Insurance
March 1, 2007
A federal judge in Mississippi weighing competing plans to resolve thousands of disputed claims against State Farm Fire and Casualty Co. after Hurricane Katrina heard emotional testimony Wednesday from policyholders who believe they have been shortchanged by the insurer. The Associated Press reports that one woman told U.S. District Judge L.T. Senter Jr. that she has contemplated suicide in the months since her home was destroyed and State Farm refused to pay for an estimated $300,000 in damage.
January 25, 2007
Nearly a year and a half after Hurricane Katrina, federally regulated lenders are still struggling to comply with a requirement that they force homeowners in high-risk flood zones to buy flood insurance, reports USA TODAY. By law, homeowners in flood-prone areas — such as along the coast — must buy such a policy if they get a mortgage from a federally regulated lender. Government-issued flood insurance covers homeowners for up to $250,000 in flood damage to property and $100,000 for contents. Unlike homeowners insurance, though, it doesn't insure against rain or wind damage.
January 24, 2007
State Farm has agreed to pay thousands of Mississippi homeowners hit by Hurricane Katrina likely hundreds of millions of dollars in a landmark settlement that's expected to reverberate across the storm-ravaged Gulf Coast, reports USA TODAY. The company agreed to a deal under which it will reopen thousands of homeowners' claims and is likely to pay as much as $500 million, Mississippi Attorney General Jim Hood announced Tuesday. In a related development, State Farm will settle more than 600 individual Mississippi homeowners' Katrina claims for roughly $80 million, according to a person with direct knowledge of the negotiations who didn't want to be named because the settlement is confidential.
January 22, 2007
On the eve of trial, State Farm has agreed to pay an estimated $1 million to settle a lawsuit by a Mississippi Gulf Coast resident whose house was destroyed by Hurricane Katrina, according to The New York Times. The settlement came a week after a jury ordered the insurer to pay $2.5 million in punitive damage to a homeowner with a similar case. State Farm and lawyers for the homeowner confirmed the settlement. They would not say how much State Farm paid, but trial lawyers not involved in the case said simple mathematics and logic suggested that the insurer agreed to pay about $1 million.
January 5, 2007
A Mississippi homeowner denied insurance coverage for his Hurricane Katrina damage grew angry, but then he did something about it. Long Beach resident Kevin Buckel's work is expected to result in an Insurance Bill of Rights for Mississippi policyholders, according to The (Biloxi) Sun Herald. The bill's strength is yet to be determined, but Buckel plans to see through the grassroots campaign he started a month after the hurricane in September 2005.
December 8, 2006
Standing in front of a crumpled, flood-damaged Honda on Thursday, U.S. Sen. Trent Lott and other lawmakers said they're pushing to end "title washing," in which cars with troubled histories are sold to unsuspecting consumers. The Mississippi Republican said about 500,000 cars were damaged by Hurricane Katrina — including the one he used to drive — and many have been cleaned up and resold, reports The Clarion-Ledger. Lott and the other lawmakers said they will press the new Congress to approve legislation that would require insurance companies and others who take possession of totaled or heavily damaged cars to disclose that the vehicles are rebuilt wrecks.
December 6, 2006
A Coast-wide business group is rallying local politicians to press Mississippi lawmakers to address the wind-pool insurance crisis, reports The (Biloxi) Sun Herald. The wind pool was created after Hurricane Camille to provide wind coverage in hurricane-prone areas where companies don't want to write standard policies. When damage exceeds premiums, the more-than-500 insurance companies that do business in the state have to pay the difference. Insurers had to pay more than $545 million in wind-pool losses from Katrina. After Katrina, state Insurance Commissioner George Dale approved a 268 percent rate increase for businesses and a 90 percent boost for homeowners. But as more people flock to the wind pool, its problems are compounded, and it threatens to drive away the private insurance market.
November 28, 2006
A federal judge in Louisiana kept a suit against major insurance companies alive Monday by rejecting the insurers' motions to dismiss the litigation, ruling that the language in some policies excluding coverage for water damage is ambiguous and may not apply. According to the Times-Picayune, the judge cited Louisiana law and precedent, which state that insurance companies face the burden of proving whether a clause excluding coverage applies in a policy.
November 20, 2006
Public officials are wondering whether insurers might come back to Louisiana if the government took over the task of providing reinsurance — essentially insurance for insurance companies — and limited losses beyond a certain level through a system of federal and/or state catastrophe funds, reports The Times-Picayune. Some say it could rescue the state from its insurance crisis by providing a powerful incentive for insurers to set up shop in Louisiana. Others argue that it transfers the cost of the worst catastrophe risk from private business to taxpayers.
