Insurance Issues Forum

"Claims Dumping" - A Primer

2007-12-14T09:17:00.000-06:00

There is an informal brotherhood of those slabbed and/or destroyed. Among that brotherhood all know at least one person whose house was destroyed by wind but was only paid their flood coverage (if they had it). We are not professionally trained licensed engineers but in some cases the cause was most evident, such as in the picture of this house in Lakeshore which was also flooded but not subjected to wave action.

This is a picture of the house across the street also smashed and flooded. The window in the house was removed by the owner as they salvaged some of their contents from the interior. In both cases the contents of these houses stayed with the house instead of being swept from it like so many others.

This picture finishes the story, notice the house down the street left standing. All the homes on the street were built within a year or so of each other by the same builder. Also notice the hole in the roof of the house down the street that stood. How is it that the majority of the houses on this street stood while three houses in close proximity of one another were reduced to rubble? A tornado or mini tornado is the cause. There was a line of snapped trees that lined up perfectly with the woods across the field from the destroyed houses on this street and through to the woods on the other side. I personally know of at least one such resident who was only paid on their flood policy instead of their private wind policy. That's right ladies and gents, the bill was on you, the taxpayers.

Mr. Rogers Couldn't "Make Believe" this Neighborhood

2007-12-27T06:48:00.000-06:00

Before Katrina, the mix of neighborhoods in the three coastal counties of Mississippi was typical small town America and the place called home to those living there.

Home after home looked like this in neighborhoods from Ground Zero to the Alabama state line after Katrina. Because the wind had earlier blown the roof off this house, when the water came, the lucky owner and his family were able to roof raft their way to safety in what he later called the ultimate water ride.

Over two years after Katrina, this home and countless others look like this - each in some way a casualty of the insurance war. Many, like this homeowner, are victims of the uncertainty. As Mr. Rogers sang, he "wants to have a neighbor just like you...to live in a neighborhood with you."

Rebuilding is more than construction. Neighborhoods are the infrastructure of both the built and social community. Unless a home owner can self insure, he is limited to the current $250,000 limit of flood insurance since windstorm policy recovery has proven problematic. At the current cost of construction, that equates to a home of approximately 1800 square feet - larger than the largest Katrina Cottage but considerably smaller than many of the homes lost to the storm.

The longer the uncertainty lingers, the more difficult it becomes to rebuild the social community. Social networks provide relationships that connect people to essential social supports in much the same way that roads connect the built community. Many consider these social networks "the 'scaffolding' or framework upon which successful community-building efforts are created."

The wind came first, then the water - washing away all but the truth. "Somewhere deep inside each one of us human beings is a longing to know that all will be well."

FEMA Code Violation on Fisher Island Potentially Threatens National Flood Insurance Participation for Miami Beach residents

2008-02-01T15:51:00.000-06:00

From Fox Business News
Thursday, Jan. 31 2008

FEMA Code Violation on Fisher Island Potentially Threatens National Flood Insurance Participation for Miami Beach residents

Unchecked violations of Floodplain Management regulations could cause FEMA to put Miami Beach on probation and eventual suspension from the National Flood Insurance Program (NFIP) which currently provides a 15% discount on flood insurance premiums for property owners in Miami Beach. If the city fails to enforce its regulations, it could result in higher flood insurance rates for policy holders. In suspended cities where flood disasters occur, certain types of disaster assistance from the federal government are not available at all.

The City of Miami Beach is currently rated as Class 7 out of 10 (with 10 being the lowest) on NFIP's Community Rating System. This rating entitles property owners in Miami Beach to receive a 15% discount on flood insurance premiums. NFIP bases its ratings on local governments' compliance with federal requirements and on local government efforts to eliminate or mitigate exposure to flood damage through regulation. Each 1-point increase in class rating represents an extra 5% discount on premiums, with a Class 1 rating carrying a 45% discount and a Class 10 carrying no discount at all. As of November 2007, Miami Beach had 48,233 flood insurance policies in effect, insuring $7,491,479,400 of property.

I know there is a Miami Valley in Ohio (named after the Miami Indians). But is there a Miami Beach Ohio? Is it just west of Cleveland on Lake Erie? Because if they are talking about a Beach in Florida, why on earth are they getting a discount?

Just Before Sunset

Miami Beach, OH

Insurance firms set to stump up billions

2008-02-02T18:32:00.000-06:00

Insurance firms set to stump up billions

2008-02-02
By Hu Yuanyuan (China Daily)Updated: 2008-02-02 08:57

Chinese insurers are expected to pay 3.52 billion yuan ($489 million) in damages to companies and people in central and eastern China as a result of the worst snowfall in almost half a century, the nation's insurance regulator said on Friday.

What is odd is that the insurers appear to be paying claims to people who did not even have insurance. Apparently they view their work as a service to their country. What an odd concept.

Passengers walk past a row of Chinese soldiers near the railway station, in China's southern city of Guangzhou, on February 2. China warned the worst was not over in its national weather crisis as desperate crowds trying to get home jammed transport hubs and others braved the frigid cold without power or water.

Don’t Mess with Texas – or Connie Moran

2008-02-27T06:36:00.009-06:00

Big Insurance, meet Connie Moran – a Fulbright Scholar with a master’s degree in finance/economics and international commerce – the Mayor of Ocean Springs, Mississippi with all perils insurance on her mind.

Moran wants more than stories about businesses and residents having trouble rebuilding due to insurance costs, she want hard data. According to the Mississippi Press Register, she plans to provide that data to Congressman Gene Taylor.

A small town Mississippi mayor may not sound like a threat – unless you happen to have read about her accusing FEMA of “creating trailer trash” in the Seattle Times.

The mayor first gained national attention when she locked horns with FEMA, preferring the traditional and sustainable Katrina Cottages to the standard-issue mobile homes that “within 18 months create a trash-heap of trailers up for auction.”

She envisioned a neighborhood of "Katrina cottages" — tiny, yellow houses built in a Southern style, with sloped metal roofs and big front porches.

Ocean City has actually created “a planned village of 20 ‘Katrina cottages” about a mile from Ocean Springs’ downtown.”

You don’t mess with Texas or Connie Moran – if you don’t believe me, contact the Mississippi Department of Transportation and ask about that bridge they almost had to sell.

"You furnish the pictures and I'll furnish the war."

2008-02-28T15:00:00.012-06:00

Humanity is governed by minorities, seldom or never by majorities. It suppresses its feelings and its beliefs and follows the handful that makes the most noise. Sometimes the noisy handful is right, sometimes wrong, but no matter, the crowd follows it.

Oddly enough, Mark Twain's quote comes from The Mysterious Stranger- in the world of blogs and message boards, mysterious strangers are the norm. Here, for example, I am known as Promise; but,by any name, am a modern day muckraker.

