Mississippi Congressman Calls for Federal Probe into Insurers' Katrina Practices

[Robbien]

"This is going to be a fight,'' Taylor said. "These guys have dumped a lot of money in campaigns. They dumped $27 million in the presidential race, most of it going to the winner just a couple of years ago. But they're wrong on this one.''

In a Jan. 5 letter to Rep. Barney Frank, D-Mass., chairman of the House Committee on Financial Services, Taylor asked for hearings on "the denial of thousands of Katrina wind claims wherever insurers could blame flooding'' and "excessive premium increases, market withdrawals, and other actions to force states to make concessions or to assume more coastal risks.''

"I have long suspected that State Farm, Allstate, Nationwide and a few other insurers agreed to aggressively deny Katrina wind claims as they had never done before,'' Taylor wrote. "One company would not have been able to get away with blanket denials if the others had been paying claims.''

. . .

Taylor wants a national all-perils insurance policy, federal oversight of the property insurance industry and repeal of its exemption from antitrust laws, which he said allowed the companies to consult each other when determining how they would handle Katrina claims.

"I think they called one another and said 'if you don't pay, we won't pay,''' Taylor said.
http://www.insurancejournal.com/news/national/2007/01/10/75746.htm

[ThomCat]

1. I hope he nails them to the wall.

It's a damned crime that people pay a fortune for insurance, and then the insurance companies can refuse to honor the contract. Insurance is usually required, so they have a captive pool of victims for blatant fraud.

[David Dunham]

2. Policyholders paid to cover wind damage only; water damage is excluded

[Jacobin]

3. There is much more to it than that

I've represented some Katrina victims in pursuing wind claims and they obtain engineer reports stating that all the damage is due to flood when in fact in most cases all the damage is NOT due to flood. In a couple of cases, they have fired engineers who would not write the reports and in two cases we've obtained copies of the first reports which said the cause was mixed, which the insurer then demanded that they re-write to say it was all flood.

The amount of chicanery going on with insurers and adjusters is utterly horrific and demands congressional action. They are stealing billions of policy holder dollars

[ThomCat]

5. They make sure they play with a stacked deck.

Your ability to collect is based on their reports written by people they pay. How many people can afford independent engineers after a disaster? How many people could FIND an independent engineer after a disaster? So it ends up being your word against a paid flunky, and that flunky has a degree that means his word will carry more wait than yours. So regardless of the truth, the corporation wins.

[Jacobin]

6. Oh, and if you DO find and pay for an engineer

then you are treated to 3 or 4 years of litigation and appeals, after which you are already bankrupt because you couldn't keep paying your mortgage AND find another place to live. They know that of course. Its one of their tools

[ThomCat]

4. And if the hurricane winds blew water into the house

how does that justify denying coverage?

I have gone over my own renter's insurance. I pay extra to get additional coverage, and yet there are exemptions and small print for almost everything. No matter what policy you have, or how much you pay, if the insurance companies decide to deny claims they can usually get away with it.

The insurance company is getting squeezed by buy-outs and mergers. Small brokers are getting replaced by mega-brokers, and they got to be mega-brokers by never, ever paying out if they could find an excuse to deny coverage. So what do you do if you've been paying for coverage that any reasonable person would read and conclude covered you, but then the insurance company says it doesn't?

[ShockediSay]

7. Maybe and maybe not - take a look at this link

http://www.nytimes.com/2007/01/09/business/09insure.html

State Farm in Talks to Settle Gulf Claims

State Farm, the biggest home insurer in the nation, is in the final stages of settling hundreds of lawsuits over its payments for homes wrecked by Hurricane Katrina along the Mississippi Gulf Coast, lawyers briefed on the talks said yesterday.

The settlement of 639 lawsuits for $80 million could be the first step in resolving a bitter legal battle between homeowners and their insurers that had threatened to drag on for years and has already slowed Mississippi’s recovery since the storm in August 2005.