November 2, 2006
A federal judge in Mississippi says he won't order a new trial for a Pascagoula couple whose lawsuit against their insurance company was the first case to be tried in the state after Hurricane Katrina spawned hundreds of similar lawsuits. The Associated Press reports that U.S. District Court Judge L.T. Senter Jr. refused to change his ruling in August that Nationwide Mutual Insurance Co.'s policies do not cover damage from a hurricane's wind-driven water, known as storm surge. Senter, who heard the landmark case without a jury, also said he sees no reason to order a new trial for Paul and Julie Leonard, who sued Nationwide after the company only paid them $1,661 for more than $130,000 worth of damage to their home.
October 27, 2006
In Gulfport, Miss., an experimental mediation program is easing the crushing load of lawsuits spawned by Katrina, which damaged or destroyed more than 250,000 homes in Louisiana and Mississippi. The Associated Press reports that with hundreds of hurricane-related lawsuits clogging his docket, U.S. District Judge L.T. Senter Jr. has ordered several dozen plaintiffs and their insurers to sit down with a mediator and try to resolve their differences — or face "appropriate sanctions." Settlements were reached in seven of the first 17 cases to go to mediation; encouraged by those results, Senter last week ordered mediation for 57 more cases.
October 20, 2006
Rep. Gene Taylor, D-Miss., laid out a wide-ranging legislative plan Thursday for the federal government to deal with disasters in the wake of Hurricane Katrina, hitting hard on the need to reform the insurance industry, according to The (Biloxi) Sun Herald. The Katrina Task Force, chaired by Taylor with Rep. Charlie Melancon, D-La., as vice chairman, was formed by the Democratic congressional leadership to develop proposals the Democrats hoped to become a blueprint for action — especially if the Democrats take control of the House in November's elections. The report's first finding is that the relationship between the insurance companies and the National Flood Insurance Program needs to be investigated.
October 19, 2006
U.S. District Court officials in Gulfport, Miss., are managing more than 1,100 Hurricane Katrina lawsuits filed against insurance companies, according to information the court provided to The (Biloxi) Sun Herald. Court-ordered mediations and settlement conferences are expected to resolve some cases before trial. A court news release states that trials already have been set for 145 cases during 2007.
October 16, 2006
Insurance companies are expecting record profits in 2006 after predictions of another year of devastating hurricanes have so far come to naught. The New York Times reports that industry experts are estimating that profits may reach $60 billion, on a combination of higher premiums along the coasts, no major payouts for natural disasters and strong investment returns. The record profits expected this year come after a terrible 2005, when insurers paid out $61 billion for damage from Hurricane Katrina and other storms. Even so, the insurers ended up with a profit of $43 billion for the year because of exceptionally good results on investments, declining claims on policies on homes away from the coast and profits on other lines of coverage.
October 13, 2006
A judge in New Orleans has ordered three insurance companies to reinstate their policies covering Dillard University, which was badly damaged in Hurricane Katrina 13 months ago, reports The Chronicle of Higher Education. Two of the companies had canceled their flood-insurance coverage for the institution following the storm and the third had reduced its flood coverage from $50 million to $10 million. The university sued the companies this past summer, arguing that the reductions in coverage violated an emergency order issued by the Louisiana Department of Insurance. The judge's order, which stands for the duration of the legal proceedings, prohibits insurers from canceling or not renewing policies on property that had been damaged in the hurricane.
See Chronicle of Higher Education article
October 12, 2006
Mississippi Senator Trent Lott, a Republican and former majority leader, is one of thousands of homeowners on the Gulf Coast who have been fighting with their insurers over payments for damage in Hurricane Katrina. He said he inserted a provision into legislation, signed by President Bush last week, directing the Department of Homeland Security to investigate potential fraud by the insurance industry, reports The New York Times. Lott said he was also drafting legislation to challenge the industry's exemptions from antitrust laws and had asked his staff to investigate the industry's tax rates. Lott's claim for the loss of his $400,000 house in Pascagoula was rejected by State Farm.
October 5, 2006
A bill President Bush signed Wednesday directs the Homeland Security Department to investigate how insurers have handled Hurricane Katrina claims. Specifically, the inspector general's office of the department is supposed to investigate whether insurance companies "improperly attributed" hurricane damage to flooding rather than wind, reports The (Biloxi) Sun Herald. Flooding, which includes Hurricane Katrina's storm surge, is covered under the National Flood Insurance Program. Insurance company policies cover wind damage but exclude storm surge. The bill requires the inspector general's office to report conclusions of its investigation to Congress by April 1.
October 3, 2006
The jury pool in south Mississippi has been tainted by "media propaganda" about the insurance industry's handling of claims after Hurricane Katrina, a major insurer argues in a bid to move the trials for several lawsuits spawned by the storm. The Associated Press reports that State Farm Fire and Casualty Co. commissioned a survey of 3,600 registered voters in Mississippi that found a "substantial amount of bias against insurance companies" among Gulf Coast residents after Katrina. The Bloomington, Ill.-based insurer claims the survey demonstrates that it can't get a fair trial in south Mississippi for the lawsuits filed by policyholders whose homes were damaged or destroyed by last year's storm.
