As Hurricane Season Arrives, U.S. Homeowners Haven?t Fixed Their Big Underinsurance Problem

Industry Update
July 18, 2018

Source: The Wall Street Journal

Many homeowners lack flood insurance or have insufficient policy limits for repairs or rebuilding following a natural catastrophe

Many U.S. homeowners are inadequately insured for natural-catastrophe damage ahead of the height of the Atlantic hurricane season.

Three major landfalling hurricanes in 2017—Harvey, Irma and Maria—revealed a widespread lack of full insurance coverage for homeowners in Texas, Florida, Puerto Rico and elsewhere. Those storms served as a wake-up call to some, but the underinsurance of Americans persists, according to regulators, trade groups and government data.

While most people have home insurance, many lack flood insurance, which is typically purchased from the U.S. government as a separate policy. Many homeowners also have home-insurance policy limits that are too low to cover the full cost of repairing or rebuilding their properties.

“Many people thought that they had a fully insured home or fully insured business” before last year’s catastrophes, said Iraelia Pernas, executive director of Acodese, an industry group for insurers in Puerto Rico. “They discovered that there were some exclusions in their policies.”

Javier Rivera Ríos, the territory’s insurance commissioner, said that a lot of the houses in Puerto Rico that suffered losses weren’t insured at all, let alone with flood coverage.

Jeremy Gundling of Friendswood, Texas, didn’t have flood insurance when his home filled with two feet of water during Harvey. His home insurance covered some wind damage to the house, where he lives with his wife and four children, but Mr. Gundling took out a loan to pay for most repairs.

When he decided to forgo flood insurance, he felt it was the right call based on recommendations from his real-estate and insurance agents.

“It was disheartening…to find out that I was severely underinsured,” Mr. Gundling said.

After the storm, he bought insurance from the National Flood Insurance Program and expanded his home-insurance coverage. The federal policies pay up to $250,000 for damage to a residence and $100,000 for contents.

The number of federal flood policies covering Florida homes and small businesses rose 2% between September 2017 and May 2018, to 1.76 million, according to government data. In Puerto Rico, the number of federal flood policies surged 77%?over the period, to 9,199. In Texas, 17% more households and small businesses owned the policies, bringing the total to 702,800.

“We often see post-disaster increases in flood insurance policies in force, but unfortunately, it is not unusual to see some of these policies dropped when they come up for renewal,” said David Maurstad, chief executive of the NFIP. “We have a long way to go to meet our goal of closing the insurance gap.”

The Houston area was devastated by flooding after Harvey, and about 70% of the flood-related damage wasn’t covered by insurance, according to analytics firm CoreLogic. Even for wind damage, which is covered under typical home policies, some people were frustrated to learn what their insurers would or wouldn’t pay.

Insurers received 717,000 Harvey claims for damage to homes and vehicles as of Oct. 31, the most recent data available, according to the Texas Department of Insurance. About one-third were closed with no payment, indicating that the damage wasn’t covered under the policy or the loss value was less than the deductible.

Insurers in Florida received nearly one million Irma claims as of June 12, and 91% had been closed, according to the state’s Office of Insurance Regulation. More than one-third of those closed didn’t entail payment.

Lisa Wansley, a realtor in Middleburg, Fla., said a home insurer offered $800 to cover damage to her roof after taking into account her several-thousand-dollar deductible. “It costs more than that for a roof,” she said. “This has just been a very frustrating battle.”

Homeowners often fail to increase policy limits if they expand or upgrade their homes, regulators said. They also can find that their policy limits are insufficient after a disaster pushes up the cost of building materials and contractors.

Like Ms. Wansley, many homeowners policies have higher deductibles for hurricane damage, which can run in the thousands of dollars. These became standard in coastal states after a spate of hurricanes in 2005 but have rarely been triggered due to a few major hurricanes hitting the U.S., until last year.

“People had no idea that they had a hurricane deductible” following Irma, said Barry Gilway, chief executive of Citizens Property Insurance Corp. “There’s still a lack of education in the industry regarding what is actually covered.”

In Houston, federal flood-insurance policyholders like Adriana Vargas say owning the coverage makes them feel lucky.

Thanks to the policy, “I got enough to rebuild what we needed” after four feet of water inundated her home, she said.

So far only about a quarter of the proceeds have been put to use because of delays with contractors, plus the need to route the insurance money through a mortgage firm and abide by its inspection procedures. Ms. Vargas doesn’t anticipate moving back in before October.

Hurricanes weren’t the only disaster that exposed issues last year.

