A recent study by two trial lawyer groups makes inflammatory statements about how insurance companies handled customers and their claims after Hurricane Katrina.
The Academy of Florida Trial Lawyers and the Association of Trial Lawyers of America released a report entitled, “Pattern of Greed: How Insurance Companies Put Profits Over Policyholders,” that purports to show how the insurance industry has made a practice of collecting billions of dollars from policyholders only to deny claims made after natural disasters and report record profits.
The report theorizes on the origin of the phrase, Great New Orleans Flood, claiming its use by insurance groups and companies began shortly after Hurricane Katrina in a concerted effort to begin inferring that flood damages would not be covered. Flooding is a peril usually excluded from most homeowners' policies; separate coverage must be purchased through the government-sponsored National Flood Insurance Program.
The report also alleges fraud by some insurance companies, pointing out that Mississippi's Attorney General Jim Hood has accused some adjusters of trying to trick Katrina victims out of millions of dollars in homeowners' claims by having them sign documents saying that damage was caused by flooding.
However, a poll conducted by IPSOS Public Affairs found that 82 percent of homeowners in Louisiana and 80 percent in Mississippi who filed a hurricane-related claim are satisfied with the way their claims were managed by their insurers. According to the poll, even though satisfaction numbers are slightly higher inland, most residents in the hardest-hit coastal areas describe themselves as being satisfied with the way their claim was handled.
Furthermore, the Insurance Information Institute (I.I.I.) estimates that fewer than two percent of homeowners' claims in both Mississippi and Louisiana are in dispute, either through mediation or litigation. More than 80 percent of mediation claims have been resolved successfully in Mississippi and 77 percent in Louisiana.
“Despite the attention focused on lawsuits seeking payments for flood damage under homeowners' policies where no coverage exists, the number of claims in litigation accounts for a very small percentage of the total number of claims filed,” said Dr. Robert Hartwig, executive vice president and chief economist of the I.I.I.
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