September 29, 2006
State Farm Mutual Automobile Insurance Co. the nation's largest home and auto insurer, has lost a bid to keep five employees from being questioned about their handling of Hurricane Katrina claims, Bloomberg News reports. A federal judge in Mississippi has denied State Farm's motion for a protective order in a case filed by a homeowner whose claim was denied. Bloomington, Ill.-based State Farm faces dozens of policyholder suits and state and federal investigations of its claims handling. Mississippi Atty. Gen. Jim Hood has convened a grand jury to examine whether insurers, including State Farm, pressured engineering firms to doctor damage reports.
September 15, 2006
A federal judge in Mississippi has refused to dismiss two lawsuits that accuse a Texas engineering firm and two engineers of falsifying Hurricane Katrina damage reports to benefit insurance companies. U.S. District Court Judge L.T. Senter Jr. said in an order that the lawsuits against engineering firm Rimkus Consulting Group of Houston and engineers Thomas E. Heifner and Gary L. Bell will go to trial, according to The Associated Press. In the two separate cases, homeowners maintain that engineer Ken Overstreet examined their properties and submitted reports saying Katrina's winds caused 50 percent or more of the damage. Rimkus, Heifner and Bell altered the reports to blame the damage on storm surge so the insurance companies would not have to pay the claims, the lawsuits allege. The defendants deny any wrongdoing.
September 13, 2006
U.S. Senate action on legislation to overhaul the National Flood Insurance Program and offset huge debts caused by Hurricane Katrina payouts is being stalled by opposition from Louisiana's two senators, who prefer provisions in a bill passed by the House. The Times-Picayune reports that Democrat Mary Landrieu and Republican David Vitter expressed concern about several provisions in the bill approved in May by the Senate Banking Committee, including one that would allow a 25 percent annual increase in insurance premiums for severe repetitive loss properties, business properties and second homes until the policyholders are paying market rates. The House bill provides for only 15 percent annual increases and doesn't apply to repetitive loss properties.
September 7, 2006
After learning in mid-July that Allstate was trying to drop wind and hail coverage for 30,000 customers in 18 of the state's coastal parishes, thousands of customers have been wondering whether they are on the list. The Time-Picayune reports that that being a loyal customer is a major determining factor in the insurer's eyes. "If you're a person who has auto insurance [written before November 2005] and homeowners insurance, you would not be impacted by this," company spokeswoman Kate Hollcraft said. "We're trying to take care of the customers who've been with us the longest and who have been the most loyal. We're trying to manage our risk as best as possible." Consumer advocates say the reasons for the move are that automobile coverage is a more lucrative and less risky line of insurance than home coverage, and trends show that long-term customers with multiple lines of coverage are less likely to make claims.
At a time when Louisiana residents are intensely concerned with insurance issues, the biggest challenge for the three candidates running for state insurance commissioner might be getting voters to pay attention to the Sept. 30 primary race, according to The Times-Picayune. The election was called by Gov. Kathleen Blanco to fill the unexpired term of Robert Wooley, who resigned in February to take a lobbyist job with a law firm. Two Republicans and a Libertarian have about three weeks to get their messages to voters still distracted by cleanups from last year's hurricanes and the occasional threats from this season's storms. Concerns about costs, coverage and keeping insurance companies writing policies in the state will strongly shape the debate.
August 11, 2006
Insurance companies representing more than two-thirds of the Louisiana market have not yet agreed to give policyholders an additional year to file lawsuits to recover damages from Hurricanes Katrina and Rita, despite an order from state Insurance Commissioner Jim Donelon, officials said Thursday. Donelon has ordered companies writing homeowners insurance in the state to give Katrina victims until Aug. 30, 2007, to file lawsuits and until Sept. 25, 2007, to file lawsuits for Rita claims —about a year longer than state law now allows. The Legislature passed two state laws giving homeowners an additional year to sue their insurance companies for hurricane damages, but the laws are not effective yet because they are being disputed in federal court, reports The Times-Picayune.
July 7, 2006
The New Orleans City Council on Thursday asked the Louisiana Recovery Authority and FEMA for hard and fast deadlines on when it must adopt federal advisory flood maps, as well as for clarification of how its vote would affect homeowners' ability to buy flood insurance and receive federal rebuilding grants. The request was another nudge in the ongoing scrap between city, state and federal officials over how the flow of federal aid through the LRA's Road Home program could be hampered if local governments refuse to fold the "advisory base flood elevation" maps into their building codes, reports The Times-Picayune.
June 14, 2006
Last year's hurricanes spared Houston-area ports, but insurers aren't taking any chances as they raise rates worldwide. Insurers have increased rates an average 40 percent at global ports and terminals in the wake of Hurricanes Katrina, Wilma and Rita, reports the Houston Chronicle. Insured losses at ports and terminals escalated from about $28 billion in 2004 to more than $56 billion in 2005. Katrina-insured losses are still being adjusted and settled, but are expected to total nearly $40 billion.
