Bookies, Pimps, and Insurance Companies

by Ana Maria

The insurance industry has a great scam of a gravy train going on with home and business owners. Think about it. Collect the premiums, deliberately fail to pay out the claims, pocket the profits, leave town, reduce the coverage, increase the premiums, repeat.

Just as a bookie collects from its gamblers, these companies collect money from us, the home and business owners of America. If we never have a situation where we need to make good on our policy, the insurance company has kind of made out like a bandit. All of this is legal and above board. We understand it’s a form of legal gambling, and we know the risks of what may happen if we don’t participate.

In essence, we’re essentially betting that we may one day need to tap into our policy, our legally biding contractual agreement with our legal bookie. When something happens and we need our gamble to pay off, we expect our insurance carriers—our bookies—to make good on our legally binding agreement.

Here in the Katrina-ravaged region of the country, our bookies are skipping town with our money pointing their proverbial fingers to the water in the Gulf of Mexico. If a drop of water hit our property, then the insurance carriers said that ALL of the damage would be paid from the U.S. Government’s federal flood insurance program. Remember, the private insurance companies were adjusting claims for their own wind insurance policies and for the federal government’s flood insurance program. A conflict of interest that has become apparent in Katrina’s aftermath. [See Wind? Water? More like a Bunch of Hot Air! for more information on that end.]

Since the private insurance carriers were adjusters for the same properties and these companies lack integrity or ethics, it was easy for them to fraudulently claim that the damage was from water and to hand their own bills to the U.S. government to the tune of $23 billion. With each home and business owner claim that these companies fraudulently denied, they have betrayed our trust.

New research from the University of South Alabama’s Coastal Weather Research Center is proving that the insurance industry’s profit generating plan doesn’t hold water.

Dr. Blackwell works at the Coastal Weather Research Center.

Winds battered residents long before water came ashore. This past May, the university announced the discovery of a “Second, Devastating Eyewall Inside Hurricane Katrina”. The university’s “hurricane expert Dr. Keith Blackwell used the latest in microwave satellite technology to look inside Hurricane Katrina’s storm clouds, leading to the discovery of a second, or outer, very potent eyewall, which extended severe hurricane winds far outward from the storm’s center.

Blackwell’s research concluded the following.

1. Before landfall, Katrina was a Category 5 storm with . . . sustained winds of 175 mph.
2. The hurricane’s highest reported surface gust was 135 mph, in Poplarville, Mississippi; many weather stations were destroyed, so Katrina’s highest gusts were not measured.
3. Video evidence from storm chasers suggests gusts on the ground in Gulfport, MS, could have been as high as 150 mph.
4. The hurricane spawned 22 documented tornadoes in Mississippi and Alabama.

FACT SHEET: Double Eyewalls and Hurricane Katrina
Coastal Weather Research Center
May 17, 2007

Dr. Blackwell’s documented research concluded the following.

“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,” explained Blackwell.
[Emphasis added.]

What does this mean?
Well, Poplarville is inland by about 60 miles from Bay St. Louis, Miss., one of the tiny coastal beach towns that comprised Katrina’s ground zero. So if Katrina’s gusts were 135 mph after it had been over 60 miles of land and these massive winds were battering homes, businesses, schools, fire and police stations, and other government buildings for THREE to FOUR hours before the surge came ashore, Katrina’s winds did plenty of damage for which the private insurance companies are financially responsible. That’s what this research means.

This research takes the wind out of the insurance industry’s argument that it was the water and NOT the wind that caused the enormous damage to homes, businesses, etc.

This means that the insurance companies have defrauded the federal government possibly by many billions and billions of dollars with its failure to pay on damages that wind, and not water, caused.


ABC News was able to obtain a copy from State Farm files of the original FAEC [Forensic Analysis & Engineering Corp.] damage report, which included the image of an attached "Post-it" note that read, "Put in wind file - do not pay bill - do not discuss"


Image at ABC's The Blotter.

That’s what this research means. It’s fantastic news for home and business owners as well as schools, cities, towns, counties and other governmental entities that have been going up against the insurance industry and its reported $108 billion in profits that it made in 2005 and 2006 alone.

With this new evidence from the Coastal Weather Research Center coupled with the RICO lawsuit that the Scruggs Katrina Group has filed [See State Farm, Partners, and RICO: What a Racket!] in which it has uncovered evidence that the companies deliberately failed to pay wind policy claims it knew that it was responsible for paying, this may also mean that that policy holders with settled claims may seek out attorneys to reopen their cases. Sure would be a pity were the insurance companies to find themselves in a whole lot of hot water.

The gig is up. As this information comes out more and more, these really bad bookies—the insurance companies peddling their property and casualty insurance wares—will continue to be exposed.

Like a bookie, insurance companies are running a numbers game on its property and casualty customers—residential, commercial, government, you name it. They're scamming us. But the big pimp daddy-O is out in full force protecting them.

So why be skeptical of several insurance companie being supportive of the Multiple Peril Insurance Act of 2007? Ever heard of a bookie willingly giving up territory? How ‘bout a pimp that lets a prostitute get out of the business and on to a more respectable profession? Yeah, me, neither.

