Hood, Scruggs try to settle with insurers
I-Fans,
When can good news for policyholders be bad news for transparency? This story answers the question.
I’m all for policyholders getting paid what they are owed (and no more) as quickly as possible. That’s the point of insurance, and these people didn’t sign up for a crusade. I really don’t know about the merits of the Scruggs claim that storm surge is not a flood, but an integral part of a hurricane that should be covered under most homeowners’ policies. Regular Notes!(TM) readers know that ITP doesn’t see the benefit to insureds or taxpayers of dividing up perils in the first place. ITP believes lawyers mainly benefit from that public-policy turkey.
But insurers are clearly feeling some pressure, as this terrific Anita Lee scoop in the Sun Herald makes clear.
On Tuesday, U.S. District Judge L.T. Senter, of Pascagoula federal court, sent a civil case brought by Attorney General Jim Hood back to state court in Hinds County, Miss., a victory for Hood. But ITP believes the key is found in this Lee paragraph:
“Hood believes his state court case and a favorable political climate in Washington will motivate insurers in the settlement negotiations. He pointed out that U.S. Rep. Gene Taylor and Sen. Trent Lott, both suing State Farm over their homeowner claims, plan to pursue insurance reform.
A settlement might soften the mood for reform, Hood indicated, including a call to remove the insurance industry’s exemption from antitrust laws.”
I-Fans by now are getting the meaning of all this.
Listen, ITP doesn’t necessarily want insurance reform, surge claims to be paid, the industry to lose its anti-trust exemption, the repeal of McCarran-Ferguson or federal regulation. ITP doesn’t necessarily not want those things either. ITP doesn’t know enough.
ITP wants to know what happened. Have insurers behaved basically like “child molesters,” as Taylor and other public officials and citizens, including Hood, Lott, many policyholders and even Commissioner Dale, as well as Louisiana Sens. Julie Quinn and James David Cain and many, many others in Louisiana have said, if not as vividly? Or is everything basically OK given the horrific circumstances, as my pal Bob Hartwig of the Insurance Information Institute, Allstate and many others say.
ITP knows only one thing: Both represenations of reality cannot be true.
Let’s get the freakin’ data. It’s out there. How can you reform something if you don’t know anything? What did people get paid per policy? Per amount they believe was owed? What is the Louisiana Recovery Authority finding in the 120,000 claims it is taking on? What’s in the 15,000 records the two sisters turned over to Scruggs and Hood? What’s in the Oklahoma records? What did State Farm Chairman and CEO Edward B. Rust Jr. say in his testimony? What do juries think of individual policyholders’ claims that insurer claims denials were peremtory, systematic and illiegal?
What ITP wants is a reasonable examination of insurer performance after Katrina. ITP believes its interest is in the public interest. Such is ITP’s chutzpah(1), it believes its interest is the public interest. And don’t even get ITP War Eagle started on this topic. Good thing he’s off chasing mice at the moment.
Look, Katrina was really big, but it wasn’t unique. It was a natural catastrophe, the kind for which we have insurance in the first place. ITP hasn’t had time to study all this, but it is aware that similar controversies over insurer performance have occured, like clockwork, after most major “nat cats” (2) since Hurricane Andrew in 1992, including the Northridge Earthquakes in California in 1994, the 1999 Oklahoma tornadoes (that’s actually no longer a controversy; a jury found against State Farm), Sept. 11, Hurricanes Isabel (2003), Ivan and Frances (2004) and now Katrina.
And as regular Notes!(TM) readers know, ITP believes Katrina puts on display important insurance industry issues that extend far beyond the Gulf of Mexico and way, way beyond homeowners’ insurance.
Paying Mississippi policyholders is good, but ITP isn’t really sure that solves anything.(3)
(1) Don’t play dumb, Ohio Muse.
(2) Hipster insurance lingo.
(3) Annoying editorial-page-type understatement.