May 26, 2006
Provisions in a State Farm Fire & Casualty Co. policy that exclude certain damage from Hurricane Katrina are unenforceable, a federal judge in Mississippi has ruled. A couple whose Long Beach, Miss. home was damaged by the Aug. 29 storm is suing State Farm for denying their claim, arguing that the wording of their policy's "flood exclusions" are ambiguous and cannot be enforced. U.S. District Judge L.T. Senter Jr., in a ruling released Wednesday, said that State Farm cannot rely on an "ambiguous" language in a clause that is used to introduce what is excluded from coverage in its policies. The judge agreed with State Farm that tidal surge is not covered, The Associated Press reports. However, he said a policy clause that purports to deny coverage when wind acts in any sequence with an excluded event, such as tidal surge, to cause damage is ambiguous.
Nationwide Mutual Insurance Co. faces a lawsuit filed Thursday by 243 policyholders who claim they were fraudulently denied coverage for Hurricane Katrina damage, according to The (Biloxi) Sun Herald. The lawsuit says Nationwide reeled in customers with the promise of "all-risk" coverage, including a "hurricane deductible." The company then refused to pay the policyholders for most, or in some cases all, Hurricane Katrina damage, the lawsuit says. In denying claims, Nationwide cited policy provisions that exclude coverage for water damage and for damage arising from "weather conditions" that may contribute, the suit asserts. Nationwide used a generic report from Haag Engineering that concluded "storm surge" caused all property damage to deny claims, the lawsuit says. The policyholders maintain hurricane winds of up to 140 mph slammed the Coast for four to six hours before the storm surge arrived, destroying or severely compromising their homes.
Owners of vacation homes and properties that repeatedly get high water would see a sharp spike in their flood insurance premiums under a bill approved Thursday by a Senate committee that is racing to overhaul the financially troubled program as another hurricane season approaches. With images still fresh of New Orleans' ruptured levees last year, the bill sponsored by Sen. Richard Shelby, R-Ala., also would require homeowners behind levees and dams to buy insurance policies even if they aren't within the traditional 100-year flood plain. Shelby's bill would immediately require owners of vacation homes, investment property and businesses to pay fair market rates for their flood insurance. The bill would phase out subsidies for homes whose flood damage exceeds their fair market value and so-called "repetitive loss" properties that have filed four or more claims, The Times-Picayune reports.
May 24, 2006
After getting knocked on its heels by the surprising success of post-Katrina insurance overhaul bills in the Louisiana Senate, the insurance industry has regrouped and launched a formidable coalition for a House fight against proposals it says would make it harder for homeowners and businesses to find coverage. The House Insurance Committee today is expected to vote on at least two of the most significant proposals, both of which are in reaction to insurance controversies in Hurricane Katrina's wake, reports The Times-Picayune. Louisiana already is teetering on the brink of a massive shortage of insurance coverage because of both the historical and recently demonstrated risk from storms, and these bills could worsen the situation, according to the Coalition to Insure Louisiana. Proposals opposed by the coalition include Senate Bill 693, which would restore the Louisiana Insurance Rating Commission’s authority to decide on premium price changes of an average of 10 percent of less; and Senate Bill 707 and House Bill 1358, which would impose fewer restrictions on courts when deciding the meaning of “bad faith” in lawsuits disputing the settling or adjusting of claims.
May 23, 2006
State Farm Fire and Casualty Co. refuses to engage in the appraisal process to resolve Hurricane Katrina claims, even though its own policy mandates appraisal on demand when the amount of an insured loss is in dispute, according to The (Biloxi) Sun Herald. Instead, records show, the company is urging policyholders to settle disputes through a mediation program sponsored by the Mississippi Department of Insurance and funded by insurers. The insurance company controls the final settlement offer in mediation. A professional mediator has no authority to tell an insurance company how much money it owes a policyholder. In appraisal, an appointed arbiter can side with either party, resulting in a decision that is final and binding.
May 17, 2006
The U.S. General Accounting Office is investigating the wind vs. water issue as it relates to payment of insurance claims from Hurricane Katrina, reports The (Biloxi) Sun Herald. The emphasis is on how adjusters do their jobs and the basis for their compensation, along with the various coverages a policyholder needs to protect property and the gaps in that coverage. The GAO also is looking at actions taken to minimize catastrophic damage, such as requiring that structures be elevated in flood zones. They hope to learn what works, what doesn't and how such policies are enforced, not only for hurricanes but also for earthquakes and other catastrophes.
