Mid-West Floods and Katrina: The Insurance Connection
by Ana Maria
For Katrina survivors here along the Mississippi Gulf Coast, we remain steadfast in our determination that no other family or business owner face the nightmare of Mother Nature’s rampage such as has been happening in the Mid-West with its flooding and tornadoes only to add insult to injury when Big Insurance betrays our trust and denies legitimate claims.
For Katrina survivors here along the Mississippi Gulf Coast, we want every family and business owner throughout the nation to have the financial security that we all think we have when we pay our insurance premiums. We know from experience that this is not always the case as things stand today.
Big Insurance didn’t miss a beat to take advantage of the recent flooding to pushing its greed-driven agenda into the public discourse. The media is highlighting the fact that the federal flood insurance program is operating in the red. However, the missing link is that Big Insurance appears to have pawned off on the federal program bills that the Big Insurance companies themselves should have paid. Yes, the allegation of fraud has been lodged.
On his official government website, Gulf Coast Congressman Gene Taylor (D-MS) has an incredible collection of “documents that suggest fraud by insurance companies in the handling of Katrina wind and water claims.” The doozies below are from Nationwide, State Farm, and Allstate.9/4/2005: Nationwide instructed its adjusters that “if loss is caused by both flood and wind there is no coverage.”
9/13/2005: State Farm instructed adjusters that “where wind acts concurrently with flooding to cause damage to the insured property, coverage for the loss exists only under flood coverage.”
6/28/2006: On-site damage assessment by engineer Jerome Quintero of Rimkus Consulting Group for Allstate… concluded that there was “insufficient physical evidence to determine the proportion of wind versus storm surge that destroyed the structure.”
11/4/2005: Jerome Quintero’s damage assessment after revision by Rimkus staff who never visited the site. Quintero’s conclusion of “insufficient physical evidence” was changed to “storm surge and waves destroyed the residence.” Quintero’s name was signed to the revised report without his knowledge.
Taylor and his wife lost everything in the hurricane, and their insurance company offered them not one penny on their wind insurance coverage.
In Katrina’s aftermath, the insurance industry posted a record $108 billion in profits in 2005 and 2006 while shuffling paper to pretend that the four hours of up to 135 mile-per-hour winds or more that the Mississippi and Alabama Gulf Coast experienced did no damage that would require them to pay off on the wind insurance coverage for which home and business owners paid their premiums.“Initially, high winds in the outer eyewall struck the Mississippi coast up to three to four hours before the highest water arrived. The problem with water created by the storm’s devastating tidal surge arrived later.”
At Congressman Taylor’s recent Town Hall Meeting, Hancock Bank Board Chair George “Schloegel brought the house down when he remarked that the insurance companies didn’t have to hire lawyers and haul us to court to get us to pay our premiums. Why should we have to hire lawyers and haul them to court to get them to pay on our wind policy claims?!”
Yet that is exactly what the Congressman Gene Taylor and his wife, Margaret G. Taylor had to do. They hired Dickie Scruggs of the Scruggs Katrina Group, and they recently settled their claim. The point is that a U.S. congressional representative had to hire a big time attorney to get the money that that insurance company should have paid in the first place.
I didn’t realize that the insurance industry could legally collude with each other, talking among themselves to say “we won’t pay, you don’t pay.” The industry enjoys an exemption from the nation’s anti-trust laws. Professional baseball is the only other exception, and that’s about entertainment. We HAVE to have insurance to get a mortgage for any loans to buy homes and businesses. It’s a MUST have, not a nice to have as may be the tickets for a baseball game.
Think insurance isn’t part of our economy? Try getting a loan to buy a house or business and tell the loan officer that you’re not getting any insurance. Tell them it’s a rip off or that the premiums are too high or that you simply don’t want to buy it. See how fast an application is turned down. In our economy, insurance is a given and the lifeblood of commerce. Yet, this industry is not subject to federal regulation.
How to remedy these two major flaws in our personal and business financial security? We need one insurance policy for both wind and water. The private insurance industry deliberately got out of the flood insurance business in the 1960s. That is the reason that the U.S. Government started its Federal Flood Insurance Program in 1968.
Today, Big Insurance is collecting premiums for wind coverage and apparently deliberately failing to pay policyholders on legitimate wind damage claims. Big insurance is stiffing the federal government with bills and the left over costs—such as those who hadn’t needed flood insurance—are born by families and businesses. In two ways, Big Insurance is sticking it to taxpayers: first, to the federal flood insurance program, and then when those limits are reached or when we don’t have the insurance to begin with.
In the face of well-publicized communal tragedy, most often we experience shock, despair, hope, answered prayers, and miracles of generosity. Unfortunately, Katrina taught us a great deal about Big Insurance which is focused on its seemingly insatiable greed that we came experience with a depth of betrayal and abandonment no one should have had to endure . . . and which we are determined to help others never to have to endure either."Greed is the main disconnect in this situation," said Taylor, D-Miss. "It's easy for them to walk around in their Gucci suits and defend their companies, but the reality is down there on the Gulf Coast, where all of the destroyed homes and property of my constituents are. Of course, these companies don't want to change the rules that are currently in their favor.
As survivors of that worst of Mother Nature’s tragedies throughout the Katrina-ravaged region from Bayou LeBatre, Alabama, to the entire Mississippi Gulf Coast and over to neighboring Louisiana where the U.S. Corps of Engineers levee system flooded New Orleans and its surrounding cities, we know first-hand of betrayal and abandonment from Big Insurance . . . and those whose knee-jerk reactions would imply that any of us get what we deserve for living where we live. See Optimism and Anger in Post-Katrina Living.
"People who played by the rules and expected insurance companies to play by the same rules got screwed," said Taylor, whose bill would create financially sound premium levels to make the NFIP self-supporting.
That is the reason we are pushing for one policy where families and businesses can obtain both wind and water coverage and stop all this fraudulent finger pointing that Big Insurance seems to take pleasure in doing.
Taking advantage of the current spate of floods and tornadoes, Big Insurance is engaging in an all out assault on Congressional proposals that will solve the insurance woes for American families and businesses.
The question, of course, is what can we do about it? Hmmmm. Seems to me that it’s time for some political hell raising fun!
Today, we’ll focus on the proposal for one policy because that is coming up for a vote shortly after Congress reconvenes in Washington after Labor Day. We’ll deal with the anti-trust legislation soon enough. But today, the one policy proposal requires our immediate attention.
Let your fingers to the walking and your mouth do some talking to encourage your congressional representatives today to support one policy for both wind and water so that when tragedy hits, families and businesses can focus on recovery rather than face legal battles and financial ruin because of corporate greed.
If the grass of our political opposition looks greener, maybe it’s time for us to water ours more.
For a good watering hose, go here for sample phone scripts to read and email letters to send. Just follow the bouncing ball, take part in this grand American experiment in democracy, and give your representative a piece of your mind. Once the phone call has been placed or email has been sent, a delightful peace of mind falls upon us as we realize that this is our part in creating the life as we desire.
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