USAA Defends Its Katrina Response Against Comments by Miss. AG Hood
NatCats and MMDs(1),
A quick one today to highlight a press release in which USAA, the Automobile Association, seeks to distinguish itself from State Farm.
“In response to a recent pending settlement involving State Farm Insurance, certain victims of Hurricane Katrina and the State of Mississippi, USAA or United Services Automobile Association, came forward to define what it says is a difference between it and State Farm.”
What’s the difference?
“According to USAA, when it adjusts claims in which there is both wind and flood damage, it pays for damage that was caused by wind.”
Uh. Hmm. Just a minute while War Eagle adjusts his reading glasses.
” ‘This approach has served our members well and we will continue to use it until the last hurricane Katrina claim is closed,’ said USAA Spokesman David Snowden.”
What other approach can there be? Well, read on:
“USAA also disagrees with Hood’s contention that USAA handles claims like State Farm does, and that USAA should enter into a settlement with the AG based on his claim.
‘From day one, USAA has adjusted Hurricane Katrina claims responsibly, and we will continue to do so until every claim is closed,’ Snowden said.
Ok, If I’m State Farm, those are fighting words.
” ‘According to media reports (Times Picayune, LA eyes State Farm case), State Farm reportedly declined coverage for both wind damage and water damage if any damage to a residence was due to flooding.‘ “
Snowden said USAA’s approach is to evaluate each claim individually and on its own merit. He said when USAA adjusts claims in which there is both wind and flood damage, the company pays for damage that was caused by wind.
The point? Come on, readers of ITP already know. Let’s assume USAA did do “better,” or performed more “irresponsibly,” if that’s your perspective. That is to say, it paid more per policy than State Farm. If the market could see the numbers for itself, USAA wouldn’t have to issue press releases.
However, at the bottom of its release, USAA issues a very useful piece of data. It says it paid $217 million to 17,000 policyholders, that’s $12,000 each. In the Scruggs litigation, evidence has emerged that State Farm paid $800 million in wind claims to 80,000 policyholders. That’s $10,000 each.
Those are small numbers, not enough to rebuild a house or jump start redevelopment.
So no one is popping champagne corks down there. For all I know those figures support insurers’ arguments that most of the damage was caused by water. But at least things are bit more visible. Why all this is a state secret is beyond me.
Thanks, again, to Ida.
(1) “Natural Catastrophes and Man Man Disasters,” my favorite Swiss Re publication. Read it on the “key documents page.”