Louisiana consumers have until Aug. 29, the anniversary of Hurricane Katrina, to resolve their storm-related homeowners and business insurance claims unless state lawmakers pass legislation putting off the deadline for another year, reports The Times-Picayune. Most insurance policies carry a one-year statute of limitations, which means policyholders have up to a year after the loss to file any lawsuits disputing their settlement. Once that date passes, it's hard for consumers to negotiate for more money because insurance companies know their policyholders have no legal recourse. The one-year deadline isn't usually a source of contention. But the scope of Katrina's devastation, as well as 24-hour curfews that prevented families and adjusters from accessing some properties for weeks after the storm, slowed down the insurance process. In addition, many policyholders waited for FEMA to come out with its latest flood map advisory — released last month — before beginning to rebuild. And many others continue to wait for grants the Louisiana Recovery Authority has said it will make available to homeowners.
May 15, 2006
If ever there was a moment for the obscure federal flood insurance program to ride to the rescue, it would seem to have been in the aftermath of Hurricane Katrina, reports The New York Times. But nearly half the victims did not even have flood insurance —claims from homeowners who were insured, $25 billion worth, bankrupted the program. And the government has had to commit $15 billion in additional taxpayer money for rebuilding in Louisiana and Mississippi. Though experts foresee a generation of fiercer and more frequent storms, Congress seems unlikely to make more than modest changes when it takes up the program in the coming weeks. The drive to restructure the perennially underfinanced program has been blocked by real estate interests, who worry that requiring millions more people to buy flood insurance would stifle development, and also by lawmakers from areas that rarely flood who see their constituents as supporting those who are frequently flooded, particularly in the South.
Biloxi City Council members could decide as soon as Tuesday whether to adopt advisory elevation levels developed by the Federal Emergency Management Agency — or come up with an alternative, reports The Clarion-Ledger. If approved, FEMA's advisory levels would require new and reconstructed buildings in the city's flood zones to be raised as high as 25 feet above sea level. Some council members, however, are pushing for a plan that would raise the city's current 13-foot building requirement to 16 feet above sea level in flood zones. Biloxi is among the Gulf Coast's 11 cities having to raise flood elevation levels because of Hurricane Katrina, which hit Aug. 29. All Gulf Coast municipalities will have to accept FEMA's requirements to participate in the National Flood Insurance Program, which some homeowners will need to qualify for mortgages.
May 10, 2006
A lawsuit filed Tuesday by nearly 700 Mississippi Gulf Coast homeowners accuses State Farm Insurance Co. of using a "one-size-fits-all" engineering report as the basis for refusing to cover damage to homes destroyed by Hurricane Katrina, reports The Associated Press. The suit alleges that the insurer denied many of the homeowners' claims without investigating whether Katrina's wind or water was responsible for damage to their homes. An engineering firm hired by State Farm drafted a generic that concludes all damage to homes on Mississippi's Gulf Coast was caused by "storm surge" and not hurricane-force winds. State Farm's policies cover wind damage, but storm surge is considered floodwater and is excluded.
May 1, 2006
Alarmed at the sharply rising cost of hurricanes and other disasters, home insurers are pulling back from some U.S. coastal markets. The development is yet another legacy of Hurricane Katrina, its mounting toll of Gulf Coast destruction having crystallized the industry’s debate about the effect of climate trends and population growth in coastal areas. Some believe the two are creating a risk of losses so large that insurers could be pushed to the breaking point, leaving the government and taxpayers holding the tab for the next disaster, reports The Washington Post.
April 28, 2006
State Farm Fire & Casualty Co. is attempting to delay a lawsuit that seeks to represent all Gulf Coast policyholders denied coverage for Hurricane Katrina's damage even though they had "all risk" homeowners' policies, an attorney suing the company contends. State Farm is requesting delays in U.S. District Court that would put the lawsuit on hold for an additional four months, says attorney Richard Phillips. Phillips wants U.S. District Court Judge L.T. Senter Jr. to decide whether the company's policy language covers all of Hurricane Katrina's damage, as he contends, or none of it when water contributed to the damage, as State Farm maintains, reports The (Biloxi) Sun Herald.
April 20, 2006
A federal judge who would have presided over some lawsuits that policyholders filed against insurance companies after Hurricane Katrina is instead waging his own personal legal battle against the insurer of his Gulf Coast home, reports The Associated Press. U.S. District Court Judge Louis Guirola and his wife filed a lawsuit Wednesday against Nationwide Mutual Insurance Co. for denying his claim and refusing to cover damage to his storm-demolished home in Long Beach. Guirola's lawsuit is like many spawned by the debate over whether Katrina's wind or water was responsible for damage to tens of thousands of homes.
April 18, 2006
Families displaced by Hurricane Katrina are suffering from mental disorders, chronic conditions like asthma, and lack of prescription medication and health insurance at rates that are much higher than average, a new study has found. The New York Times reports that the study conducted by the Mailman School of Public Health at Columbia University and the Children's Health Fund is the first to examine the health issues of those living in housing provided by the Federal Emergency Management Agency. Based on face-to-face interviews with more than 650 families living in trailers or hotels, it provides a grim portrait of the hurricane's effects on some of the poorest victims, showing gaps in the tattered safety net pieced together from government and private efforts.