Since the Multiple Peril Insurance Act of 2007 would severely cut into the insurance bookies’ ability to run this numbers game on American families and businesses, they are transforming themselves from bookies to pimps. Seeing the hand writing on the wall, the industry is taking solace in the fact that they have the big insider Daddy-O of a Pimp out there hustling inside the political trenches.

The Insurance Industry’s Big Daddy-O Pimp
In 2005, Marc Racicot, the former chair of the Republican National Committee (RNC), became the president of the American Insurance Association. When George Bush named his buddy as chair of the ReTHUGlican party, Racicot continued as “an active, registered lobbyist . . . for the Houston law firm of Bracewell & Patterson, personally representing the controversial energy firm Enron.” I suppose there’s something to be said about being upfront with one’s lack of good ethics and integrity. Not much to say, of course.

When Racicot became the president of the American Insurance Association, he characterized the association as being “widely regarded as one of the most effective business advocacy groups in state capitols and in the halls of Congress.”

Today, Racicot is pimping the association’s fraudulent Towers Perin report that tells Congress that the proposed Multiple Perils Insurance Act of 2007 is on shaky financial ground. What a load of baloney. Their analysis is on shaky ground and when the dust settles on the court cases that are pending, I’m personally hoping the companies’ financial positions are below the ground. What they have done here in Katrina Land is sinful and criminal in every sense of those words. Do I hear an Amen?!

Congressman Gene Taylor (D-MS) sent a letter to Racicot requesting that he “retract and disavow the fraudulent Towers Perin report.” Taylor stated, “the assumptions, scenarios, and conclusions in the report are impossible under the bill.”

In other words, Bush’s Boy—the big Daddy-O Insurance Industry Pimp Marc Racicot—is pimping the industry’s trade association’s fraudulent information.

So here’s where we come in with today’s Political Hell Raising Activities.

On Tuesday, July 17, 2007, the House of Representatives’ Subcommittee on Housing and Community Opportunity will hear testimony regarding the proposed Multiple Peril Insurance Act of 2007. Below are the members of this committee. Are any of these members your congressional representative? If so contact them, inform them that you are you their constituent, and that you support the Multiple Perils Insurance Act of 2007.

Contact Chairwoman Waters and any of the others and inform them that you support the Multiple Perils Insurance Act of 2007. This hearing is an important step in the road to stopping the bookies from ripping off any other families and business owners. Sharing our perspective on this critical matter is how we protect our families through expanding the flood insurance program to include wind coverage. Sharing our perspective is how we put a gust of powerful wind under our political sails.

[Here are political hell raising email and phone activities.]

Subcommittee on Housing and Community Opportunity
Rep. Maxine Waters (CA), Chairwoman
Rep. Nydia Velázquez (NY)
Rep. Julia Carson (IN)
Rep. Stephen F. Lynch (MA)
Rep. Emanuel Cleaver (MO)
Rep. Al Green (TX)
Rep. William Lacy Clay (MO)
Rep. Carolyn B. Maloney (NY)
Rep. Gwen Moore (WI)
Rep. Albio Sires (NJ)
Rep. Keith Ellison (MN)
Rep. Charles A. Wilson (OH)
Rep. Christopher S. Murphy (CT)
Rep. Joe Donnelly (IN)
Rep. Judy Biggert (IL)
Rep. Stevan Pearce (NM)
Rep. Peter King (NY)
Rep. Paul E. Gillmor (OH)
Rep. Christopher Shays (CT)
Rep. Gary G. Miller (CA)
Rep. Shelley Moore Capito (WV)
Rep. Scott Garrett (NJ)
Rep. Randy Neugebauer (TX)
Rep. Geoff Davis (KY)
Rep. John Campbell (CA)
Rep. Thaddeus McCotter (MI)

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Summary of H.R. 920, the Multiple Peril Insurance Act

From the Office of Rep. Gene Taylor

Cosponsors: Maxine Waters, D-CA; Bobby Jindal, R-LA; Charlie Melancon, D-LA; Walter Jones, Jr. R-NC; William Jefferson, D-LA; Jo Bonner, R-AL; Carolyn Maloney, D-NY; Emanuel Cleaver, D-MO; Al Green, D-TX; Wm. Lacy Clay, D-MO; Edward Markey, D-MA; Lincoln Davis, D-TN; Rodney Alexander, R-LA; Donna Christensen, D-VI; Bennie Thompson, D-MS; Henry Cuellar, D-TX; Danny Davis, D-IL; Neil Abercrombie, D-HI; Jeff Miller, R-FL; Timothy Bishop, D-NY; Sheila Jackson-Lee, D-TX; Alcee Hastings, D-FL; Carolyn C. Kilpatrick, D-MI; Donald Payne, D-NJ; Corrine Brown, D-FL; Loretta Sanchez, D-CA; Steve Cohen, D-TN.

H.R. 920, the Multiple Peril Insurance Act, would create a new program in the National Flood Insurance Program to enable the purchase of wind and flood risk in one policy.

