Insurers do not pay much for the flood damage on the Ahr – the economy

Insurers are very proud of themselves: three-quarters of the damage caused by the storm Bernd are regulated in the summer of 2021, the General Association of the German Insurance Industry (GDV) announced in early July. “Virtually every homeowner who was insured quickly received money from their insurance company,” the association said. 5 billion euros have already been paid out of a total of 8.5 billion euros in insurance damage.

However, Bonn Markus lawyer Gerd Krämer cannot share this enthusiasm. It represents around 80 clients from the particularly hard-hit Ahr valley. He’s worried about a quarter of the outstanding claims. He criticizes that not all insurers behaved perfectly. Some are just inflexible when it comes to settling claims and stick to the “F pattern”. Apparently, due to the heavy claim burden, others tried to delay payments or weaken customers until they were ready to compromise.

The fact that a year after the catastrophe, a quarter of the claims have not been settled, and more than 40 percent. benefits have not yet been paid, it is not their fault, insurers say. Rather, bottlenecks in building materials and the lack of craftsmen are to blame. Norbert Rollinger, the head of the R + V insurer, which belongs to the cooperative finance sector, also referred to this. Rollinger’s voice matters, he is set to become the new president of GDV in September. “The money is ready, but we have no influence on the bottlenecks,” he said. Zurich and Gothaer insurers argue similarly. A lot of the damage is very complicated, and there are also craftsmen and building materials that are hard to come by.

Both of these factors cannot be rejected at once. But Kramer, an insurance lawyer, sees problems largely elsewhere, namely with insurers. “The fact that 25 percent of the damage has yet to be repaired is actually a hammer,” he said. In his opinion, it is mainly about the serious damage in the Ahr Valley. “In principle, it can be said that the as yet unregulated district begins in Schuld and ends in Sinzig.” The fact that the “uncomplicated mass of 20,000 euros in damage” has now been finally settled is in fact not worth mentioning, he believes.

“Finally settled” does not mean that your claim has been properly satisfied

Düsseldorf lawyer Mark Wilhelm is also skeptical about GDV’s success. “You have to ask yourself which claims are already settled and which are still open,” he said. For him, too, there are some signs that a lot of minor damage has already been repaired. On the other hand, the pending cases contained a disproportionately large number of large and costly claims. The fact that, according to the insurer, the damage is “finally settled” does not necessarily mean that it is properly settled from the customer’s point of view – he emphasized.

Following the flood, some insurance claim adjusters tried to confuse customers with payout offers. This quick help was tempting to customers, but inspections usually only covered a fraction of the actual amount of damage. “Many customers will accept these offers in danger,” suspects Wilhelm.

Wilhelm notes the “strange regulatory behavior” of some insurers. Basically, it can be seen that the higher the sum, the greater the likelihood of problems between the customer and the insurer. “Of course we only have heavy negatives on the table,” he said.

A frequent dispute between insurers and clients: does a badly damaged house, washed by muddy water not only on the ground floor, but also on other floors, require only renovation or thorough reconstruction? “Insurers are quick to take the position that the restructuring is still working,” said Wilhelm. “Renovation only costs a third of a new building.” The problem is not only water, which has severely affected buildings, but also leaking heating oil, which completely pollutes the walls and ceilings of the houses. “Here you can usually only demolish and rebuild, as the heating oil hardly comes out of the house,” says Wilhelm.

Most companies’ compensation reserves have been set too low

Lawyer Krämer from Bonn complains that many insurers in the processing Bernd-Complaints, everything went wrong from the beginning – from registering the damage immediately after the disaster and establishing the necessary reserves. There were too few qualified experts to identify the true extent of the damage. Effect: most companies’ compensation reserves were set too low. He stressed that he did not want to blame insurers at all due to the overburdening of the compensation departments and the extent of the damage, which was initially difficult to estimate. “Insurers later found out how costly the damage could be, which doesn’t look so bad at first glance,” says the lawyer. “We all learned from this event.”

However: Fortunately, some insurers quickly realized that their established processes for a claim in the event of an event such as Bernd are no longer feasible and their processes are accelerated as a result. Her clients and herself would benefit. Others walked on with their old shoe, Kramer informed. They include Debeka and Alte Leipziger. “Experts are sent out to ask for estimates, check them, remove things and then send them back and so on,” he complained. So it takes a long time for the claim to first hit the insurer’s desk. “You just can’t approach this incident as if it were a leak in an equipped kitchen.”

These insurers are fighting. A spokesman for Alte Leipziger dismissed the allegations as being too general. Debeka doesn’t understand this either. “We have no interest in arguing with our customers or delaying operations and payments,” the spokesman said. In private residential insurance, 83 percent of the claims were finally processed. The remaining 17 percent. this is due to unavailable artisans.

Some insurers urged customers to settle a partial payment

For some companies, Krämer suspects that the lengthy processes are designed to spread the burden of claims over time. “If an insurer is unable to pay all claims at once because it is too expensive, it is delaying.” He is very familiar with this approach given his many years of legal work in the legal departments of Ergo and Zurich insurers.

Some insurers apparently realized last fall that the money reserved for the damage had been used up, it said. Benefits, which were still a long time at the end of 2021, were not paid until early 2022. Some homeowners were denied, while the neighbor’s claim, which had been made a little earlier, was still pending.

The tactic of destroying Ahr Valley customers over time and then persuading them to compare is also apparent. Some insurers urged customers to settle a partial amount and then receive the rest from the Rhineland-Palatinate Investment and Infrastructure Bank (ISB). However, in order to apply for government assistance to rebuild their building, flood victims must state whether they are insured – and if so, what benefits they received under their policy.

It is not possible to submit an application to the ISB without the insurer’s decision. “The insurers obviously know this, and they’re relying on the customer to get into their contract at some point so he can finally rebuild,” says Kramer. The problem with state funds: the client receives compensation for the destruction of the building, but also loses a lot, mainly compensation for his own work and accommodation costs.

One of the problems was the quality of external experts

For all the criticism of individual insurers: There are also many positive examples among them, the lawyer emphasized. For example, Basler, DEVK, Signal Iduna, Zurich and Generali “did a really great job”. For the most part, things were also going very well with Allianz. Some insurers have an exemplary claims department but suffer from high-quality outsourced experts.

For Krämer, it is incomprehensible when insurers stick to experts a few months later, even if cooperation with them is not going well. “At some point you have to realize this isn’t working and replace your colleague.” On the other hand, some insurers were quick to learn from the difficulties and acted accordingly, such as R + V which, according to Krämer, initially had too few principal claims adjusters. “R + V has quickly adjusted its claim routine to reality, and now everything is going well.”

Overall, insurers would hurt themselves by delays, Krämer believes. The price increases in reconstruction costs that were initially seen as a temporary phenomenon after the floods have become permanent. “It is foolish not to let go of the plaster for a few euros and let the weeks go by.”

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