April 14, 2006
Provisions in Allstate Insurance Co. policies that exclude damage from Hurricane Katrina's floodwaters are "valid and enforceable," a federal judge in Mississippi has ruled in a setback for Gulf Coast policyholders whose claims were denied by the insurer, according to The Associated Press. A couple whose Gulfport home was damaged by the storm is suing Allstate for denying their claim, arguing that the wording of their policy's "flood exclusions" are ambiguous and cannot be enforced. U.S. District Judge L.T. Senter Jr. rejected that argument, ruling Tuesday that the terms of Allstate's policies are "clear and unambiguous" in excluding damage from "tidal waters" such as those that Katrina pushed ashore from the Mississippi Sound, inundating thousands of homes.
April 12, 2006
Professional engineer James K. "Ken" Overstreet said his assessments of property damaged by Hurricane Katrina were altered without his permission and, in several cases, his signature was forged on documents insurance companies used to minimize or deny policyholder claims, reports The (Biloxi) Sun Herald. Overstreet worked as a contractor for S&B Infrastructure. In turn, S&B contracted with Rimkus Consulting Group Inc. to supply damage assessments to insurance companies. S&B, he said, parroted orders from Rimkus. "If they could get by with changing the wind to surge, they would do it," said Overstreet, who has talked with the state Attorney General's Office in connection with a Hurricane Katrina insurance-fraud investigation. "If you had affidavits in there where people saw houses blowing down, sometimes they'd just take those out entirely. They took out whole exhibits."
April 10, 2006
Recurring flood loss has long bedeviled homeowners in Louisiana, which leads the nation in repeat claims filed with the National Flood Insurance Program, according to The Times-Picayune. While limited money has been available since 1994 to flood-proof these houses, Hurricane Katrina has loosed a huge stream of federal assistance that should allow most owners to elevate vulnerable homes without the customary hassle. Many owners grappling with severe repeat flood loss live in post-World War II homes built on slabs before the development of federal flood maps; their homes have taken on water during tropical storms and ordinary downpours for years.
April 7, 2006
Mississippi Atty. Gen. Jim Hood said he has convened a grand jury to investigate whether insurers, including State Farm Mutual Automobile Insurance Co., improperly denied Hurricane Katrina claims by pressuring engineering firms to doctor damage reports. Bloomberg News reports that Hood is examining whether insurers asked engineering firms that work with claims adjusters to alter reports about how homes were damaged or destroyed by the Aug. 29 storm, the insurance industry's most costly disaster.
April 6, 2006
The pictures of destruction are all too familiar. Entire cities washed away by the powerful hurricanes that pummeled the Gulf Coast last fall. With so much lost to the storms, it would be easy to assume that property and casualty insurance companies — which insure homes and cars — took a big hit to their bottom lines in 2005, reports ABC News. But data compiled by the National Association of Insurance Commissioners paints a surprising picture — one of record profitability for property and casualty insurers amid all the devastation. The group says insurance company filings with all 50 states show an unprecedented $44.8 billion in profits for 2005.
April 3, 2006
Thousands of homeowners affected by Hurricane Katrina are afraid to rebuild because federal officials haven't yet issued new flood advisories for New Orleans and adjacent parishes. The Associated Press reports that even with enough insurance and savings to start over, many are reluctant to start expensive reconstruction until FEMA issues advisories that will tell them what they need to do to mitigate the risk of flooding again. The issue isn't flood insurance or building permits. As long as homeowners follow the existing maps — last revised in — they'll be grandfathered into the federal flood insurance program. But surrounded by rotting drywall and the painful memories of Katrina, residents say they're afraid to invest financially or emotionally before FEMA gives them some advice.
March 29, 2006
As people in the New Orleans area try to get on with their lives by acquiring new homes, they're discovering that most homeowners insurance companies operating in Louisiana aren't interested in insuring their homes, reports The Times-Picayune. The situation is delaying — and sometimes scuttling — real estate closings, and public officials worry that high prices and limited availability of homeowners insurance could deter banks from lending money and derail efforts to rebuild New Orleans.
Flood maps used for insurance purposes and minimum building elevations have become more complex and confusing in the wake of Katrina and Rita, experts say. The (Baton Rouge) Advocate reports that after the hurricanes pushed walls of water into some coastal communities, the Federal Emergency Management Agency created “flood recovery maps,” many of which may eventually be used to set future flood elevations. The new maps are in addition to the old flood maps FEMA used to set insurance rates and municipalities used to set minimum building elevations.
