NOLA/Gulf Blogathon: Insuring profits over people

( – promoted by buhdydharma )

Today is Day Two of the NOLA/gulf coast Blogathon at La Grande Orange. Links to all essays are below  –commonscribe

It is the Great Forgetting. After thirty-odd months, the nation has moved on. Katrina and all that it wrought has fallen out of the national conversation. The devastation caused by both the storm and the incompetence of the government are just dim, uncomfortable memories for most of the nation.

Which is exactly how the insurance industry likes it.  

The insurance industry doesn’t want you paying too much attention, because what’s happening on the gulf coast will probably be coming soon to a town near you. While the nation’s distracted and insurance reform is now bottled up in the Senate, the industry is once again moving to protect profits at the expense of the rest of us, particularly those living on the gulf. And make no mistake: these are not isolated cases- This is an industry-wide effort.

The latest target? A group of former insurance adjusters turned whistleblowers who are seeking to reinstate their false claims lawsuit against the good hands people at Allstate, the good neighbors at State Farm and no fewer than twelve  other insurance companies.

The lawsuit alleges that the industry systematically classified wind damage as flood-related, and pushed those costs onto the federal flood insurance program. The whitleblowers claim to have documented this behavior in hundreds of cases in Louisiana alone.

It’s all part of the growing body of evidence that the industry acted as one to defraud and delay in the wake of the storm, and it follows hard on the heels of the release of the so-called McKinsey documents. These documents are a 150,000+ page cache of material relating to the industry’s outside consultants, McKinsey & Co., that in the 1990’s counseled clients like State Farm and Allstate on ways to reduce claim payments by lowballing policyholders willing to settle quickly and litigating those holding out for more. One document described the strategy as moving “from good hands to boxing gloves.”  

These documents have been both the industry’s best and worst kept secret. While lawyers have long known of the documents existance, the companies have gone to great lengths to avoid releasing them. At one point last year, Allstate was paying $10,000 per day in contempt-of-court fines for refusing a Indiana judge’s order to make them public. Contempt of court charges for doing the same thing in Missouri ran to over $4 million.The company finally caved earlier this month,  posting the bulk of the documents on its webite after it was ordered to stop selling new policies in the state of Florida.

This is not necessarily good news for gulf coast policyholders looking for ammunition to fight Big Insurance. Incredibly, Not a single one of those 150,000 pages deals with catastrophic loss claims for things, like, say, hurricanes.

And there is no indication the company will be compelled to release any further documents anytime soon.

In the meantime, insurance rates in the gulf have risen by as much as 300%, and Louisiana now has some of the highest premiums in the country. And largely because of this, an American city rots and turns to brownfields, and residents all along the crippled gulf, forgotten by the nation, are left to fend for themselves against a multi-billion dollar industry seeking to protect record profits at all costs. With Washington sitting on the sidelines, private attorneys and state insurance commissioners are understaffed and ill-equipped to stand alone against the insurers; just last month, Louisiana hit Allstate with the largest fine it possibly could for illegally dropping policyholders. The penalty?  A relatively insignificant $250,000.

The gulf coast may be forgotten, but hard lessons being learned here shouldn’t be. We can have discussions about the wisdom of living in harm’s way, and the need for those who do to pay higher premiums, but that is not what we are talking about here. We are talking about honoring contracts that were entered in good faith, and secured by years of premium payments. We are talking about an industry actively shirking the fiduciary duties it agreed to during the licensing process.  We are talking about holding corporations accountable for thier actions.

Unless relief comes in the form of new laws out of Washington, what’s playing out on the coast today will happen again somewhere else with the next earthquake, the next wildfire, or the next tornado.

Be warned.

NOLA/GULF BLOGATHON–ALL TIMES PACIFIC

Thurs., Apr. 17

7AM Louisiana1976

9AM commonscribe (you are here)

11AM buhdydharma

1PM mlharges

3PM Mike Stagg

5PM alpelican

Fri., Apr. 18

7AM YatPundit

9AM Mike Stagg

11AM Louisiana1976

1PM mlharges

3PM chigh

5PM bodhiness