Anyone who thought the fallout from Hurricane Katrina would pass by now was sadly mistaken. Trial lawyers are still hammering away at carriers for leaving many policyholders with both wind- and water-related claims up the creek, and some fear a long-term impact on how catastrophic claims are litigated. I tend to agree with the pessimists. I always expect the worst when it comes to the industry's reputation, and I am rarely disappointed.
The day before this week's second anniversary of the day Katrina struck, the American Association for Justice–a group of plaintiff attorneys masquerading as an objective organization–put out a 15-page diatribe whose title said it all: Pattern of Greed 2007: How Insurance Companies Put Profits over Policyholders.
The group charged insurers with systematically denying policyholders fair and just” payment on their Katrina claims. (You can read our complete news story on the report by clicking here, and you can access the full report by clicking here.)
While the insurance industry is enjoying record profits, thousands of people continue to live in FEMA trailers and other temporary housing, waiting for their policies to be honored, said AAJ Chief Executive Officer Jon Haber.
It is a sad and shocking fact that after every natural disaster, insurance companies adopt a pattern of delaying and denying the payment of just and fair claims, he added. We urge state governors and insurance commissioners to investigate this outrageous behavior and take action against it.
Time after time when a major disaster strikes, Big Insurance puts its profits ahead of its policyholders, according to Mr. Haber. No region of our country is immune from natural disasters, so every American is at risk of being victimized by their insurance company as we have seen after hurricanes, tornados and earthquakes. The insurance industrys denial of fair and just claims to Katrina victims should be a wake-up call for all Americans.
In the “he said, she said” world of objective journalism, the industry had a chance to comment, but whether anyone was listening or buying it is another story.
Robert P. Hartwig, president of the Insurance Information Institute, called the report a great piece of fiction” and said the notion that insurers are greedy is absurd. He added that the insurance industry performed admirably in the wake of Hurricane Katrina, paying $41 billion in insured losses on 1.7 million claims.
Later, the Institute, along with three other insurance associations, put out a joint statement, calling the AAJ report part of a deliberate effort to pad the pockets of the lawsuit industry by drumming up litigation and high jury verdicts. The various trade groups refuted criticism of the industry point by point, but again, I doubt that got much press outside of the insurance media.
You may be tempted to say this, too, shall pass. Indeed, some defense attorneys believe that in the grand scheme of things, not much will change in terms of how people will react in future windstorms.
However, other attorneys are far more cynical, believing that Katrina suits challenging the longtime flood exclusion will lead to more such litigation down the road. Indeed, the flood exclusion itself might be at risk.
To read more about this exchange of attorney views, click here. And please feel free to offer your views on this dicey subject.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