Following devastating wildfires in Northern California in October, about two-thirds of the victims said their insurance wouldn’t fully cover the cost of repairing or replacing their dwellings, according to a survey by consumer-advocacy group United Policyholders.

Laney Wall and Scott Rooks ’ house in Santa Rosa, Calif., burned down. They are living in a rental house, which is currently paid for by insurance, but their home policy won’t cover the full cost of rebuilding, they said.

“What will we do when we run out of money?” said Mr. Rooks, a pilot. “There’s massive amounts of stress knowing that if we were insured for the proper amount, it would be no big deal.”



Alan Jaffa

Alan Jaffa is the chief executive officer for Safeguard, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to chief operating officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur of the Year® finalist in 2013.


Chief Operating Officer

Michael Greenbaum

Michael Greenbaum is the chief operating officer for Safeguard. Mike has been instrumental in aligning operations to become more efficient, effective, and compliant with our ever-changing industry requirements. Mike has a proven track record of excellence, partnership and collaboration at Safeguard. Under Mike’s leadership, all operational departments of Safeguard have reviewed, updated and enhanced their business processes to maximize efficiency and improve quality control.

Mike joined Safeguard in July 2010 as vice president of REO and has continued to take on additional duties and responsibilities within the organization, including the role of vice president of operations in 2013 and then COO in 2015.

Mike built his business career in supply-chain management, operations, finance and marketing. He has held senior management and executive positions with Erico, a manufacturing company in Solon, Ohio; Accel, Inc., a packaging company in Lewis Center, Ohio; and McMaster-Carr, an industrial supply company in Aurora, Ohio.

Before entering the business world, Mike served in the U.S. Army, Ordinance Branch, and specialized in supply chain management. He is a distinguished graduate of West Point (U.S. Military Academy), where he majored in quantitative economics.



Sean Reddington

Sean Reddington is the new Chief Information Officer for Safeguard Properties LLC. Sean has over 15+ years of experience in Information Services Management with a strong focus on Product and Application Management. Sean is responsible for Safeguard’s technological direction, including planning, implementation and maintaining all operational systems

Sean has a proven record of accomplishment for increasing operational efficiencies, improving customer service levels, and implementing and maintaining IT initiatives to support successful business processes.  He has provided the vision and dedicated leadership for key technologies for Fortune 100 companies, and nationally recognized consulting firms including enterprise system architecture, security, desktop and database management systems. Sean possesses strong functional and system knowledge of information security, systems and software, contracts management, budgeting, human resources and legal and related regulatory compliance.

Sean joined Safeguard Properties LLC from RenPSG Inc. which is a nationally leading Philintropic Software Platform in the Fintech space. He oversaw the organization’s technological direction including planning, implementing and maintaining the best practices that align with all corporate functions. He also provided day-to-day technology operations, enterprise security, information risk and vulnerability management, audit and compliance, security awareness and training.

Prior to RenPSG, Sean worked for DMI Consulting as a Client Success Director where he guided the delivery in a multibillion-dollar Fortune 500 enterprise client account. He was responsible for all project deliveries in terms of quality, budget and timeliness and led the team to coordinate development and definition of project scope and limitations. Sean also worked for KPMG Consulting in their Microsoft Practice and Technicolor’s Ebusiness Division where he had responsibility for application development, maintenance, and support.

Sean is a graduate of Rutgers University with a Bachelor of Arts and received his Masters in International Business from Central Michigan University. He was also a commissioned officer in the United States Air Force prior to his career in the business world.


General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard and oversees the legal, human resources, training, and compliance departments. Linda’s responsibilities cover regulatory issues that impact Safeguard’s operations, risk mitigation, enterprise strategic planning, human resources and training initiatives, compliance, litigation and claims management, and mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans over 20 years, and Linda’s experience covers regulatory disclosure, corporate governance compliance, risk assessment, executive compensation, litigation management, and merger and acquisition activity. Her experience at a former Fortune 500 financial institution during the subprime crisis helped develop Linda’s pro-active approach to change management during periods of heightened regulatory scrutiny.

Linda previously served as vice president and attorney for National City Corporation, as securities and corporate governance counsel for Agilysys Inc., and as an associate at Thompson Hine LLP. She earned her JD at Cleveland-Marshall College of Law. Linda holds a degree in economics from Miami University and an MBA. In 2017, Linda was named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.


Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for the Control, Quality Assurance, Business Development, Accounting & Information Security departments, and is a Managing Director of SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Joe has been in a wide variety of roles in finance, supply chain management, information systems development, and sales and marketing. His career includes senior positions with McMaster-Carr Supply Company, Newell/Rubbermaid, and Procter and Gamble.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.