State Farm Fire & Casualty Co. is "twisting the arms" of engineering firms to produce reports that will allow the company to deny Hurricane Katrina claims, a special assistant Mississippi attorney general said in Circuit Court Tuesday. The (Biloxi) Sun Herald reports that Tim Howard, special assistant to Mississippi Attorney General Jim Hood, said confidential informants have been cooperating with a grand jury investigation into fraudulent insurance practices.
March 28, 2006
If a supposedly self-supporting federal program was hemorrhaging cash while exacerbating the very problems it was designed to fix, you might think Congress would rush in to stanch the bleeding. But if the enterprise in question were the federal flood insurance program, you'd be dead wrong. Gulf Coast Reconstruction Watch reports that more than six months after Hurricane Katrina ravaged the program's finances, members of a House committee just got around to a first attempt at reconstructive surgery. Judging by the result, they seem to have settled for a few stitches.
See Gulf Coast Reconstruction Watch article
March 23, 2006
A Mississippi couple who got conflicting reports from an engineering firm about how their home was destroyed during Hurricane Katrina filed a lawsuit Wednesday accusing State Farm Insurance Co. of manipulating those reports to deny their claim. The Associated Press reports that the lawsuit, which comes as Mississippi's attorney general investigates insurance companies for "fraudulent" handling of post-Katrina claims, is one of many spawned by a fierce debate over whether homes were destroyed by the Aug. 29 hurricane's wind or water.
March 17, 2006
A high-profile litigator said Thursday that a whistleblower is helping him build a case against insurers who denied thousands of claims from policyholders whose homes were destroyed in Hurricane Katrina. Richard ''Dickie'' Scruggs, who helped secure a multibillion-dollar settlement against tobacco companies in the 1990s, told the Associated Press that the whistleblower gave him copies of internal reports prepared by engineers hired by an insurance company to inspect storm-damaged homes. He did not identify the whistleblower or the person's employer. The reports indicate the company pressured engineers to change conclusions so claims could be denied, Scruggs said.
March 15, 2006
Mississippi Attorney General Jim Hood has won his fight to keep his lawsuit, which aims to force insurance companies to pay for damage caused by Katrina's storm surge, in state court. The (Biloxi) Sun Herald reports that because the case involves the federal flood insurance program, it had been sent to federal court, where the insurance industry was expected to have the upper hand. Hood's lawsuit, filed mid-September, seeks to force insurance companies to cover flood losses despite policy exclusions for flood damage.
March 13, 2006
About half of the homeowners who live in federally designated flood plains do not have flood insurance, a nationwide study indicates. But more single-family homeowners in the South — including those in the hurricane-ravaged Gulf Coast — are insured than elsewhere across the country, according to the RAND Corp. study released Monday. The Associated Press reports that the new data come as the Federal Emergency Management Agency prepares to issue flood elevation maps that will likely require more homeowners to carry insurance — and, ultimately, dictate how hurricane victims are allowed to rebuild.
March 9, 2006
The Mortgage Bankers Association in Washington, D.C., estimates that between 80,000 and 100,000 homeowners in the New Orleans area had no flood insurance when Katrina’s Aug. 29 arrival led to levee failures. Most are still waiting for federal and state assistance and a decision on whether they’ll be required to elevate their homes or move from neighborhoods deemed too risky to rebuild, New Orleans City Business reports.
See New Orleans City Business article
February 21, 2006
Louisiana Gov. Kathleen Blanco outlined a $7.5 billion rebuilding, relocation and buyout plan Monday for thousands of residents whose homes remain damaged or destroyed after last year's hurricanes, reports the Associated Press. It is Louisiana's first comprehensive housing proposal since Katrina and Rita devastated the Gulf Coast. Assistance would be capped at a maximum $150,000 per homeowner under the proposal. But direct relief is still months away, and homeowners receiving the aid could be taking on more debt to rebuild.
February 10, 2006
New Orleans residents had learned to put up with unreliable services long before Hurricane Katrina laid waste to the city and killed 1,300 people in August, often shrugging them off as part of a laid-back character that was inseparable from great jazz music and Creole cuisine. But Reuters reports that the daily struggle and long waits many now face to commute, receive medical treatment or cut through layers of bureaucracy for insurance payments or housing aid has even hardened natives questioning their loyalties.
February 7, 2006
Mississippi’s Attorney General Jim Hood has launched an investigation into possible fraud by insurance companies in handling Hurricane Katrina claims, The (Biloxi) Sun Herald reports. An insurance adjuster told investigators that he sent claims in for payment, but the company cut the amounts actually paid. The adjuster has since left the business, Hood said.
February 6, 2006
Property owners across the United States could face higher premiums for flood insurance after Congress re-examines this program in the wake of huge losses from last year's hurricanes. American City Business Journals reports that the Federal Emergency Management Agency expects to pay at least $23 billion in flood insurance claims for damage caused by Hurricanes Katrina, Rita and Wilma. FEMA only collects about $2 billion a year in flood insurance premiums and fees, so taxpayers probably will be on the hook for most of this money. Katrina's devastation was unprecedented, but critics of the flood insurance program say it was never actuarially sound.