I still believe most do; but, I am no longer so green that I can’t spot a Yellow Kid or recognize comments made by those that reflect the British English application of the word to sensationalist scandal-mongering journalist, not driven by any social principles.

Allegations and indictments have, as Cowboy would say, slabbed the integrity of our State’s legal system. Grief is a natural response, and anger is a natural part of the grieving process. Scandal-mongering, however naturally it may come to some, is not anger – it’s the sensationalized stories or outright lying that caused Joseph Pulitzer and William Randolph Hearst, two icons of American journalism, to be known as the two Yellow Kids.

Pulitzer and Hearst are often credited (or blamed) for drawing the nation into the Spanish-American War…eventually resulting in…the most famous example of the exaggeration…a version of which appears in the Hearst-inspired film Citizen Kane - the apocryphal story that artist Frederic Remington telegrammed Hearst to tell him all was quiet in Cuba and There will be no war. Hearst responded Please remain.You furnish the pictures and I'll furnish the war.

So - Who’s furnishing the pictures of Attorney General Hood and who’s furnishing the war on his integrity?

It would be less than honest not to acknowledge Hood himself is submitting a few snapshots – I didn't care who (Scruggs) supported. I wasn't crazy about being attorney general anyway.. – and equally dishonest not to consider the possibility Twain suggested - Often the surest way to convey misinformation is to tell the strict truth.

Yesterday’s edition of the Clarion Ledger generated a total of 160 reader comments from a front page story and three separate blog posts related to the allegation that indicted attorney Dickie Scruggs attempted to influence Hood.

Blogs started developing that picture on the 25th - that Jim Hood story was sitting there in Pacer at 7-8 PM or thereabouts. I started downloading stuff about then, and just didn’t get around to it till midnight.The first post was up early on the 26th and Holy S--t Balducci, State Farm, Jim Hood, Scruggs – all together in one paragraph appeared shortly therafter.

During the day related posts and news stories were linked to those already posted online.

Holy Cow! Do you see what this says? It says that Scruggs paid Balducci and Patterson half a million dollars to get Hood to back off the State Farm grand jury investigation. ..Seems to me that whole business needs to be explored some more, don't you think? If this is true, doesn't it qualify as some sort of improper influence of a public official?

By the evening of the 26th another picture was developing on the blogs – one chiding the old media are 24 hours behind the blogs…Actually, I’m going to frame this question more aggressively…What’s with the pros? – and, on the morning of the 27th, it was ready to print.

As you might expect, that $500,000 that Tim Balducci claims Dickie Scruggs (eventually, grudgingly) paid him and Steve Patterson to get Attorney General Jim Hood’s indictment of State Farm called off has made a splash in Mississippi’s largest newspapers this morning

On the 28th, the Yellow Kid went big time with a level of sensationalism that spread an outright lie coast to coast under the banner of none other than Legal News Line. Had it not been for my all time favorite blog post title - Why Legal News Line is fit only for the bottoms of virtual birdcages – the Yellow Kid’s nose would be longer than Pinocchio’s by now for claiming An FBI report released this week supported the headline Hood allegedly offered bribe from Scruggs.

The modest attempt to set the record straight - Editor’s note: The following story is a corrected version of an earlier article that contained many inaccuracies – fell far short of any measure of retraction. Shortly after daylight today, Legal News Line was back to the bottom of virtual birdcages - Too bad you didn’t notify The Google, LNL. I hope this helps them sue your ass for libel.

Attributing an outright lie to an FBI report can only be called an amazing act of hubris – far stronger evidence than documented in the defense Motion to Change Venue:

the print media blitz has been supplemented by Mississippi-based web logs (blogs) that report, in excruciating detail, every event in the prosecution and defense of the Scruggs criminal case; as well as their finding people piling on. Mr. Merkel. Mr. Tollison. The notion being at last he’s getting his comeuppance.

Judge Biggers called it one of the most thoroughly researched briefs I have ever seen; later adding, but it’s hard for me to believe there were no statements favorable to Dickie and denying the motion.

Considering the unanimous, accurate blog prediction of every ruling Judge Biggers made on the Defense Motions, Judge Biggers unquestioned integrity, and the assaults on Attorney General Hood, one can only wonder who’s providing the pictures and who’s providing the war - and where all these warriors are hidden.

The only thing proven thus far is attributed to Mark Twain:

Injurious truth has no merit over an injurious lie. Neither should ever be uttered. The man who speaks an injurious truth, lest his soul be not saved if he do otherwise, should reflect that that sort of a soul is not strictly worth saving.

"If the facts don't fit the theory, change the facts"

2008-03-01T22:38:00.016-06:00

Einstein got that right – so did the acclaimed journalist Walter Lippman who said the news and the truth are not the same thing.

Lippman believed many people, including journalist, make judgments by condensing ideas into symbols that are stored in the brain and released when triggered. When journalists take this shortcut, it is their opinion, not fact, that influences public opinion.

Once triggered, these shortcuts to judgment are a cognitive map governing the processing of new information – denying some and inventing other.

Here, 'cognition' can be used to refer to the mental models, or belief systems, that people use to perceive, contextualize, simplify, and make sense of otherwise complex problems. Put more simply, cognitive maps are a method we use to structure and store spatial knowledge, allowing the “mind’s eye” to visualize images in order to reduce cognitive load, and enhance recall and learning of information.

Hurricane Katrina created a host of complex problems that triggered an explosion of mental maps – many stemming from the handling of insurance claims.

In many cases, public opinion on the new and complex problems of post-Katrina Mississippi was shaped with little or none of the discernment, analysis, and evaluation needed to form a solid judgment that reconciles scientific evidence with common sense – critical thinking.

Critical thinkers gather information from all senses, verbal and/or written expressions, reflection, observation, experience and reasoning. Critical thinking has its basis in intellectual criteria that go beyond subject-matter divisions and which include: clarity, credibility, accuracy, precision, relevance, depth, breadth, logic, significance, and fairness.

No where has the absence of critical thinking been more noticeable than in the rush to judgment over the intended meaning of facts contained in the various legal documents related to the federal indictment of five including attorney Dickie Scruggs and the public indictment of others such as Attorney General Jim Hood – bringing to mind the everyday application of Einstein’s wisdom – if facts and theory conflict, ignore the facts and keep the theory.

All would do well to remember this simple rhyme from one of Rudyard Kippling’s Just So stories – The Elephant’s Child – else they, too, may be seeking something they’ve already seen and denied:

I keep six honest serving-men
(They taught me all I knew);
Their names are What and Why and When
And How and Where and Who.