The bill requires premiums for the new optional coverage to be risk-based and actuarially sound, so that the program would be required to collect enough in premiums to pay claims.

Multiple peril policies would be available where local governments agree to adopt and enforce building codes and standards designed to minimize wind damage, in addition to the existing flood program requirements for flood plain management.

Any community participating in the flood insurance program could opt into the multiple peril option, but the greatest demand for the product will be in coastal areas that face both flood and wind risk from hurricanes and tropical storms. Insurance companies are withdrawing from coastal areas and forcing state-sponsored insurers of last resort to take on much more disaster risk.

The Multiple Peril Insurance Act would allow homeowners to buy insurance and know that their damage from both wind and water will be covered. This is primarily a concern after a hurricane where the worst destruction is caused by a combination of wind and flooding. Homeowners would not have to hire lawyers, engineers, and adjusters to determine what damage was caused by wind and what was caused by flooding.

This bill would set residential policy limits at $500,000 for the structure and $150,000 for contents and loss of use. Nonresidential properties could be covered to $1,000,000 for structure and $750,000 for contents and business interruption.

Once the program is enacted, a private insurance market should develop to offer coverage above the limits. This would allow insurance companies to design policies that would have the equivalent of a $500,000 deductible for residential properties or a $1 million deductible for nonresidential properties.

Section by Section of H.R. 920,
the Multiple Peril Insurance Act

Section 1. Short Title

“Multiple Peril Insurance Act of 2007”

Section 2. Flood and Windstorm Multi-peril Coverage

Adds a new program to the National Flood Insurance Program to enable the
purchase of insurance covering losses resulting from flood and/or windstorm;

Multi-peril coverage is available only where the local government has adopted standards designed to reduce windstorm damages; (Flood standards already required by NFIP)

No duplicate coverage with multi-peril coverage and NFIP flood coverage;

Multi-peril policy covers damage from flooding and/or windstorm without requirement to distinguish flood damage from wind damage;

Premiums must be based on risks according to accepted actuarial principles;

The Director shall issue regulations setting the terms and conditions of coverage;

Aggregate policy limits are as follows:

Residential Structures - $500,000 for single-family dwelling; $500,000 per dwelling unit for structures with more than one unit; $150,000 per unit for combination of contents and increased living expenses for loss of use;

• Nonresidential Structures - $1,000,000 for structure; $750,000 for combination of contents and business interruption coverage.

Section 3. Prohibition Against Duplicate Coverage

Adds the prohibition against duplicate coverage to the existing flood program.

Section 4. Compliance with State and Local Law

No new coverage for any property that is in violation of local building and zoning
requirements designed to reduce windstorm damages.

Section 5. Criteria for Land Management and Use

The Director shall carry out studies to determine the appropriate standards for windstorm damage prevention, and establish criteria based on those standards.

Section 6. Definitions

Windstorm is defined as any hurricane, tornado, cyclone, typhoon, or other wind event.



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Beyond the 9th Ward

As I sit here in the town of Bay St. Louis, Miss., one of several tiny coastal beach towns that comprise ground zero for the worst part of the worst natural disaster in the nation, I feel conflicted. The New York Times has published a lengthy article titled Road to New Life After Katrina Is Closed to Many. The article zeroed in on the difficulty of returning home after Katrina. Again, as has been the modus operandi from the beginning, the focus is on New Orleans alone and specifically on residents in the 9th Ward. This is an important heart breaking story. And herein lies my conflict.

The road home after Katrina is equally difficult for those who don’t live in the lower 9th Ward. A few weeks ago, I attended my niece’s 13th birthday party held at Rock ‘n Bowl in New Orleans. How wonderful to see a bunch of 13 year girls so confident, delightful, and vibrant. Their parents dropped them off, stuck around a while and chatted, then left and returned to pick them up when the party ended. One of the mother’s I met was yakking with me about having to go to the laundry mat. In New Orleans, “to yak” means “to talk.” Let’s get some cross cultural adaptation going here, ok? ;) Back to the yakking itself, she was so lovely. She and her husband’s home in Lakeview had many feet of water in it after the U.S. Army Corps of Engineers’ levees broke. Fortunately, they were able to buy a home a few blocks away that was untouched by the water.

Anyway, she was saying how awful it was for her because since the storm, she’s been having to go to the laundry mat to do the clothes. “At THIS age? Girl, you know, I didn’t work all my life to be going to a laundry mat to do my families clothes.” Oooooo. I told her that when I moved back to San Jose, California in 2002, one of my main criteria for renting was having a washer and dryer in my apartment. Period. I was not going to drag my clothes over to a laundry mat and sit there for hours waiting for a dryer, getting stuck using a dryer that hardly dried the clothes and ate up my coins like mad. And I’m only one person. I couldn’t imagine doing it for a family—mom, dad, and kids.