See American City Business Journals article
February 3, 2006
Homeowners’ insurers have settled nearly 70 percent of claims from Hurricane Katrina in Louisiana and Mississippi, according to the Insurance Information Institute, the Insurance Journal reports. The institute estimated that more than 732,000 claims have been settled in the two states, totaling $11.4 billion, as of Jan. 24. Homeowners’ insurers ultimately expect to pay more than one million homeowners claims totaling $16.4 billion.
January 25, 2006
The wait for federal standards for home building is hampering Louisiana's hurricane reconstruction efforts, Gov. Kathleen Blanco told the Associated Press on Tuesday. The Federal Emergency Management Agency is developing a new set of recommended standards for rebuilding in hurricane- and flood-prone areas. But the first new preliminary set of standards won't be out until March or April in New Orleans and several other areas, with the final guidelines not expected until August, Blanco's administration says. The wait is stymieing people who want to rebuild in accord with the new standards so they can be eligible for assistance and get insurance, Blanco said.
January 19, 2006
The Louisiana Insurance Rating Commission reluctantly approved its first post-Katrina increase in homeowners’ insurance rates Wednesday, beginning what is likely to be a painful stream of rate increase requests over the next few months. The Times-Picayune reports that after an hour and a half of debate, the commission voted 4 to 1 to allow ANPAC Louisiana Insurance Co. to increase homeowners insurance rates by an average of 23.3 percent statewide. New Orleans area homeowners likely will bare the brunt of that increase and see their rates rise much more than the average 23 percent.
January 13, 2006
Many insurance companies' reaction to Hurricane Katrina revealed "a significant pattern of callousness, unfairness and generally inept performance," charges a study issued by a consortium of more than 100 U.S. public interest groups. The report by Americans for Insurance Reform cites numerous problems that consumers had dealing with such insurers as Northbrook-based Allstate Corp. and Bloomington-based State Farm Insurance Cos, according to the Chicago Tribune.
January 11, 2006
U.S. Rep. Gene Taylor, D-Miss., has joined the thousands of Mississippians suing State Farm Fire & Casualty Co., challenging the insurance company's refusal to cover property losses resulting from Hurricane Katrina. The Associated Press reports that Taylor's lawsuit comes less than a month after U.S. Sen. Trent Lott, R-Miss., filed a suit against State Farm. Both Taylor and Lott are represented by Lott's brother-in-law, attorney Richard "Dickie" Scruggs.
January 5, 2006
A mediation program kicks off Friday to resolve Hurricane Katrina insurance claims, but homeowners with disputes over the cause of damage—wind vs. water—likely will be disappointed. The (Biloxi) Sun-Herald reports that insurance mediation has focused on disagreements over the cost of repairs, not the cause of damage, said India Johnson, a senior vice president of the American Arbitration Association, which is administering mediation programs for Mississippi and Louisiana. In thousands of cases, insurance companies say water, excluded from coverage, damaged homes while homeowners maintain that wind, which is covered, caused the destruction. Some policies even purport to exclude wind damage when water was a contributing cause. Thousands of homeowners have filed lawsuits to resolve their claims and are ineligible for mediation.
December 23, 2005
A Navy plan to pay Gulf Coast shipbuilders about $1.7 billion for losses related to damages and construction delays from Katrina may overstate the actual costs and could dampen efforts to collect insurance payments, a government report warns. According to an Associated Press report, the nonpartisan Congressional Research Service says that Northrop Grumman may be able to collect insurance claims for future increased costs related to labor and overhead. If the government pays now, the CRS report says, the company will have little incentive to negotiate with insurers for those payments. But Navy and Northrop Grumman officials contended Wednesday that there is no overlap between the company's insurance claims and the Navy's funding.
December 19, 2005
U.S. Sen. Trent Lott says personal losses he suffered because of Hurricane Katrina will weigh on his decision whether to run for re-election in 2006, the Associated Press reports. The Mississippi Republican lost his waterfront home in Pascagoula during the Aug. 29 storm, and he has sued his insurance company in what has become a wind-versus-water-damage fight between insurance companies and thousands of storm victims. Lott said in an interview with the The (Biloxi) Sun Herald newspaper that he will rebuild, but not immediately.
December 15, 2005
New Orleans homeowners may have trouble rebuilding their houses for the amount of insurance money offered to them, reports The Times-Picayune. The president of the Homebuilders Association of Greater New Orleans estimates that building costs have climbed roughly 30 percent since the storm, while labor rates have jumped as much as 50 percent, and could go higher. Insurance companies work to incorporate building price fluctuations into their settlements, but it's often hard for them to keep pace with the very latest increases.