UPDATE:
Today’s Clarion Ledger contains a related guest opinion column, Tendency to Oversimplify Scruggs Case. Marc Harold, senior counsel and visiting professor at the National Center for Justice and the Rule of Law at the University of Mississippi School of Law, noted In certain cases, media outlets have exaggerated the impact pretrial motions may have on the outcome of the trial itself…

...the media almost inevitably attempt to simplify the events or stages of the trial process. This is not a negative, in and of itself. One of the major goals of any type of news reporting is to distill information into a digestible format for a broad audience… In most interviews, the "expert" is asked to put the legal or procedural issues "in simple terms… While explaining the law in lay terms can certainly be helpful in informing an interested general audience, oversimplifying what is not simple can act to misinform rather than educate…

The motions are often based on complex legal theories; in other words, like in math, sometimes giving the answer without "showing your work" is of little value.
Finally, and perhaps most damaging, is our desire to predict. Admittedly, this can be fun, and everyone likes to ultimately be proven correct...

In most of the interviews the legal "expert" is asked to speculate on the strategy of the prosecution or the defense. Attorneys should always be hesitant to engage in this type of speculation. Again, as in other facets of news coverage, it can, when undertaken irresponsibly, act to misinform rather than educate as the line between speculation and fact can become blurred…

Exactly Lippman’s point and ours as well– the news and the truth are not the same thing.A journalist’s version of the truth is subjective and limited to how he constructs his reality. The news, therefore, is “imperfectly recorded” and too fragile to bear the charge as “an organ of direct democracy.”

Connect to the Insurance Issues Forum as "slabbed"

2008-03-17T11:11:00.004-05:00

http://slabbed.wordpress.com/

We're moving to wordpress

2008-03-07T20:36:00.003-06:00

Blogger has been good to us but we've decided wordpress better meets our needs. We're becoming a more comprehensive site and will cover insurance plus other recovery issues from ground zero.

Please join us on slabbed.

http://slabbed.wordpress.com/

sop

Roger Wicker's Maiden Senate Speech

2008-03-07T07:58:00.002-06:00

The Sun Herald has consistently reported he would make Hurricane Katrina recovery the major part of his speech and they were true to their words. Perhaps Congressman Taylor now has a true champion for the multi peril concept in the Senate. Without further analysis here is the insurance exerpt of Senator Wicker's maiden Senate speech:

Much has been done, but there is much left to do.

Chairman Donald Powell, the Federal Coordinator for the Office of Gulf Coast rebuilding, acknowledged these challenges last week when he announced he was stepping down. He said it would be "some time before the area recovered."

I say this to my colleagues in the United States Senate: Katrina is not over. There are tall hurdles still to overcome. There is more the United States Congress must do.

The most urgent issue facing the Mississippi Gulf Coast is insurance. If you can't insure it, you can't build it or finance it. The rising cost of insurance cripples the efforts of small businesses, increases the cost of home-ownership, and drives rental rates beyond affordability.
This is not just an issue for Mississippi. From Bar Harbor, Maine to Brownsville, Texas, millions of Americans live near the coastline, in the path of a future hurricane. For many years, insurance companies have refused to offer insurance protection for water damage caused by hurricanes; this led to the creation of the National Flood Insurance Program. After Katrina, the most important question for a homeowner or a small businessman was "wind or water?"

Wind versus water. That is the debate which still occurs today in courtrooms on the Mississippi Gulf Coast between insurance companies and storm victims.

This debate is what necessitated the multi-billion dollar supplemental appropriations package this body approved after Katrina, and unless Congress changes the law, the wind versus water debate will result in a multi-billion dollar supplemental appropriations package after the next big hurricane - wherever it may land.

Even worse, since Katrina, it is also common practice for insurance companies to not offer wind insurance at a rate that is even close to affordable. This is driving more and more homeowners and business owners into a state-sponsored wind pool, which acts as an insurer of last resort. But this is not a reasonable long-term solution, because too much risk is being placed in a too small of a pool.

The best solution available is to allow homeowners to purchase wind and flood insurance coverage in the same policy.

This will not only help the storm victims so they can know their hurricane damage will be covered; it also will protect the United States taxpayer. The American people are the most generous in the world, and their elected representatives will continue to respond to natural disasters, whether it is a hurricane on the East Coast or an earthquake in California, with supplemental disaster appropriations packages. But the size of these packages will be smaller if more people have insurance.

As a member of the House, I voted for Congressman Gene Taylor's multi-peril insurance legislation when it passed last September. I am committed to achieving the same success here in the Senate.

Breaking: Several Insurers Dropped from Whistleblower Suit

2008-03-05T19:34:00.004-06:00

It's mono y mono now. The Rigsby sisters against State Farm.

Three insurance companies dropped from whistle-blower suit

By ANITA LEE calee@sunherald.com

Ocean Springs whistle-blowers are dropping three major insurance companies from a lawsuit filed over Katrina claims handling, choosing to focus on State Farm insurance companies as they press for damages under the federal False Claims Act.

Attorneys for the whistle-blowers Cori and Kerri Rigsby, who are sisters, expect a federal judge to approve the request that Allstate, Nationwide and USAA be dismissed from the lawsuit.

"We wanted to focus our case and make it as detailed as possible against State Farm," said Anthony DeWitt, a Missouri attorney who specializes in False Claims Act cases. Such cases allow employees who uncover fraud against the government to file lawsuits.

The government is given the opportunity to press the claim. In this case the U.S. Attorneys Office for the Southern District of Mississippi has so far decided against intervening, leaving the sisters to pursue the case. They would be entitled to up to 30 percent of any damages assessed if fraud is proven.

The Rigsbys claim State Farm used biased vendors to blame Katrina damage on tidal surge covered by federal flood insurance in order to avoid paying claims for wind damage. State Farm has denied the allegations, saying the company covered Katrina damage owed under its policies.

Along with State Farm, the Rigsbys are suing seven engineering firms that assessed damage for the insurance company, a State Farm claims manager and the couple who employed the sisters as claims adjusters.

Famed attorney Dickie Scruggs filed the lawsuit on the sisters' behalf, but is no longer active in the case because he faces unrelated charges involving bribery of a state court judge. DeWitt said he expects that Scruggs will at some point officially withdraw, as he did from lawsuits being pursued on behalf of Coast policyholders.

The Rigsbys worked on State Farm claims under a contract between the insurance company and their employer, Alabama adjusting firm E.A. Renfroe. Renfroe is suing them in Alabama, claiming they breached their contract to keep State Farm records confidential.

A judge in the case issued an injunction in December 2006 that required the Rigsbys to return State Farm records they took while adjusting claims, from September 2005 until they downloaded thousands of State Farm computer records in June 2006. DeWitt said the Rigsbys will seek permission from the Alabama court to use those records in their lawsuit.

