Senator Helps Fund Katrina Investigation
as posted at www.claimsmag.com
A new law signed last month by President Bush apportioned money to the Homeland Security Department to investigate how insurers handled Hurricane Katrina claims.
The recently signed bill, HR 5441, specifically states that the Homeland Security’s Inspector General’s Office is allocated no more than $100,000 to investigate whether insurance companies improperly attributed hurricane damage to flooding, rather than wind. Wind damage is covered by insurance policies, but storm-surge damage is not. Damage attributed to storm surge would only be paid by the government-sponsored National Flood Insurance Program if victims carried this type of insurance.
The action by the President did not raise alarms at Allstate and State Farm, two of the largest homeowners’ insurers in Louisiana. This despite the fact that the two companies insure more than 55 percent of the state’s available market and have 568,000 policies in force, according to the Insurance Information Institute.
“A lot of governmental programs that State Farm participates in — including the National Flood Insurance Program — have always had built-in auditing processes and we’ve always been a part of those inquiries when they happen on a regular basis,” said Phil Supple, spokesperson for State Farm Insurance, one of the largest writers of homeowners’ policies in Louisiana. “We understand this is going to be an extension of that and we plan to cooperate fully.”
“More than 1,000 of our adjusters handling [Hurricane Katrina] claims were flood certified and able to handle claims under the National Flood Insurance Program,” said Mike Siemienas, spokesperson for Allstate. “Adjusters determined whether damage was caused by flood or by wind by examining the facts of each individual claim. Generally speaking, claim adjusters can ascertain the cost of damage based on evidence related to the loss and, as appropriate, neighboring properties. Among other things, that evidence may include reports of engineers and other experts. When it was determined that there was wind damage, Allstate paid for that damage under the terms of the policy.”
The measure’s language was placed by Mississippi Senator Trent Lott, who is suing State Farm over its handling of his individual, post-Katrina homeowner’s claim. The Inspector General’s Office has until April 1, 2007, to report conclusions of its investigation to Congress.
United Policyholders is a non-profit organization founded in 1991 and dedicated to educating the public on insurance issues and consumer rights. UP publishes educational materials and serves as a resource for individual and business policyholders and residents of communities with insurance problems. UP’s Amicus Project provides information to courts of law to support policyholders’ legal rights. UP unites policyholders and their advocates by sharing information. Write to UP at 110 Pacific Ave., PMB 262, San Francisco, CA. 94111, call us at (510) 763-9740, or visit our website at www.unitedpolicyholders.org.
•••••••••••••••••••••