To Our Select Producers,
On February 20, 2013 Kingstone Insurance Company received a document request from the NYS Department of Financial Services. KICO, through its attorney, immediately contacted the DFS asking for a meeting to discuss the request. The very next morning there was a press release, announcing that the DFS had begun an investigation into "unacceptable claims practices" at three insurance companies, Tower, Narragansett Bay and Kingstone.
Kingstone is a domestic New York carrier, headquartered in Kingston and in business in New York State for almost 127 years. We have been rated by the Professional Insurance Agents Association of New York as #1 in each of the past two surveys. We are familiar with and comply with all regulations, claims related or not. Our record speaks for itself. We will comply with whatever is reasonably requested of us, and look forward to ending this quickly, as there is much work yet to be done.
Superstorm Sandy's destruction to the South Shore of Nassau County, Staten Island, Queens and Brooklyn was monumental. Kingstone insured a total of more than 22,000 homes in New York City and Long Island. We received over 3,100 claims, or almost 1 out of 7 of our homeowners' filed claims with KICO. In Nassau County alone more than 1 in 4 filed claims. This was 6.5 times worse than claim count from Tropical Storm Irene the year before.
We received from the DFS a total of 60 complaints made by homeowners, or 1.9% of the total homeowner claims. We responded to each complaint within 2 days, not the 10 days permitted by regulation. In each response we explained our position and defended our actions. We will be happy to do so again. Perhaps one or two of these complaints were valid.
Unfortunately, before the complaint responses were reviewed, DFS asked us for the data, because we had a high percentage of complaints to claims. Included in the 60 homeowner "complaints" are 12 which can be categorized as just wrong. These include those where Kingstone wasn't even the carrier, the complaint should have gone to another company; where the complaint was sent in, before any claim was even presented to KICO; or where the complaint alleged that KICO denied a claim for a specific coverage, but the insured never purchased the coverage at all. Further, and perhaps more importantly, more than half the complaints related to Flood damage. Damages caused by Flood are not covered by a homeowner's policy.
Kingstone is a conservatively managed carrier. Catastrophe insurance was purchased providing KICO (and thus its policyholders) with coverage up to $73 million. All losses and loss adjustment expenses in excess of $3.0 million are covered. But, we've incurred losses of approximately $14 million from Sandy. As you can see, KINGSTONE DOES NOT BENEFIT FROM DENYING A CLAIM OR WITHHOLDING OR DELAYING CLAIMS ADJUSTMENT SERVICES. Every dollar of claims and every dollar of adjusting expense above the first $3.0 million is reimbursed to Kingstone, so long as Kingstone handles claims as they are agreed to in the insurance policy. We've done just that. Kingstone denies that it engaged in any action to deny, slow or impede any claim.
Kingstone, unlike most other admitted carriers providing homeowners and dwelling fire coverages in NYS, has written a substantial amount of business in coastal areas of New York City and Long Island. These same areas, where we write while others avoid, experienced the storm surge and flooding that accompanied the storm. More than 75% of our claims came from the flooded zip codes. And so did the complaints.
We are a hardworking, low key group of 50+ insurance professionals. To help our insureds quickly, we shut down accepting any new business, moved our marketing staff from Buffalo, New York City and Long Island into Kingston hotels so they were here to help out; we moved underwriters to the claims area to answer phones, take reports and help our Select Producers and their clients. We added four hours to the work day, opened on the weekend, and worked on holidays. We did everything we could in these, the worst of times, just as we do every single day.
We are proud of what we've accomplished so far. We've closed 94% of the claims received, putting us at or above the same metric for State Farm, Allstate, Hartford, and other national companies having far more resources at their disposal. The dedication and hard work of the KICO staff is evident and the pride we all have in our work is justified.
We are not perfect. We will not make everyone happy all the time. We just do our job the best way we can. We don't delay settling claims, ever. We never deny claims where the loss is covered and coverage exists. We've worked very hard over many years to earn the reputation we enjoy, and are certain that once the data is gathered, delivered to and analyzed by the DFS; they too will realize that we've done an exceptional job in dealing with the worst weather event to ever hit NYC and Long Island.
Barry Goldstein, President and CEO