Gene Taylor Issues + Answers Lecture

2008-03-01T08:19:00.009-06:00

Gene Taylor's issue + answers lecture at USM Gulf Park was a well attended event. Besides Congressman Taylor, Senatorial hopeful Ronnie Musgrove, State Senator David Baria and Insurance Commissioner Mike Chaney were in attendance. While I organize my thoughts and before I give my personal impressions, I'll post the Sun Herald story along with the actions of our fellow blogger and friend Steve, aka Topbanana, who shouted down an insurance agent that heckled Congressman Taylor. The agent in question was forcibly removed from the premises by campus security while Steve received a round of applause from the crowd for shutting the guy up.

This news story contains a factual inaccuracy, HR 3121 does not repeal the McCarran Ferguson anti trust exemption. sop

Taylor asks residents to act

Wants support for multi-peril coverage

By MICHAEL A. BELL

Continuing his fierce pursuit of federal multi-peril insurance, U.S. Rep. Gene Taylor on Friday urged South Mississippians to flood senators with e-mails, letters and phone calls in support of a bill that would allow property owners to purchase both wind and flood insurance under one policy.

"We're all in this together," he told hundreds at the University of Southern Mississippi's Gulf Coast Campus.

Taylor's lecture, "The Insurance Crisis: A Case for Multi-Peril Coverage," was part of the Issues + Answers series sponsored by the school and the Sun Herald.

The U.S. House has approved multi-peril insurance. But the legislation faces heavy opposition in the Senate.

"We need our senators to champion this issue," said Taylor, who's trying to convince senators to support the addition of wind coverage to the National Flood Insurance Program.

Taylor argued insurance agents who probed the post-Katrina wreckage blamed the damage on wind. "I think the taxpayers got hosed on that," he said. "Insurance is killing us."

He said the private insurance industry made nearly $50 billion the year Katrina hit, then nearly $70 billion in 2006.

But people stuck in FEMA trailers - "42,000 little cubicles of love," he quipped - continue to grapple with recovery.

"A lot of people are hesitant to rebuild," he said. "And that's not a good thing for our country."

He argued his bill would provide peace of mind to residents that they won't have to prove wind or water caused property damage.

"You don't have that lingering feeling that 'maybe I ought to stay behind with a video camera and have some evidence'," he said.

He added his bill would no longer exempt the insurance industry from anti-trust laws.

Former Gov. Ronnie Musgrove and current Insurance Commissioner Mike Chaney attended Taylor's presentation.

Taylor's 60-minute speech was followed by a standing ovation and a Q&A session.

One woman asked how much Taylor's policy would cost if it were approved by the Senate.

"The answer is, 'We don't know,'" Taylor said, adding the coverage would be optional. "But it's got to pay for itself."

Kenneth Trawick, 76, of Gulfport called the insurance industry a "runaway group of thieves" and thanked the congressman.

Commissioner Chaney Scores!

2008-02-21T15:01:00.004-06:00

Newly elected Insurance Commissioner Mike Chaney announced Aegis Security Insurance Company will begin writing new policies in Mississippi.

We welcome the good news, Commissioner Chaney - and look forward to more.

Breaking: Scruggs Contempt Case in Alabama Dismissed

2008-02-29T15:47:00.005-06:00

David Rossmiller has broke this story on his blog. Thanks to Bellesouth for the pdf of the order and heads up.

sop

Update:

I have read the order for dismissal and await a lawyer's analysis but to me it boils down to what was very apparent from reading Judge Acker's original order; the law enforcement exception contained therein is absolute and was met as demonstrated by the facts of the case. Also Judge Vinson found Judge Acker's order was poorly written:

There is some ambiguity in the wording of the order because if the first paragraph was complied with (and the documents were given to counsel for Renfroe), then as Judge Acker himself acknowledged at the March 2007 contempt hearing [see Doc. 130 at 187-88], the second paragraph would be superfluous (i.e., the Rigsbys could not further disclose, use or is appropriate materials no longer in their possession). The special prosecutors attempt to resolve this ambiguity by arguing that the second paragraph meant only that the Rigsbys “could cooperate with law enforcement by discussing with law enforcement what they knew about the documents.” See Doc. 11 at 5. This contention overlooks the nature of the object of the injunction. The second paragraph by its own terms applied to “any material described” in the first paragraph, which plainly consisted of the tangible documents themselves. Any attempt to limit the second paragraph to “mental impressions” or “recollections” must fail.....

And finally the heart of the matter:

However, the fact remains that Scruggs did not violate the clear and express terms of the injunction. Again, as then-Judge (now Justice) Stephen Breyer has observed, courts must read injunctions "to mean rather precisely what they say."

The injunction specifically and precisely said the documents could be given "to law enforcement officials at their request." Regardless of the subjective intent that Hood may have had when he requested the documents, the undisputed fact is that he did make such a request. The objective language of the injunction expressly authorized the law enforcement exception, and it must be recognized here. Criminal contempt under such circumstances cannot be supported under the law.

While Judge Vinson did cast a wary eye on the arrangement between Mr Scruggs and Mr Hood the bottom line was that issue was ancillary to the points of law. I wonder if Marsha Thompson at WLBT will now rehash the Rigsby sister's sex lives in an attempt to save face.

This issue has been resolved and not the way the self proclaimed cyber experts predicted. At the risk of appearing snotty such things happen to the closed and weak minds.

Our best wishes and regards go out to the Rigsby sisters for their strength in the face of this assault on their characters and reputations.

sop

Another Type of Insurance Problem

2008-02-07T19:58:00.001-06:00

One insurance suit settled, one begun

The Desmoines Register
February 7, 2008

By S.P. DINNENREGISTER BUSINESS WRITER

Another Des Moines area insurance company has run afoul of Minnesota’s attorney general over the sale of equity-indexed annuities, and now Iowa regulators say they’ll look to see whether any similar action is warranted here.Minnesota Attorney General Lori Swanson on Thursday accused AmerUs Group and American Investors, both business units of what is now Aviva USA, of misrepresenting terms of annuities that it sells to senior citizens. She sued them in Minnesota state court for allegedly failing to disclose key terms and conditions of equity-indexed annuities that they market.

This type of thing has been going on for some time. The 2001 downturn brought a rash of problems with oversold variable annuities (whose accumulations were tied to stock market performance). Annuities are essentially reverse life insurance once the payout stage is reached. They have their good points, but their fees are often very high.

Cashing In On Catastrophe

2008-02-27T04:57:00.003-06:00

How the insurance industry is protecting their proftis, not policy holders, when natural disasters strike.

Full page add in WSJ (C5) for a program this Sunday, March 2 at 10pm EST.

Sounds interesting. I don't get CNBC (We are a basic cable kind of family), but maybe it will show up as a clip on the web.

Insurance Crooks at Marsh Convicted of Price Fixin'

2008-02-26T09:31:00.005-06:00

Hey pardners why don't we go help State Farm beat up on Jim Hood. Not!

