Wind? Water? More like a Bunch of Hot Air!
Ever since the last drop of Katrina rain passed through the Gulf Coast and the water receded after the levees burst in New Orleans, the insurance industry has been hell bent on implementing at full throttle its great American rip off program. In no time flat did those who had likened their company to good neighbors or to the security of being in good hands issue written instructions on how to maximize what seems to have been their goal: blame Katrina’s damage on flooding.
Let me help the insurance industry become crystal clear on this point. This was a H-U-R-R-I-C-A-N-E! We didn’t call this Katrina, the flood. We didn’t call this Katrina, the tornado. We didn’t call this Katrina, the storm surge. Everybody calls it . . . H-U-R-R-I-C-A-N-E Katrina. Capiche? Now let’s get technical.
The National Oceanic and Atmosphere Administration (NOAO) states on its hurricane preparedness website that “[h]urricane hazards come in many forms: storm surge, high winds, tornadoes, and flooding.”
In other words, a hurricane is a natural disaster consisting of both wind and water. How does one slice and dice the impact of one on the other and the amount of damage directly attributable to each?
Gulf Coast Congressman Gene Taylor (D-MS) testified before Congress that insurance companies were choosing not to pay on claims unless the policy holder provided an eye witness. [See Video: Katrina Insurance Claims Hearing: Rep. Taylor Testimony on the homepage of A.M. in the Morning!]
Can you believe this?! Unethical,? Of course. Heartless? Obviously. Ruthless? Evidently. Maniacal and Evil? Absolutely.
Stupid? No. These corporate execs who made the decision to blame Katrina’s damage on water comes out of value system foreign to most of us of any religious or spiritual background. Seems these execs live in a decency-free bubble where their god, the Almighty Dollar, reigns supreme. There will be no conversions. So, forget any lofty notions of that sort.
What we need are two things. First, we must fully understand how they are getting away with this horrendous travesty. Second, we must understand and implement what we can do to prevent its continuation.
Look, they know how to play us and play the politicians. Moreover, they know how to take advantage of the conflicts of interest that are inherent in the U.S. Government’s National Flood Insurance Program (NFIP).
Yesterday’s piece titled Scamming Policyholders & Taxpayers reported that our federal government has been in the flood insurance business since 1968. The private insurance companies pretty much got out of the flood insurance business “because of the catastrophic and unpredictable nature of floods.” In 1983, the federal government turned over to the private insurance industry the selling, servicing, and adjusting of those policies and claims. This may have been a fine arrangement for those natural disasters that dealt with floods only.
However, when it comes to a hurricane which by its very nature simultaneously involves several types of natural calamities such as storm surge, high winds, tornadoes, and flooding, a conflict of interest rises when it is the private insurance companies that are determining whether damage would be covered by them or by the federal taxpayers. In this instance, the conflict of interest is $23 billion.
So far, claims paid out on Katrina add up to $64 billion— and this amount only accounts for those who’ve been paid on their claims through 2006. By the end of last year, the private insurance companies had paid $41 billion. These same companies essentially handed a $23 billion bill to American taxpayers for damages that these private companies determined flood waters had caused. How generous that the private insurance industry only stiffed us for 36% of the bill.
What a racket! But could companies really be that methodically maniacal to stiff its own customers and the American taxpayers to the tune of at least $23 billion?!
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.
We haven’t even begun to talk about the rebuilding costs that weren’t covered at all or the folks who didn’t have flood insurance because they believed their policy provided adequate coverage. We haven’t touched on the fact that many like my own family are not in an official flood zone and may not have purchased flood insurance.
What is important, though, is to recognize that what the insurance companies are doing to New Orleans and the Mississippi Gulf Coast can happen to over half the population of our country.
“Populations and built environments in coastal watersheds are growing rapidly, with 55 percent of the U.S. population already living within 50 miles of the coast.”
The Coastal Community Development Partnership brings together NOAA and EPA offices to better support state and local governments as they promote safer and smarter development along the coast.
The name of the game is to be informed and to take action.
Yesterday, we discussed the need to eliminate the insurance industry’s exemption from the anti-trust law governing business throughout our country. Right now, the Senate is considering the Insurance Industry Competition Act (S. 618), which will make it illegal for the insurance companies to collude with each other for things like price fixing and claims adjustment. Go here to tell your two U.S. Senators that you support the Insurance Industry Competition Act.
Today, we take action to protect ourselves from the inherent conflict of interest created because the insurance industry gets to determine for our federal government the amount of damage allegedly attributable to flooding at the same time the private insurance industry is determining the damage at the same property that it will attribute to wind.
Congressman Taylor has introduced H.R. 920, which amends the National Flood Insurance Program. In his testimony before Congress, he stated, “in response to the fact that the insurance industry apparently no longer wants to over people for wind damage in coastal America, or will not provide that coverage at a cost that is reasonable, I am asking you to consider legislation that will expand the National Flood Insurance Program to include all natural perils.”
Taylor explains that under the rules of the House of Representatives, the insurance plan would have to be financed in a way that pays for itself. “Thus, any argument that this would be taxpayer-subsidized would be eliminated. Under the new rules of the House, that is not an option.” What Taylor is referring to is that when the Democrats were swept into office last November, Speaker of the House Nancy Pelosi instituted strong fiscal controls on spending. She ended the fiscally irresponsible era under Republican leadership.
Lastly, Taylor stated, “This problem affects thousands of people. Quite frankly, people should be encouraged to get out of coastal areas in a time of a storm, rather than encouraged to stick behind with a camera to record the event.” Amen to that!
Speaking of the Amen Corner, former Congressional Speaker of the House Newt Gingrich (R-GA), that compassionless conservative crony, has already come out against national disaster insurance. What a shock! The only thing those so-called conservatives are interested in is conserving their power.
During the apex of his reign in Congress, Gingrich accepted almost $425,000 in political contributions from the insurance industry coffers. Newt being a mouthpiece for an industry that has so blazingly betrayed the American people and her families isn’t all that shocking these days.
And just as the wind got knocked out Newt’s political sails, we can partner with Congressman Taylor to take the wind out of the insurance industry’s selling to us wind insurance policies on which they fail to appropriately pay out after a natural disaster.
Today, we can call and email our congressional representatives to request that they co-sponsor H.R.920, which is called the Multiple Peril Insurance Act of 2007.
After all, the more this private industry continues to push their wind vs. water rationale, the more it sounds like nothing more than a bunch of hot air.