Now what does any of this have to do with a New York Times story about the 9th Ward and going home to New Orleans? My recent five part series focused on broadening the Katrina lens beyond it. The woman with whom I was speaking—I wish I could remember her name. It’s a terrible thing, I know, to not recall someone’s name. But, down here in the greater New Orleans area, which includes the very western part of the Mississippi Gulf Coast and in particular the towns of Waveland and Bay St. Louis (my home town, remember), we don’t remember names that well. Often, we’ll say something along these lines. “You remember the son of Ms Josie who is married to that beautiful woman whose sister works at the bank? Well her mamma’s good looking brother . . .” Not recalling people’s names may be the reason everyone calls everyone honey, baby, dahlin’, shuga, and sweetie.

A few years back, Bob, a boss of mine was going to New Orleans for some kind of work thing. I told him of this delightful cultural verbal habit of ours. Bob came back complaining that I had forgotten to tell him about the mosquitoes and gnats. Poor thing, his neck was raw from the bites. But, he perked up when he said that I was right. Even the big burly man behind the counter of a sandwich shop where Bob had gone for lunch called him “hon.” That’s part of the charm of the area. We don’t care if you really are good looking or ugly, fat or thin, old or young, or your race, ethnicity, or religion. If you talk with the locals, you’ll be called one of the terms named above.

Now where was I on that laundry mat story. Oh yeah. So, the woman with whom I was speaking? She and her husband live in Lakeview, which is the affluent neighborhood that is on the exact opposite economic spectrum of the 9th Ward. One other thing. She and her family are African American.

The media has not sufficiently told the story of the incredible hardships of the road home for New Orleans residents outside of the 9th Ward. And their hardships and stories are also important to know to understand the barriers to a full, vibrant and quick recovery.

Residential Contractors, a Scarce Commodity
Contractors are very, very difficult to come by. Finding a Contractor Like California Dreamin’ tells my mom’s story of looking for contractors to repair her home. The Times-Picayune, the daily paper in New Orleans, ran a story titled A Clog in the Line which told of the incredible hardship in finding a plumber in New Orleans. Over 18 months ago, my own brother bought a brand new hot water heater that he needed to install in his home. He has paid plumbers to come out to do the work, they didn’t show. He has asked others for quotes and they tell him, “We don’t give quotes, we give bills.” What?!

Clearly, the terse delivery of the message is rude and carries an arrogance that is unhelpful in this Katrina area where doing everyday normal things—such as getting a quote for installing a hot water heater—is like walking through glue. Only after many, many months of enduring this ridiculous lack of business etiquette did he learn that what plumbers are finding is that when they go into do a simple, routine job, one pipe after the other begins to crumble and fall apart. And so giving an accurate quote becomes incredibly difficult for the plumbers.

If I recall correctly, and I’m not sure that I do, the reason for the pipes crumbling is because the salt in the water that flooded the homes corroded the pipes. Something like that. It’s all Katrina related. That’s no excuse for the rudeness. Since the licensing process takes a few years to obtain in Louisiana, plumbers from other parts of the country who would love to donate their talent are prohibited from doing so.

The courts, jails, and child support
Recently, a friend of mine was telling me that she finally hauled her ex into court for his failure to pay child support. Life is tough anyway here in Katrina Land. Raising kids without the financial assistance of their dad makes life tougher. So what happened once they got to court? Well, under pre-Katrina days, he would have been put in jail. However, we don’t have a jail to put him in. He got a free pass for a few months. Without the leverage of jail time, this takes the teeth out of child support enforcement for those situations that require it.

So what’s my point?
The ravages of post-Katrina life in New Orleans and here on the Gulf Coast are difficult to manage. The impact is broad, wide, and deep. The impact of insurance companies like State Farm, Allstate, and Nationwide that apparently deliberately fail to live up to their financial contract on the wind policies of their homeowner customers is keeping money out of the very hands that need it to rebuild, to return home. For those that have some money to repair their homes and businesses, getting good contractors is an exceedingly rare commodity. Without money flowing into the city and county coffers be it from FEMA or insurance companies or tax revenues, local and county governments cannot rebuild basic buildings such as schools to educate children and jails into which to incarcerate parents who are deliberately failing to live up to their financial obligations to their kids even when they do have these financial resources.

That’s my point. Reputable media outlets like the New York Times must tell the whole story of the challenges that post Katrina life presents. From a strictly political perspective, this is how we bring about recovery faster. The more varied the stories, the more the entire picture becomes clear, the greater the opportunity for momentum to build. That is what is needed most of all: momentum outside of the Katrina-ravaged region regarding everything from Insurance companies failing to pay out on legitimate claims . . . to governments not being able to build schools and jails . . . to homeowners not getting the plumbers and other contractors they need . . . to building low income housing in the 9th Ward and throughout the rest of the Katrina area. This is a broader lens through which to see what needs to be done and what can be done to speed up a vibrant recovery.

Today’s political hell raising activity targets the New York Times. Let’s call and write the paper thanking them for investing the time and money to write the story and devoting the enormous amount of space in the paper itself to raise awareness about the continuing challenges of getting home after Katrina. When we talk with or email the paper, we’ll be asking the editors to broaden their lens to include the plight of those in the rest of New Orleans, its surrounding Louisiana cities, and the entire Mississippi Gulf Coast. We’ll again thank them for providing coverage to something that is important to healing the wounds of Katrina and the pathetic circumstances that the insurance companies’ failure to properly fund and the White House failure to provide appropriate leadership has created.