Two ex-Marsh executives convicted of bid-rigging

NEW YORK (Reuters) - Two former executives at Marsh Inc, a unit of Marsh & McLennan Cos Inc (NYSE:MMC), were found guilty on a monopoly charge on Friday for participating in an insurance bid-rigging scheme, court officials said.

William Gilman, a former executive in Marsh Inc's Global Broking unit, and Edward J. McNenney, a former global placement director, were acquitted of all other charges they faced in the ruling handed down by New York State Supreme Court Judge James Yates.

The ruling was confirmed by clerks for the judge.

"All of the charges that were thrown out sort of gutted (the government's) case, in my view," said Stephen Neal, a lawyer for McNenney. "We are going to appeal the conviction on the anti-trust count vigorously."

"Bill Gilman was really the client's best friend and the insurance carrier's worst enemy," said Gilman's attorney, Robert Cleary. "We look at this as merely round one."

The case, first brought in September 2005 by the New York Attorney General's office, was part of a sweeping investigation of insurance industry practices.

"We are gratified that the court found the defendants guilty of felony bid rigging," Jeffrey Lerner, the spokesman for Attorney General Andrew Cuomo, said in a statement.

"Bid rigging is a serious offense which deprives customers of the benefits of a competitive marketplace and this office will continue to prosecute it vigorously."

Eight former Marsh executives, including Gilman and McNenney, were indicted in September 2005 and their 10-month bench trial was the first trial in the case.

At the time of the indictments, then-Attorney General Elliot Spitzer said that between November 1998 and September 2004, the defendants colluded with executives at ACE USA (NYSE:ACE), American International Group Inc (NYSE:AIG), Liberty International Insurance Co, Zurich American Insurance Co (VTX:ZURN.VX) and others to rig the market for excess casualty insurance.

Gilman and McNenney were acquitted of charges of scheming to defraud and 19 counts of grand larceny.

Marsh, a unit of the world's largest insurance broker, itself did not face criminal charges. The company agreed to pay $850 million in January 2005 to settle Spitzer's civil lawsuit accusing it of bid rigging.

Florida Again Dominates the Insurance Battle

2008-02-24T09:37:00.010-06:00

There were two big announcements out of Florida this week, one involving Allstate and one involving State Farm. I'll tackle State Farm first since it is more complex and the most disingenuous.

Some background is in order for State Farm. When Florida created a state market for cheaper reinsurance it also mandated premium reductions for those who took advantage of the program. Two major insurers filed for rate increases after buying the state reinsurance, Allstate and State Farm. When Insurance Commissioner McCarty ordered rate hearings for the increases (rate hearings in Florida involve public sworn testimony including revealing the basis for the rate increases) State Farm backed down and instead reduced their homeowner premiums in accordance with the law. As is their custom in states where they do not get their way including here in Mississippi when we dared to litigate against them they announced they will no longer write new homeowner policies in Florida. I like Beatrice Garcia's reports on insurance news from Florida so today I've linked the Miami Herald story on this development.

In a move certain to deepen Florida's insurance crisis, State Farm Florida plans to stop writing new homeowners policies throughout the state starting Saturday.

The state's largest private insurer of homes also won't offer new renters or commercial policies in order to reduce its exposure to hurricane risk in Florida.

State Farm's current policyholders won't be affected by the move. The company will continue to renew the one million homeowners and renters policies it has in Florida.

The insurer also will continue to write new auto insurance in Florida, a far more lucrative line of insurance than property coverage. It insures more than two million vehicles.

State Farm will cease writing new homeowners policies just days before lawmakers return to Tallahassee to wrestle once again with proposals to make insurance coverage more affordable and available.

However unlike Mississippi which kowtows before these large insurance companies Florida's Office of Insurance Regulation has some arrows left in it's quiver. Contrast the Florida approach as outlined yesterday and my comment to yesterday's post of Mississippi's of letting insurers dump off coast consumers in the state wind pool:

Ed Domansky, an OIR spokesman, said that as a courtesy State Farm Florida told regulators of its plan to stop writing new homeowners policies. While OIR regulates insurance company activities in Florida, it has no authority to block State Farm's move.

Domansky said Insurance Commissioner Kevin McCarty was disappointed by State Farm's decision.

Both McCarty and OIR General Counsel Steve Parton will see if State Farm will be in compliance with a new law that requires companies to sell homeowners coverage in Florida if they sell other lines here and sell homeowners insurance elsewhere in the country.

Sen. Steve Geller, a Democrat from Cooper City, said he believes State Farm will stay within the bounds of the new law because the company will be renewing existing property insurance policies.

State Farm is trying to curtail its risk if a massive storm hits, particularly in densely populated areas such as South Florida and the Tampa-St. Petersburg area. But Geller wonders if State Farm's action could also be driven by another motive.

State Farm and Allstate are aggressive backers of a bill introduced in the Florida House of Representatives last week that would create a statewide windstorm program to write hurricane coverage throughout the state, not just along the coast.

Under that proposal, insurers could decide to write policies without hurricane coverage or still sell traditional multi-peril policies. These policies wouldn't be subject to surcharges to make up any deficits in the state-run Citizens Property Insurance, the state's largest insurer of homes and condos.

State Farm's new move ''could be a threat to get more favorable consideration'' of this bill, Geller said.

The bill faces resistance. Sen. Bill Posey, R-Rockledge and chairman of the Senate Banking and Insurance Committee, sees the bill as an "insurance industry relief bill. That's why it's a non-starter with me."

Isn't it strange that the insurance company PR departments and trade groups denounce the NFIP as a taxpayer subsidy (it is and was intended as one when it was enacted in 1969) yet expect the taxpayers to bail them out every time they hit a bump in the road? Senator Posey has it exactly right in my opinion and I hope the Florida legislature does not let these insurance companies offload their least desired risk exposures on the taxpayers while continuing to profit handsomely from other lines of business.

sop

Breaking: Federal Jury Finds 5 Former Insurance Executives Guilty in Financial Manipulation Scheme

2008-02-25T14:10:00.004-06:00

Not much time for analysis but here is the news story. sop

HARTFORD, Conn. (AP) -- Five former insurance company executives were found guilty Monday of a scheme to manipulate the financial statements of the world's largest insurance company.

The verdict came following a monthlong trial in federal court.

The defendants, four former executives of General Re Corp. and a former executive of insurance industry leader American International Group Inc., sat stone-faced as the verdict was read.

They were accused of inflating AIG's reserves through reinsurance deals by $500 million in 2000 and 2001 to artificially boost its stock price.

Reinsurance policies are backups purchased by insurance companies to completely or partly insure the risk they have assumed for their customers.

The defendants were former General Re CEO Ronald Ferguson; former General Re Senior Vice President Christopher P. Garand; former General Re Chief Financial Officer Elizabeth Monrad; and Robert Graham, a General Re senior vice president and assistant general counsel from about 1986 through October 2005.

