Insurance Transparency Project

I-Fans,

Sisters ordered to return papers
They’re caught between lawsuit and grand jury investigation

In a blow to transparency, the two whistleblowers alleging a State Farm contractor tampered with engineering reports to help the insurer deny or minimize claims were ordered to return 15,000 records to their former employer, E.A. Renfroe & Co., a Birmingham, Ala., adjusting firm.

Senior U.S. District Judge William M. Acker Jr., in the Northern District of Alabama (Birmingham), ruled that Kerri Rigsby and her sister, Cori Rigsby Moran, violated confidentiality agreements in copying the records and carrying them to Dick Scruggs and Mississippi Attorney General Jim Hood, who has convened a grand jury. As the terrific Anita Lee of the Pulitzer-winning SunHerald writes, the ruling puts the sisters in a legal quandry. Obeying Acker’s order might entail violating grand jury secrecy rules. They have 30 days to decide. State Farm and Renfroe deny wrongdoing.

ITP favors records in the public domain, especially those shedding light on insurer conduct post-Katrina, and is disappointed, though not discouraged, by Judge Acker’s ruling.

http://www.sunherald.com/mld/sunherald/news/local/16226941.htm

But that’s not what I want to write about today.

Democratic Sen. Tim Johnson Falls Ill, Undergoes Surgery

Nor will I write about the unfortunate stroke suffered by the South Dakota Democrat, except to note that the senator is a co-sponsor with Sen. John Sununu, R-N.H., of the National Insurance Act of 2006, a very important bill that has a big chunk of the industry’s support and leaves advocates cold, to say the least. More on that later.

http://www.washingtonpost.com/wp-dyn/content/article/2006/12/13/AR2006121301509.html

In fact, ITP just wanted to direct your attention to the Bob Herbert column in today’s NYT. No link provided because you have to pay, and as a newsman, I think people should pay $49 a year for news. If ITP can afford it, you can.

Herbert visited Louisiana trailer parks run by FEMA and finds “encampments of profound stress and sadness.”

“More than a year after the catastrophe of Hurricane Katrina, thousands of the poorest victims from New Orleans are still living in these trailer parks run by the Federal Emergency Management Agency. They have ironic names, like Mount Olive Gardens and Renaissance Village. A more accurate name would be Camp Depression, after the state of mind of most of the residents.”

Herbert doesn’t say how many thousands, but an AP story around Thanksgiving put the figure at 99,000 families, up from 34,000, as other temporary solutions ran out.

I-Folks, that’s a lot of people.

Not to be callous — just the opposite — but ITP sees a reporting opportunity. Because of the scale of the catastrophe, the relative density of the areas hit, the number of government agencies at work, the current political landscape and the sheer amount of money at stake — not to mention the growing insurance sophistication of Gulf-area residents and policymakers — Katrina has created an important, if fleeting, insurance laboratory. Courts are jammed with records. Whistleblowers are blowing hard — and not just the sisters. Scruggs and his very elaborate operation is acting like insurance in 2006 was tobacco in 1986. The Louisiana Recovery Authority is gathering data on more than 120,000 insureds because it may have to make good on their claims.

And, ITP has decided it likes this story.

Thousands of former home-dwellers now living right next to each other would be perfect for a door-to-door survey asking how many are policyholders and what happened with their claims. Seems rudimentary? Maybe. But there is nowhere else to get this kind of data and may never be again.

Whatever the U.S. insurance industry’s problems — and ITP believes these do exist and include excessive secrecy and chopped-up state markets — their effects are on display in Louisiana and Mississippi right now.
No Notes! tomorrow. ITP will be on the move, unfortunately, not to the gulf.