In this way, we’ll praise their coverage and encourage more articles as we direct their attention to additional stories they could explore beyond the 9th Ward.

Go here for today's political hell raising activities.

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FEMA funding for new schools in doubt

Ceremony held to transfer military base property

By LEIGH COLEMAN
SUN HERALD
July 12, ,2007

HANCOCK COUNTY --Education officials are sweating out a pending decision from FEMA that could throw a dark cloud over plans for two new elementary schools.

"This has really put a challenge out there for us," School Superintendent David Kopf said Monday of plans to build new schools in the south and north county.

The schools are planned for the Lakeshore and Leetown communities to replace the old Gulfview and Charles B. Murphy schools in the south county and add a new school in the north. Murphy and Gulfview were closed after Hurricane Katrina and would be replaced with South Hancock Elementary in Lakeshore. The new Leetown school, which would be called West Hancock Elementary, is planned because of rapid growth in the north county since the hurricane.

Both projects have been thrown in doubt by a recent FEMA memo that said the federal agency may not help fund any new public projects located in coastal high hazard areas. The old Gulfview Elementary site, where the new South County Elementary would be built, is squarely in such a location.

A non-fund decision from FEMA would endanger both projects because they were contracted as a package deal, with the bulk of the funding coming from FEMA compensation for the loss of Gulfview and Charles B. Murphy. A contract to build the new schools already has been issued to Roy Anderson Corp. for nearly $33 million.

Kopf said the school system had been working with FEMA on the new schools project for months. Then came the bad-news memo.

"Then, 22 weeks after, we get this memo saying they would not fund," he said. "They dropped that bombshell in our lap."

The school system sought help from Gov. Haley Barbour, Sen. Trent Lott, Sen. Thad Cochran and U.S. Rep. Gene Taylor. All have since been lobbying on the county's behalf to have the schools built with FEMA money. "We couldn't have asked for any more help," Kopf said.

Since the hurricane, students who previously attended Gulfview Elementary in the Lakeshore area and Charles B. Murphy in Pearlington have been bused for miles every school day. They have attended class in trailers behind Hancock Middle School, north of Interstate 10.

Kopf said he was communicating this week with Mike Womack, director of MEMA. Barbour has held discussions on the school funding with FEMA leaders in Washington.

Hopefully, a resolution may come soon, Kopf said. Until then, the futures of both new schools are suspended in doubt: "We're delayed on both fronts at this point."


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FEMA trailer park to remain open in Bay St. Louis

The Associated Press
July 11, 2007

BAY ST. LOUIS, Miss. --A FEMA trailer park on U.S. 90 near Hancock Medical Center in Bay St. Louis will remain open for several more months.

The City Council this week agreed to allow the Bay Village Trailer Park to operate until Jan. 31, 2008. It was scheduled to close on Aug. 31.

The Federal Emergency Management Agency had asked the city to allow the park to stay open until Jan. 31, 2009.

Bay Village was one of two parks in a one-block stretch until recently. A smaller park, on U.S. 90 to the east of Bay Village, was closed last week. In that location, FEMA had provided only pads for the trailers and did not operate a full-blown park.

Business owners have complained the park is a haven for criminal activity, including drug deals, burglary, prostitution and begging.

"This has been a major inconvenience to us," said John Rosetti, owner of Rosetti's Liquor Barrel.

Rosetti opened his store in a new building after Hurricane Katrina. He said residents of the park regularly commit crimes in the area and loiter in his parking lot, begging money from customers.

Even though police try to stay abreast of developments and FEMA-hired guards monitor an entrance gate and patrol the park, there seems to be no way to stop the crimes, Rosetti said.

FEMA representatives told council members that the park also houses residents who are not criminals. The also noted that a severe housing shortage in Bay St. Louis and Waveland means there is no place for trailer residents to go if the park is closed now.

FEMA representative Greather Heathcock said Hurricane Katrina destroyed 247 affordable apartments in Bay St. Louis and 496 apartments in Waveland.

"All we're asking for is an extension to give these apartments time to come back on board," Heathcock said.

Following the Aug. 29, 2005, hurricane, Bay Village was opened for employees of the John C. Stennis Space Center who had lost their homes. However, these residents soon moved on because relief programs sponsored by the Navy and other federal agencies became available. The trailers were then occupied by storm victims from various areas.

Phil Strouse, FEMA's local government liaison for Hancock County, said the federal agency eventually plans to start charging rent to storm victims who remain the trailers.

"Then, they're going to be paying $100 to $150 a month to live in a tin can," he said.


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Road to New Life After Katrina Is Closed to Many

Lee Celano for The New York Times
Gwendolyn Marie Allen lives in a FEMA trailer near Baton Rouge with her son, who has schizophrenia, and her severely retarded brother, right.

CONVENT, La. — This was not how Cindy Cole pictured her life at 26: living in a mobile home park called Sugar Hill, wedged amid the refineries and cane fields of tiny St. James Parish, 18 miles from the nearest supermarket. Sustaining three small children on nothing but food stamps, with no playground, no security guards and nowhere to go.

