported in the claim to determine a fair settlement.

While Park is helping more clients than usual work toward fair payouts, he’s also seeing clients dropped by their insurance companies more often, even after filing a single claim. 

Some, he said, are turning to the California Fair Plan, a state plan that provides policies for owners of high-risk properties where traditional insurance is unavailable.  

But state-run programs have their limitations to ensure the private insurance market remains competitive. The state of California, for example, only covers fire. 

It’s also difficult for governments to rally support behind higher taxes to bolster the state home insurance programs, Bach said, similar to the political pushback that came with the expansion of Medicare and Medicaid. 

“There’s a political view, a very strongly held political view that any government-run insurance program should be inferior to anything that you could get from the private market,” Bach said. 

A similar story is playing out on the East Coast. Many Floridians, especially in South Florida, have been forced to turn to the state’s “last resort” property insurance program. It’s 20% higher than rates in the private market.

Florida real estate agent Roche Akkarappuram lives in Tallahassee, which has been spared from most of the hurricane damage in recent years. Still, the Farm Bureau insurance plan on his home has increased from $2,500 to $3,000 in the 16 years since he bought his home. 

Many of his clients, he said, are surprised by the surging insurance costs tacked onto mortgages during the closing process. 

“It is a shock. Florida premiums are up, just like in Louisiana. This is hurricane alley,” Akkarappuram said. “But that’s one of the requirements before closing. You gotta have insurance.”   

While policyholders can get a higher claims payout with the help of a public adjuster, they still have to pay for their services – an additional cost to the existing burden of storm damage repairs.

“The public adjuster, of course, they’re going to say, ‘People are getting ripped off and they need us,’” Bach said, “But from an economic perspective, the fee you pay a PA comes out of the money that you need to fix your house. So that’s not ideal either.”

Bach believes strengthening the publicly funded insurance options and better enforcing industry regulations is the only equitable solution moving forward. 

In the private market, insurance companies are expected to continue to prioritize shareholders while the storms rage on.

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