Katrina Victims Still Fighting Insurance Companies
NEW ORLEANS, LA; BILOXI, MS -- June 16, 2006 -- A new hurricane season is upon us, yet many Hurricane Katrina victims are still waiting for payments from their insurance companies for last year's disaster. In 2005, there were five major hurricanes nationwide, resulting in $57.3 billion in insured losses, with $40.6 billion from Hurricane Katrina alone (ISO, Fact Sheet, Catastrophic Losses). Louisiana had about $24.3 billion in insured property losses, but according to the latest statistics from the Louisiana Department of Insurance, only $12.5 billion has been paid out in the state.
Part of the problem is how insurance policies define losses--some only cover those caused by wind, but not by flood, for example. The insurance companies have been ingenious at making fine line distinctions between the two types of damage, leaving homeowners to foot the bill. Some consumers say that companies may have gone even further, doctoring reports or just ignoring telephone calls and claim forms.
After receiving numerous complaints from insured homeowners, the Louisiana Department of Insurance recently began examining the conduct of Allstate and St. Paul/Travelers in regard to Hurricane Katrina claims (Press Release, May 17, 2006). Last year, the Mississippi Attorney General, Jim Hood, filed a lawsuit against five insurers because their policy provisions attempted to exclude Hurricane Katrina losses. The insurance companies also required hurricane survivors to sign unfair waivers in order to receive living expenses, the lawsuit charged. In March of this year, Mr. Hood issued a notice suggesting that insiders step forward to help with his investigation of fraudulent denial of insurance claims.
A lawsuit filed in Mississippi federal court by 669 Gulf Coast homeowners accuses State Farm Insurance of using biased and preplanned reports as a way to refuse coverage for homes damaged by Hurricane Katrina (Tulsa World, May 27, 2006). The suit claims that the company used a "one-size-fits-all" engineering report, but neglected to truly investigate whether hurricane-force winds were responsible for the damages. One former State Farm employee has claimed that the company shreds reports and documents that do not comply with its conclusions (Sun Herald, June 6, 2006).
What is particularly upsetting to many consumer groups is that insurance companies seem to be in fine shape, while hurricane victims continue to suffer. The insurance industry has $401.8 billion in surpluses, which could be used to meet its financial commitments to homeowners with hurricane damages, according to the group People Over Profits. Also, insurance industry profits have greatly increased over the last three years.