AVP, High Risk and Investor Compliance

Steve Meyer

Steve Meyer is the assistant vice president of high risk and investor compliance for Safeguard. In this role, Steve is responsible for managing our clients’ conveyance processes, Safeguard’s investor compliance team and developing our working relationships with cities and municipalities around the country. He also works directly with our clients in our many outreach efforts and he represents Safeguard at a number of industry conferences each year.

Steve joined Safeguard in 1998 as manager over the hazard claims team. He was instrumental in the development and creation of policies, procedures and operating protocol. Under Steve’s leadership, the department became one of the largest within Safeguard. In 2002, he assumed responsibility for the newly-formed high risk department, once again building its success. Steve was promoted to director over these two areas in 2007, and he was promoted to assistant vice president in 2012.

Prior to joining Safeguard, Steve spent 10 years within the insurance industry, holding a number of positions including multi-line property adjuster, branch claims supervisor, and multi-line and subrogation/litigation supervisor. Steve is a graduate of Grove City College.


AVP, Operations

Jennifer Jozity

Jennifer Jozity is the assistant vice president of operations, overseeing inspections, REO and property preservation for Safeguard. Jen ensures quality work is performed in the field and internally, to meet and exceed our clients’ expectations. Jen has demonstrated the ability to deliver consistent results in order audit and order management.  She will build upon these strengths in order to deliver this level of excellence in both REO and property preservation operations.

Jen joined Safeguard in 1997 and was promoted to director of inspections operations in 2009 and assistant vice president of inspections operations in 2012.

She graduated from Cleveland State University with a degree in business.


AVP, Finance

Jennifer Anspach

Jennifer Anspach is the assistant vice president of finance for Safeguard. She is responsible for the company’s national workforce of approximately 1,000 employees. She manages recruitment strategies, employee relations, training, personnel policies, retention, payroll and benefits programs. Additionally, Jennifer has oversight of the accounts receivable and loss functions formerly within the accounting department.

Jennifer joined the company in April 2009 as a manager of accounting and finance and a year later was promoted to director. She was named AVP of human capital in 2014. Prior to joining Safeguard, she held several management positions at OfficeMax and InkStop in both operations and finance.

Jennifer is a graduate of Youngstown State University. She was named a Crain’s Cleveland Business Archer Award finalist for HR Executive of the Year in 2017.


AVP, Application Architecture

Rick Moran

Rick Moran is the assistant vice president of application architecture for Safeguard. Rick is responsible for evolving the Safeguard IT systems. He leads the design of Safeguard’s enterprise application architecture. This includes Safeguard’s real-time integration with other systems, vendors and clients; the future upgrade roadmap for systems; and standards designed to meet availability, security, performance and goals.

Rick has been with Safeguard since 2011. During that time, he has led the system upgrades necessary to support Safeguard’s growth. In addition, Rick’s team has designed and implemented several innovative systems.

Prior to joining Safeguard, Rick was director of enterprise architecture at Revol Wireless, a privately held CDMA Wireless provider in Ohio and Indiana, and operated his own consulting firm providing services to the manufacturing, telecommunications, and energy sectors.


AVP, Technology Infrastructure and Cloud Services

Steve Machovina

Steve Machovina is the assistant vice president of technology infrastructure and cloud services for Safeguard. He is responsible for the overall management and design of Safeguard’s hybrid cloud infrastructure. He manages all technology engineering staff who support data centers, telecommunications, network, servers, storage, service monitoring, and disaster recovery.

Steve joined Safeguard in November 2013 as director of information technology operations.

Prior to joining Safeguard, Steve was vice president of information technology at Revol Wireless, a privately held wireless provider in Ohio and Indiana. He also held management positions with Northcoast PCS and Corecomm Communications, and spent nine years as a Coast Guard officer and pilot.

Steve holds a BBA in management information systems from Kent State University in Ohio and an MBA from Wayne State University in Michigan.


Assistant Vice president of Application Development

Steve Goberish

Steve Goberish, is the assistant vice president of application development for Safeguard. He is responsible for the maintenance and evolution of Safeguard’s vendor systems ensuring high-availability, security and scalability while advancing the vendor products’ capabilities and enhancing the vendor experience.

Prior to joining Safeguard, Steve was a senior technical architect and development manager at First American Title Insurance, a publicly held title insurance provider based in southern California, in addition to managing and developing applications in multiple sectors from insurance to VOIP.

Steve has a bachelor’s degree from Kent State University in Ohio.