Also charged was Christian Milton, AIG's vice president of reinsurance from about April 1982 until March 2005.

Ferguson, Monrad, Milton and Graham each face up to 230 years in prison and a fine of up to $46 million. Garand faces up to 160 years in prison and a fine of up to $29.5 million.

"This is a very sad day, not only for Ron Ferguson, but for our criminal justice system," Clifford Schoenberg, Ferguson's personal attorney, said in a statement distributed at U.S. District Court in Hartford. "I and the rest of Ron's legal team will not rest until we see him -- and justice -- vindicated."

Yo Allstate: Florida Isn't Amused OIR Moves to Ban Allstate

2008-02-24T10:11:00.007-06:00

Earlier this week there was some improtant developments involving Florida's battle with Allstate. As we have repeatedly noted in our continuing coverage of Allstate there is a pattern of behavior exhibited by this insurance giant of ignoring lawful subpoenas and court orders. Worse according to the Florida Office of Insurance Regulation complaint:

Encompass Floridian Insurance Company’s chief executive officer knowingly made and filed a false certification.....

This charge involves a certification on the rate filing that the CEO of the operating company has reviewed the entire application. When sworn under oath the CEO of Allstate's Florida subsidiary admitted he signed the document only reviwing the execuitive summary and thus was unable to answer detailed questions by the Florida Senate committee.

To put this into context this was the type of defense by ignorance used by Ken Lay at Enron (the three wise monkeys). It resulted in CEO's and CFO's being required by Sarbanes-Oxley to affirmatively certify their companies financial information submitted to the Securities and Exchange Commission. Here is a link to Thomas Wilson certifing the last quarterly corporate financial statement and in the process doing what the CEO of his Florida subsidiary did not do, reading and certifing that an important document is accurate and complete. I now wonder if those internal controls Mr. Wilson swore were working on October 30, 2007 really are in light of the FLOIR Complaint. After all a good system of internal controls include those which insure compliance with applicable laws and regulations.

In any event here is the press release from Commissioner McCarty's office for our readers to consider. Events in Florida are heating up and as pointed out elsewhere by Mr CLS could directly tie into the shareholder derivative suit styled Fojas v. Ackerman.

Florida Insurance Commissioner Kevin McCarty today announced that the Office of Insurance Regulation (Office) has filed an administrative complaint on a non-emergency basis seeking to suspend the certificates of authority of the Allstate Companies (Allstate) to write new insurance policies in Florida.

The complaint is based in part on Allstate's failure to provide witnesses and documents as subpoenaed by the Office; falsely labeling subpoenaed documents as trade secret and falsely certifying its rate filings.

"Seeking to suspend a company's license is not something we take lightly," said General Counsel Steve Parton. "However, in light of their defiance of the Florida Insurance Code, we think it is necessary to make the point that actions such as we have seen by Allstate will not be tolerated."

Allstate was to have provided all appropriate company documents related to the Office's investigation at or before the Jan. 15 hearing. Instead, in late November, Allstate filed 51 pages of objections to the subpoenas. Allstate has been delivering documents to the Office since the Jan. 15 hearing, but has not delivered all documents requested by the subpoenas and is maintaining claims of privilege to some of the documents.

The Office has been asking for documents about Allstate's reinsurance program, its relationships with risk modeling companies, insurance rating organizations and insurance trade associations. The subpoenas also required appropriate witnesses to appear at the January hearing to be able to discuss issues that were subjects of the subpoenas.

The complaint also alleges that Allstate has violated Florida law by not properly certifying its rate filings as required by House Bill 1A, which passed in January 2007.

Filing the complaint is required under Florida law as part of the process that began when Commissioner McCarty issued the Immediate Final Order (IFO) Jan. 17, suspending Allstate from writing any new business in Florida. Allstate is expected to request an administrative hearing on the Office’s complaint. If requested, a hearing would be held at the Division of Administrative Hearings (DOAH).

An administrative law judge will hear the evidence and then make findings of fact. Commissioner McCarty could then issue a Final Order, which may include a suspension of Allstate's certificates of authority. Allstate could then appeal to the First District Court of Appeal.

The DOAH hearing is separate from the ongoing matter that Allstate initiated in the First District Court of Appeal (DCA) by filing its Jan. 17 notice of appeal of the commissioner’s IFO. That matter is still proceeding in the DCA.

The Allstate suspension was the first time the Office had suspended a company for failure to "freely" provide documents as required by Florida law.

The Order would apply to all Allstate companies on which the subpoenas were served:

Allstate
Floridian Insurance Co.
Allstate Indemnity Co.
Allstate Property &
Casualty Insurance Co.
Allstate Insurance Co.
Allstate Floridian
Indemnity Co.
Allstate Fire and Casualty Insurance Co.
Encompass
Insurance Co. of America
Encompass Indemnity Co.
Encompass Floridian
Insurance Co.
Encompass Floridian Indemnity Co. A copy of the subpoena is available
to review.

sop

Insurance News You Can Use

2008-02-23T07:27:00.007-06:00

Welp folks this Cowboy don't know what to make of ole Chaney. One day he campaign promisin' to make the insurance commissioner appointed then after he wins he says he wasn't going to fight for that in the legislature since it was just his personal opinion. A couple weeks back he says rates is goin' up and now he says rates is goin' down. Maybe one of the others can make sense of this Sun Herald story for me.

Insurance Commissioner Mike Chaney told members of the Biloxi Businessmen's Club on Thursday he hopes to lower residential rates in the state wind pool by at least 10 percent.

Chaney said he would like to see a decrease of up to 40 percent in rates for the coverage offered by South Mississippi's wind insurance company of last resort, but doesn't know if that's possible. The wind pool is shopping for reinsurance, which would help cover its losses in case of a disaster. Chaney will be transferring $40 million to the pool between now and July to help pay for the coverage.

With reinsurance rates going down, the hope is wind pool rates also can be lowered.

Wind pool rates increased 90 percent for homeowners in October 2006 because of Hurricane Katrina. On the Coast, insurance companies also stopped offering new customers homeowner insurance that included wind coverage and in some cases cancelled policies at renewal time.

Chaney said the Coast is probably one of the "most profitable markets" for insurance companies that offer policies without wind coverage because the risk of ice storms and tornadoes, which their policies do cover, is relatively low.

A day earlier, Chaney had announced Aegis Security Insurance Co. would resume offering new policies in Mississippi, but it turns out the company will offer wind coverage only as far south as George, Stone and Pearl River counties.

In other news the leader of the Diamondhead Slingshot Group has finally settled out with them crooks at State Farm. It only took 30 months and bringin' in a lawyer to get them Gucci suit wearin' crooks to experience a come to Jesus moment and honor their obligations. Havin' to fight your insurance company tooth and nail is the new fangled way of doin' business. Besides them executives and their yearly bonuses the other folks I see benefitin' from the current system is the lawyers. Here is the Anita Lee story:

A Diamondhead homeowner who rallied policyholders to fight for payment of their Katrina claims has settled her lawsuit with State Farm Fire and Casualty Co.