No, Ms. Cole was supposed to be paying $275 a month for a two-bedroom house in the Lower Ninth Ward — next door to her mother, across the street from her aunt, with a child care network that extended the length and breadth of her large New Orleans family. With her house destroyed and no job or savings, however, her chances of recreating that old reality are slim.

Read the New York Times story.

The end.
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Attorneys who won punitive damages verdict settle State Farm cases

By ANITA LEE
calee@sunherald.com

BILOXI --The attorneys who won a punitive damages verdict against State Farm Fire & Casualty Co. earlier this year have settled their remaining Hurricane Katrina lawsuits with the insurer.

"Obviously, the terms are confidential, but we were pleased to avoid costly and lengthy litigation which is in no one's interest," State Farm spokesman Fraser Engerman said. "This is another example of our goal to resolve matters quickly so that we can continue to assist with the rebuilding of the Coast."

Biloxi attorney Jack Denton told the Sun Herald he and attorney William C. Walker Jr. finalized the settlement Friday morning of 18 lawsuits filed against State Farm. Two of those cases were set for court later this month. While Denton could not discuss specifics of the settlement, he said the specter of punitive damages against the insurer played into the negotiations.

"We finally got a little relief," Denton said. "We're pleased that we were able to get our current State Farm cases resolved. What it indicates to me is that we have finally reached some middle ground with State Farm that has created a basis on which we can settle our State Farm cases."

More than 200 lawsuits are pending against the insurer in U.S. District Court. Evidence unearthed so far indicates State Farm denied payments for wind damage in coastal areas also subjected to tidal surge. State Farm relied on a clause in its policies that purports to say wind damage is not covered when water contributes.

Under pressure from state officials, and with an unfavorable court ruling early in the year, the insurer is now re-evaluating claims and offering wind damage payments to policyholders whose property the storm swept away, leaving only slabs or pilings. The insurer also will review the claims of other Coast policyholder who request it.

State Farm, the state and nation's largest property insurer, has about 35,000 customers in the three Coast counties. The company has paid more than $1.2 billion for hurricane damage statewide.

Its claims re-evaluation process is being overseen by Mississippi Insurance Commissioner George Dale, whose office is investigating how the insurer handled Katrina claims because of consumer complaints.

Denton said that he and Walker will continue to take State Farm cases and hopefully will be able to settle them without a trial, too. The law firm still has cases pending against Nationwide, USAA and Allstate.

Denton and Walker tried the first Katrina case against State Farm in January, winning policy limits for a Biloxi couple who lived near the waterfront. State Farm denied their claim without proving that water, excluded from coverage, caused the loss. At trial, State Farm conceded that wind could have caused some roof damage.

U.S. District Court Judge L.T. Senter Jr. awarded Norman and Genevieve Broussard policy limits, saying a jury decision was not needed because State Farm had failed to meet its burden of proof. The jury then awarded the Broussards $2.5 million in punitive damages, concluding State Farm had denied the claim in bad faith.

Senter later reduced that award to $ 1 million.

State Farm is appealing that case to the U.S. Fifth Circuit Court of Appeals.



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Drowning in Millions: State Farm, Allstate CEO Pay

Mississippi’s Insurance Commissioner George Dale said Katrina was "the worst natural disaster in U.S. history . . . and put an undue burden on insurance companies.” Oh yeah? Is that how Dale characterizes the obscene tens of millions dollars that State Farm and Allstate paid their CEOs in 2005 and 2006?

As Dale well knows, the company’s financials prove otherwise.

The Insurance Industry Institute pegged the industry's profits at $108 billion for 2005 and 2006. These profits are after companies paid taxes and Katrina claims they didn't pay. These profits are after companies paid out normal expenses such as employee income and benefits. These profits are after companies paid out extraordinary expenses such as their CEOs obscene compensation packages.

These execs denied legitimate policyholder claims stemming from Hurricane Katrina's wind damage. Company memos directed its employees to deny wind claims where ever so much as a drop of water was involved in the damage. [See Wind? Water? More like a Bunch of Hot Air! Also view these insurance documents on the website of Congressman Gene Taylor (D-MS). ]

Collectively the insurance companies sent our government's federal flood insurance program a $23 billion bill, the percent of which is fraudulent is yet unknown. For deliberately hurting Katrina survivors, these CEOs have been handsomely paid. In fact, I'd say that their pay has them drowning in millions. This year, State Farm increased the salary of its CEO by 82%.

"Chairman and Chief Executive Officer Ed Rust Jr. got a $5.26 million raise. He earned $11.66 million in 2006 with a base salary of $1.77 million and results-based bonus of $9.89 million, the statement said. Rust made $6.4 million in 2005 and $5.5 million in 2004." -- Insurance Journal

Photo on State Farm Website

Ed Liddy has been "[c]hairman of The Allstate Corporation since January 1999. Mr. Liddy previously served as Chief Executive Officer from January 1999 until December 2006 . . . .” Allstate’s SEC Records Photo by Business Week.

