"We have received from our congressional colleagues who represent the Gulf Coast serious allegations of a failure in the insurance system to serve the purpose for which it was intended," said Reps. Frank and Watt. "We believe these allegations deserve appropriate attention, and our committee will be looking into these charges."

A representative for the panel said the committee hasn't determined how it will deal with the issue, and that a decision won't be made until next month because the committee is still organizing itself.

"This development is not unexpected," said Joseph Annotti, senior vice president of the Property Casualty Insurers Association of America, who added that "PCI will work with Chairman Frank and other members of Congress to make sure they get answers to all their questions about the industry's post-Katrina performance."

Mr. Annotti said the industry is "proud of the role insurers are playing in rebuilding the Gulf, and [we] are always willing to discuss ways that we can work more cohesively with state and federal legislators to improve the way our nation prepares for, responds to, and recovers from future natural disasters."

Dennis Kelly, a staff official with the American Insurance Association, echoed those sentiments, stating that AIA, "as we have in the past, will work with Chairman Frank to the extent that the House Financial Services Committee explores issues related to natural catastrophes and Katrina."

Rep. Taylor has repeatedly criticized the insurance industry over the handling of hurricane damage claims. In his letter to Rep. Frank, he said that "despite billions of dollars of federal assistance, South Mississippi's recovery is obstructed by the actions of private insurance companies."

Rep. Taylor has filed suit against State Farm over damage to his own Gulf Coast home from Hurricane Katrina.

His letter called for the committee to investigate what he calls "the denial of claims wherever insurers could blame flooding," as well as "excessive premium increases, market withdrawals and other actions to force states to make concessions or assume more coastal risks."

In his letter, Rep. Taylor said Sen. Trent Lott, R-Miss.--whose home was also destroyed by Katrina, and who is also suing State Farm--noted that language mandating a Government Accountability Office study of Katrina wind and water claims adjustments passed as part of a Homeland Security Appropriations bill. The report must be delivered to Congress by April 1.

"I ask that you not wait until then to begin the committee's investigation," Rep. Taylor wrote. "It is clear that the insurance companies have a conflict of interest when allowed to assign damages to the federal flood program rather than to themselves."

"It is clear that the insurance companies have a conflict of interest when allowed to assign damages to the federal flood program rather than to themselves."

Rep. Gene Taylor, D-Miss.