Notice of the settlement was filed Friday in U.S. District Court in Gulfport. Terms were undisclosed.

Kenneth and Judy Dutruch sued State Farm in June 2007. They accused the company of breaching its contract to cover Katrina damage to the couple's vacation home and sought punitive damages for denial of their claim.

Judy Dutruch has told the Sun Herald in previous interviews State Farm refused to consider evidence of wind damage to the couple's South Diamondhead home off the Bay of St. Louis. State Farm sent experts to examine the property only after the Merlin Law Group filed the lawsuit on the Dutruchs' behalf.

Experts hired by the Dutruchs, including a forensic arborist, concluded their home suffered extensive wind damage - covered under their State Farm policy. State Farm concluded storm surge, excluded from coverage, destroyed the home.

As a result of widespread denials by State Farm and other major insurance companies, Judy Dutruch formed the Slingshot Gang in Diamondhead to unite waterfront homeowners. They pooled money to pay for expert reports, shared information and provided moral support to one another.

Many members of the group have settled their claims, but the Slingshots agreed not to disband until all claims were resolved.

As part of the settlement, both sides agreed not to disclose the terms. In fact, they could say little more than they were "pleased."

Judy Dutruch added, "We are certainly glad that it is all over and we can now start thinking about future plans of rebuilding."

A State Farm spokesman said, "We're pleased to have resolved our differences with Mrs. Dutruch."

Breaking: Allstate Fined $250,000, Ordered to Reinstate Policies

2008-02-21T11:57:00.003-06:00

Thanks to Mr CLS for the heads up to this Times Picayune story.

BATON ROUGE -- Insurance Commissioner Jim Donelon fined Allstate $250,000 Wednesday and ordered the state's second-largest insurer to reinstate the wind and hail coverage of several hundred customers whose policies were dropped in disregard of a key consumer-protection law.

It is the only fine that Louisiana has levied against a homeowners insurance company since Hurricane Katrina, and the fine is the maximum penalty allowed by state law.

"I'm doing that because of the continuing efforts of the company to circumvent the consumer
protections that have served us so well," Donelon said. "This statute is the law of Louisiana. It was the law of Louisiana when these policies were written, and it will be enforced."

Donelon said he has tangled with Allstate three times in the past year and a half over the company's efforts to circumvent a Louisiana consumer-protection law that makes it difficult for insurers to drop policyholders after three years, and he said he is tired of it.

In July 2006, Allstate announced plans to drop 30,000 customers in south Louisiana in a way that Donelon said would violate the three-year law, and it took five months of negotiations to get the company to take a different tack. In spring 2007, Allstate conducted cursory drive-by inspections of homes and tried to cancel hundreds of homes that it deemed "abandoned" that were actually under repair or occupied before the state Insurance Department intervened.

And most recently Allstate has been reclassifying some longtime customers as new ones so their wind and hail coverage could be dropped. Donelon said the ongoing problems with Allstate's practices led him to conclude that the company was flouting the law and needed to be penalized.

Allstate admits no wrongdoing. The suburban Chicago company said it disagrees with the Louisiana Insurance Department on its interpretation of insurance laws.

But Allstate, the sponsor of the Sugar Bowl, said in the consent agreement and stipulation signed Tuesday that it decided to settle the matter "in recognition of the catastrophic events of 2005, the continuing concern for its customers and as a gesture of goodwill."

In a news release Wednesday, Allstate said it agreed to pay the money "to avoid expenses associated with a hearing."

But Donelon said the $250,000 is indeed a fine. "In my view, absolutely," he said. "No one else has gotten close to the need for punitive action."

Cursory inspections done

Though the fine was triggered by Allstate's recent efforts to drop the wind and hail coverage of longtime customers who should be protected by state law, the fine technically was levied on the company as a result of a flawed property-inspection process that was supposed to determine whether homes were occupied or being rebuilt.

Last year Allstate dropped 4,772 customers after conducting drive-by inspections of 40,500 homes in the New Orleans area that averaged about a minute a home. Allstate said it dropped the policies because the inspections revealed that the homes were unoccupied or not being repaired. Within a few weeks, 588 people filed written complaints with the Insurance Department saying they were in fact living in the home or rebuilding.

The department ordered that Allstate temporarily reinstate all policies and redo the inspections, with documentation. How many of the 4,772 customers ultimately qualified to keep their reinstated insurance coverage is unknown, but 552 of the 588 people who complained were found to have been improperly terminated and were reinstated.

When the department forged an agreement with Allstate on the issue in March, Donelon reserved the right to impose sanctions. As the department began investigating a new round of complaints that began just a month later with Gretna homeowner Michael Scioneaux, Donelon decided he needed to do so.

Dropped after 31 years

Scioneaux had been insured by Allstate for 31 years at the same home and never made a claim outside of Hurricane Katrina, but he got a letter in April saying his wind and hail coverage would be dropped because he had been with the company for less than three years.

The letter made no sense because Louisiana has a law that says once a customer has been with an insurance company for three years, it's very difficult to drop them. Customers can be dropped only if they stop paying their bills, make excessive claims for non-"act of God" events such as hurricanes or tornadoes, commit fraud, or unless the company can prove to the Insurance Department that it risks going bankrupt if it keeps them.

But several years earlier, Scioneaux had taken advantage of a good-credit discount that Allstate offered. Unknown to Scioneaux, Allstate rewrote his policy from letterhead that said "Allstate Insurance Co." to stationery that said "Allstate Indemnity Co." to process the discount.

In the April 2007 letter, Allstate now said the May 2004 change meant that Scioneaux was a new customer whose wind and hail coverage would be dropped in June. Scioneaux said he was not informed of any such risks when he accepted the discount offer and that the shift amounted to a bait-and-switch for the company's benefit. Allstate has been under a corporate mandate to reduce its exposure in coastal areas.

Scioneaux was overjoyed at the news that his policy would be reinstated. "I just heard I won. I'm in a state of shock," he said Wednesday.

Since the summer, Scioneaux has been forced to buy his wind and hail coverage from Louisiana Citizens Property Insurance Corp. But because he was angry that Allstate cut the most important part of his policy, he moved to Louisiana Farm Bureau Mutual Insurance Co. for his fire, theft and liability coverage as payback, and cut Allstate out of the deal so it would be unable to earn easy premiums.

Even though Scioneaux says he has no love for Allstate, he said he plans to return to the company because it's a better deal than a split policy. "I'm really not in a position that I can pick and choose. I need to take the best coverage and the best price to protect me and my family and our biggest investment: our house," said Scioneaux, who is also personnel director for Jefferson Parish.