Forbes Magazine reported Liddy’s total compensation for 2006 to be $18 million, and his 5-year compensation total to be $70 million. In 2005, Liddy’s compensation total was $27 million.

When it comes to bloated salaries, these gentlemen are in good hands with their respective companies. All that money didn't buy them ethics, decency, or integrity though. Instead, they acted as really bad neighbors toward their Katrina area policyholders. As for George Dale, he is acting in accordance with his reputation as a bought and paid for political hack of the industry.

M. Dale, if you will kindly look in a mirror, you’ll find the undue burden staring you right in the eye.
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Katrina's Karmic Payback: Insurance Reform

This is the fifth in a series of five to help the Democratic Party, particularly its presidential hopefuls, to get the framework right, to broaden its lens through which it views Katrina, what’s stopping recovery, what will speed up a vibrant recovery, and how Katrina affords us the opportunity to transform the basic quality of life for all Americans.

We all know that small and large businesses are choking on skyrocketing health care costs. The other day, a friend of mine said that his tiny company just wrote out a $44,000 check to cover the annual costs of its seven employees and their families. The other employees are covered through the insurance benefits of their respective spouses. Without businesses covering the costs, however, families are often going without attending to their health care needs to the tune of 47 million in 2005, according to the Census Bureau. This is a national crisis.

These aren’t the only insurance costs that are hurting us. Worker’s comp costs are also skyrocketing and hurting businesses in their pocketbook.

What is less well tracked, however, is the national crisis of insuring our homes—the most valuable asset for most families. News reports inside Katrina Land have revealed rate increases or rate increase requests from 23 to 400%. Inside and out of this Katrina-ravaged region, companies are either jacking up their premiums or refusing to write new policies altogether.

In May of this year, CNN Money reported that Allstate “the largest home insurer in the United States, said it would no longer write new homeowner policies in California, marking another reduction in its property coverage nationwide. . . . The carrier recently announced it would no longer write new homeowner policies in Florida, Connecticut, Delaware and New Jersey and in certain counties in the Atlantic and Gulf Coast regions.” California is the fifth largest economy in the world and accounts for one-eighth of the U.S. economy. Yet, Allstate is closing shop.

Homeowners have one less company from which to purchase their much needed homeowner insurance.

In February of this year, State Farm quit writing new homeowner policies in Mississippi. Back in 2002, State Farm’s moratorium on writing new homeowner policies included “Oklahoma, Arkansas, Kansas, Louisiana, Missouri, Texas, California, Montana, Oregon, Washington, Idaho, Hawaii, Alaska, Maryland, West Virginia and North Carolina. The company ha[d] also restricted activity in Arizona, New Mexico, Colorado, Utah, Nevada and Wyoming.” Just like a good neighbor, right?

When State Farm stopped writing homeowner policies in Oklahoma in June of 2002, its “policies represented 27 percent of the homeowner insurance market“ in that state. That same year Allstate “implemented a 35.2 percent rate increase on new homeowner policies” for its Oklahoma customers. You know those homeowners felt they were in good hands.
Regarding its 2002 decision to stop writing new homeowner policies in Oklahoma, State Farm’s company’s spokeswoman said "These changes are not a short-term fix. It will take time for us to regain our profitability." Since the company is a private entity, it is not required to publish its financials.

What we DO know is some one is making money. The industry posted $108 billion in profits in 2005 and 2006. What we DO know is that insurance companies deliberately directed its workers not to provide benefits under a policyholders wind policy even when wind caused damage to the Katrina-ravaged homes and businesses. [See Wind? Water? More like a Bunch of Hot Air!]

What we DO know is that the National Oceanic and Atmospheric Administration has told us that “[p]opulations 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 local governments as they promote safer and smarter development along the coast.

What we DO know is that Congressman Gene Taylor (D-MS), who lost everything in Katrina and only recently settled with his insurance company who had originally offered him and his wife . . . not . . . one . . . penny, testified before a congressional committee stating, “In response to the fact that the insurance industry apparently no longer wants to cover 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 has introduced the Multiple Perils Insurance Act of 2007, H.R. 920, which amends the National Flood Insurance Program to cover all natural perils. It is coming up for discussion in a few weeks at the same time the National Flood Insurance Program comes up for reauthorization. Taylor’s law will help tremendously.

Another major problem with the insurance industry is that it is only one of two industries exempt from the nation’s anti-trust laws. You know the laws that make it so you can’t do bid rigging and price fixing.

What we DO know is that the Senate’s Democratic Leaders have put together legislation to strip the insurance companies of its 62-year old exemption, and U.S. Senators Mary Landrieu (D-LA) and Senate Minority Leader Trent Lott (R-MS) are among its co-sponsors. This proposed law will finally make price-fixing behavior in the insurance industry illegal. The companion bill in the House is H.R. 1081.

What can WE do with all that we know?
The first thing we can do is to tell ourselves and each other that the time has come for us to end our propensity for political cynicism. Our knee-jerk cynicism grants us a momentary ego boost, but it has a decidedly detrimental impact to everyone including ourselves.

