Insurance Transparency Project

Insureds,

Casting modesty aside, I offer this story by Anita Lee about the ITP in yesterday’s Sun Herald; this marks the War Eagle’s first mention in the mainstream media.
More from the unstoppable, the courageous, the beautiful Lee (see, this is what’s known as a “liberal media conspiracy”) and the Times-Picayune’s indomitable Mowbray — together at last via the miracle of The Insurance Transparency Project, sponsored by The Open Society Institute.

Anita, who is based in Gulfport, Miss., is writing about State Farm’s decision to reopen 350 slab cases in Louisiana. Becky, based in New Orleans, writes about a Mississippi trial lawyer speaking to his Louisiana counterparts.

The point here is that Katrina is all one story, and it’s part of the bigger picture that is the U.S. insurance industry.

The State Farm decision to reopen 350 Louisiana cases comes after Louisiana insurance officials very reasonably complained that State Farm — under force of litigation from Scruggs et al. — had already agreed to open 35,000 cases in Mississippi.

As Lee writes:

“(I)n areas subject to tidal surge, the company covered wind damage only if it was “separate” and “discernible” from water damage, although that language is not included in its policies. In Mississippi, a federal judge has ruled that State Farm must cover wind damage unless the company can prove water, excluded from coverage, caused the loss.

State Farm has appealed the decision, but company representatives say they want to resolve lingering claims.”

Insurer friends, you know and I know — and I know that you know — that if you are adding new restrictions to a policy — a policy that you wrote — you are changing the contract after the event. This is unkosher for policyholders to try. It is worse for insurers, who know better and have many more obligations in these matters.

As I’ve argued, this is not about asking insurers to pay for flood. It is about asking them to abide by the terms of their contract, without a policyholder having to go to court. This is no different from walking up to your bank and making a withdrawal. It’s not the bank’s money. Insurers seem to have forgotten this basic principle, and I’m sorry to have to say that.

Not all insurers behaved this way. Lexington, the A.I.G. unit, paid, as near as I can tell via anecdotal evidence and discussions with plaintiff’s lawyers. They are not trying to add language to contracts that are already written — by them — and agreed to by them. They are just acting like an insurance company.
Meanwhile, Mowbray, based in New Orleans, covers a speech by Oxford- and Pascagoula, Miss.-based Richard Scruggs, who excoriates insurers to fellow trial lawyers.

“In an explosive speech to a group of New Orleans trial lawyers Friday, Mississippi attorney Dickie Scruggs charged that insurance companies are ripping off the National Flood Insurance Program by altering engineering reports to falsely conclude that Hurricane Katrina damage was caused by rising water.

‘They instructed the adjusters to max out the flood,’ Scruggs told attorneys with the Louisiana Association for Justice, formerly known as the trial lawyers association. ‘It’s literally a license to steal.’ ”

Here’s another accusation: “Because some engineering firms get as much as 90 percent of their business from the insurance companies, Scruggs said, they’re under tremendous pressure to conclude that flooding destroyed the home rather than wind.

‘Some of the engineering firms are essentially taking orders. The insurance industry is essentially telling them what to write in the reports,’ Scruggs said.”

Mowbray writes that sisters Kerri Rigsby and Corrie Rigsby Moran, former executives of State Farm contractor E.A. Renfroe, have given depositions in a case called McIntosh v. State Farm.

“The Rigsbys also testified that after Mississippi Attorney General Jim Hood issued subpoenas, State Farm hired mobile shredding trucks to come to the Gulf Coast. ‘They destroyed evidence,’ Scruggs said. ‘The paper they shredded they made into toilet paper. That’s what happened to the engineering reports after the subpoena.’ “

State Farm spokesman Fraser Engerman responds: “Mr. Scruggs continues to put out emotional and inflammatory remarks. We continue to look for ways to resolve claims in the Gulf Coast.”

Ok. One can reasonably question the Times-Picayune’s news judgment. Why run a story about a partisan speaking to his own kind? Isn’t that an example of a liberal, pro-tort-lawyer bias?

The answer is, you run it because what he says is finding support in courts in both Mississippi and Louisiana. Scruggs’s credibility rises and insurers’ falls with each bad faith verdict. In other words, you run it because what he says is quite possibly true.
No one is asking, but ITP says: Ending a criminal probe as part of a civil settlement, as Attorney General Hood agreed to do, is understandable, but not right. If someone shredded documents after a subpoena was issued, this isn’t something that can be covered in a civil context.

Thanks to Ida again and to the Mississippi BizPress Maven.