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Whistleblowers Accuse Insurers of Bilking NFIP

A whistleblower lawsuit filed last year by several former insurance adjusters in a U.S. district court in Louisiana has been made public.

By Eric Gilkey | Updated on July 03, 2007

A whistleblower lawsuit filed last year by several former insurance adjusters in a U.S. district court in Louisiana has been made public, and it accuses several major insurers of over-billing the National Flood Insurance Program for Hurricane Katrina flood damages that should have been classified as wind damages.

Since flood losses are not covered under most homeowners’ policies, any losses attributed to flood would theoretically limit the amount of money insurers would have to pay. According to the complaint, the adjusters — who are identified only as Branch Consultants — say they inspected hundreds of properties and gathered evidence to show grossly inflated flood losses followed by underreported wind losses (see sidebar, end of article). Reports said that the adjusters had direct knowledge of the scheme to defraud the federal government, which is why their names are not being released.

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