Clearing away our cynicism, however, allows us to recognize that rearranging the furniture as the building burns around us is, well, stupid. Its only real contribution is to paralyze us which prevents us from taking appropriate action.

However, clearing away our cynicism frees us up to be in a position to learn how to be politically savvy, smart, and sophisticated so that we can make our dreams come true inside the complex world of American politics. We do this one day at a time as we keep our eye on the prize and adjust our strategies and tactics as needed to achieve our goals.

Because we’re adults, we understand that some things take time, effort, and persistence.

“What being an adult means is knowing what you have to do and doing it, even though you may not feel like doing it.”

Robert T. KiyosakiRich
Dad’s Cashflow Quadrant

This definition applies to everything including politics. As we clear away our political cynicism, we will find a renewal of our spirits, our creativity, and our intellectual capitol all of which we need to be successful in any endeavor including political hell raising as we are inclined to do here at A.M. in the Morning!

Today’s Political Hell Raising Opportunities
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.

In addition, let’s drown out the insurance industry’s opposition by calling and emailing our two U.S. Senators and our congressional representative to express our support to end the insurance industry exemption from laws that prohibit their ability to price fix, etc.

As usual, A.M. in the Morning! provides contact information and email letters as well as phone scripts and access to telephone numbers of your two U.S. Senators and congressional representative.

Thoughts on Katrina’s Bigger Picture
Katrina was a tragedy of epic proportions. The storm itself destroyed our Mississippi Gulf Coast. The levees that the U.S. Army Corps of Engineers had built failed to protect New Orleans. Clearly, shoring up those levees in a world class way is paramount. Through Katrina, we have learned that 28 additional states place Americans in New Orleans-like danger in 120 locations throughout the country. Each of these is unacceptable.

Nationally, we must commit resources to invest in world class levees throughout our nation to ensure that we protect our nation’s families, businesses, and communities against the danger of repeating the man-made disaster in New Orleans.

Committing to world class levees throughout our country infuses our own economy in ways that have been absent ever since Bush and Cheney moved into our White House six and a half years ago. With a renewed focus on math and real science, we can also breathe new life into all facets of our educational system. Finally, implementing a world class levee system across the country can further assist our commitment to environmental sanity.

In the wake of Katrina’s devastation, insurance companies fraudulently denied the claims of legitimate policyholders who sought payment on their wind policies. The result of the insurance industry’s deliberate denials of these claims has been to create a mounting financial crisis throughout the Katrina-ravaged region. Since the insurance industry is begging off of protecting America’s homes against wind damage just as it did with flood coverage in the 60s, we must expand our nation’s Federal Flood Insurance Program to cover all natural perils.

However, this is part of an ever expanding crisis with our insurance industry. We now add to skyrocketing health care and worker’s compensation costs, the costs of protecting the single asset that is central to how many of us define the American Dream: our homes. The time has come for insurance reform.

To be competitive in the world, our businesses need insurance reform. To run efficiently while providing all the services and programs we expect from our government, our towns, cities, states and federal governments need insurance reform. To protect our health and our homes, our families need this. The insurance execs can think of it as paying off Katrina’s Karmic debt. Anyway you slice it, insurance reform . . . it’s good for America.

Broadening Katrina’s Lens:
A five Part Series
Part 1: Broadening Katrina's Lens
Part 2: Recovery’s Two Major Impediments: $$$ and the “F” word
Part 3: The "F" Word: FEMA
Part 4: Katrina’s Bigger Picture
Part 5: Katrina’s Karmic Payback: Insurance Reform

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Were insurers crooked bookies?

Letter to the Editor

Reading comments from some observers of the post-Katrina insurance drama can become downright painful. Trying to characterize the Scruggs Katrina group as Morris Bart attorneys would be laughable if it wasn't so sad.

State Farm and Nationwide committed no less than fraud against thousands of legitimate policyholders. I would encourage anyone to drive to Bay St. Louis and observe how, after nearly two years, an overwhelming majority of the beachfront homes and surrounding areas remain empty lots.I deliberately mention the beachfront homes, because it automatically eliminates the ignorant comments I have read by those who suggested FEMA owed nothing to the lower-income residents who should have 'fended' for themselves.

They read the hype about "over-payments" and fraud cases and allow this to disguise how inefficient and unresponsive that agency became after one of the most devastating natural disasters in U.S. history.These beachfront homeowners are an important demographic, because they illustrate the sad reality that honest, legitimate paying insurance customers were worse off than renters once Katrina's storm surge had passed.

Once these insurance companies lost the great Katrina bet, they operated like crooked bookies and effectively hid behind the ambiguous language within their policies to defraud their clients.
I would have no problem paying my attorneys whatever percentage they wanted to go after that insurance company. I encourage you to share your outrage with the residents on the coastwho will still be living in more than 20,000 FEMA trailers on the two-year anniversary of Katrina on August 29. You can be the guests of honor at their celebration.

Dominic Haberman
Hattiesburg

Letter to the editor
Hattiesburg American
Hattiesburg, MS
(1.5 hours from Bay St. Louis, going northeast
Katrina hit Hattiesburg, too.)

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