For now, Scioneaux plans to celebrate. His Allstate agent, a friend who also lost his wind and hail coverage, called and invited him out to dinner Friday night. Scioneaux also will be having a celebration lunch with two other dissatisfied Allstate customers whom he met during the course of complaining to the Insurance Department.

"We're comrades in a cause," he said. "I never thought I would feel so happy about being able to go back to a company where I'm going to have to pay an expensive policy."

Unknown number affected

About 21 people in Scioneaux's situation have complained to the Insurance Department, but it is not known how many customers of Allstate or Encompass, the brand of Allstate insurance sold by independent agents, were affected. Allstate's news release says "a few hundred" are in the group.

According to the terms of the agreement, Allstate must give the Insurance Department a list of people like Scioneaux who were dropped within seven days and send customers an offer to come back within 30 days. That offer will include wind and hail coverage, but it will carry a 5 percent storm deductible, as all Allstate policies have done since June. The company must "take all reasonable and necessary efforts to contact each customer directly," and within 90 days, it must give the Insurance Department a list of how many of those people opted to come back.

Not everybody was impressed with the settlement.

Bob Hunter, director of insurance for the Consumer Federation of America, said a $250,000 fine for a company that earned $4.6 billion in net income last year is negligible. "The fine, for Allstate, is chump change. It's a cost of doing business," he said.

Hunter, who is originally from New Orleans and who served as insurance commissioner in Texas in the early 1990s, said Louisiana needs to make sure Allstate doesn't pass on the cost of its fine to customers because the state doesn't have a law barring companies from throwing the cost of fines into rate filings.

Hello! Hello! Is this the party to whom I am speaking?

2008-02-20T11:50:00.005-06:00

Saturday Night Live became Tuesday morning reality when State Farm attorney, the “honorable” Shelia L. Birnbaum, hit the wrong button and sent the media an email asking if Attorney General Jim Hood could be charged with Contempt of Court.

I bet you did Shelia – the panic button – when Hood’s office replied, “No, you can’t!

The case was dismissed because the allegations were false, according to Hood’s spokeswoman, Jan Schaefer.

Living in a travel trailer for two-and-a-half years can make folks crazy; but, it doesn’t make them dumb. No one’s ever called Shelia Birnbaum dumb either – most say she’s smart as a fox.

After yesterday, there’s no reason to doubt they’re right. Birnbaum looked at the clarification Hood’s office sent to the media and noted the General was about to take his coat off - his message to the media meant he was tugging at his tie.

Cowboy, you better saddle up – I do believe the State Farm’s fox is about to find out what Hood had waiting in the henhouse.

Robin' Hood of Support

2008-02-20T11:03:00.006-06:00

Blogs are touted as the savior of democracy – a voice for the people, a place where our cherished freedom of speech enjoys the freedom of information.

…and, by the way, did I mention the bridge I’ve got for sale up in Brooklyn?

Blogs are in the information business – news you can use but news that can use you, too.

Last week blogs were big news. The defense team for the King of Torts, indicted Mississippi attorney Richard “Dickie” Scruggs, cited the unfavorable environment created by blogs in the Motion for Change of Venue.

The named blogs responded with a “moment of silence” and noticeable absence of some of his most vicious critics. However, it wasn’t long before they were back in business -feasting on Mississippi Attorney General Jim Hood with a side dish of Scruggs and the others for desert.

Hood is a state-wide elected official and his conduct is fair game for public conversation – but this game was anything but fair. Although he recently won reelection by a larger percentage of vote than any other candidate, few of his supporters comment on these blogs. Understandably so - take a look at the titles of these posts: AG Jim Hood Goes on Offense…and Fumbles the Ball; What's the Name for Hood Posts; and Hood Pours Gasoline, Strikes Match, and Sets Self on Fire.

I don’t know who picked up the tab for this feast but I know who paid the price – the people on the Coast – particularly those with State Farm claims unsettled. Banned from one blog and then another, and threatened by yet a third, robbed Hood of his strongest supporter and those who read these blogs of a balance view.

I came to offer Promise – for every voice to be heard. Meet bellesouth a fearless fighter for the people on the Coast – a diva of a defender with a sack full of rock solid fact and a spirited opinion up against a Goliath of critics who turned on her when they had nothing of substance to throw back.

(Note from Sop: To the extent this intersects with insurance we are allowing some Jim Hood discussion. We have begun the process of contacting the Office of the Mississippi Attorney General in hopes Mr Hood will comment to the extent he can on what his office is doing for us on these insurance issues. Given the pilloring he has taken, unfairly in certain respects in our opinions, we intend to provide a blog outlet that will simply allow him to present a differing point of view, just as we welcomed the Rimkus Engineer's viewpoints on our Aiken threads.)

Also a quick hello to Mr CLS and our thanks for reading us. - sop

Xavier University v. Travelers / Chehardy v. Allstate

2008-02-20T06:27:00.002-06:00

"The wise man listens to meaning; the fool only gets the noise."
Poet C. P. Cavafy

"Favor distilled thinking, by which I mean the thinking based on information that is around us that is stripped of meaningless but diverting clutter. For the difference between noise and information has an analog: that between journalism and history."
Nassim Nicholas Taleb in Fooled by Randomness

For whatever reason I was reminded of those quotes yesterday while reading the Jim Hood commentary in yesterday's Clarion Ledger, the Folo Blog and David Rossmiller's blog. Those that have actually read Taleb's books understand he harbors a general disdain for "journalists" though the main object of his sarcastic wit in "Fooled" is George Will who is a commentator, rather than a journalist. All in the blogosphere are guilty of being Talebesque noise makers including your authors here at the Insurance Issues Forum. The trick is distilling the commentary, which task all three sources of noise I listed above failed miserably yesterday in my opinion.

So while much of the local blogosphere goes off chasing the Jim Hood br'er rabbit, some fresh off their unsuccessful chase of Billy McCoy, we will stick to our knitting of providing analysis of the insurance news which impacts so many coastal residents across this nation.

I saw this news item in today's Sun Herald and thought it most worthy of mention, mainly because we will surprise some of our readers with our take. It deals with two court cases on appeal out of the New Orleans area related to Katrina and the Supreme Court shooting down the appeals of Xavier University.

The Supreme Court refused Tuesday to offer help to Hurricane Katrina victims who want their insurance companies to pay for flood damage to their homes and businesses.

The justices rejected appeals from Xavier University and 68 other individuals and businesses seeking to allow their lawsuits against the insurers to go forward.

Xavier asked the court to step in after the 5th U.S. Circuit Court of Appeals ruled the policies did not cover damage from floods, even those that resulted from man-made failures such as the collapsed levees in New Orleans.

Other cases working their way through state courts have so far reached differing conclusions. A Louisiana appeals court has said language excluding water damage from some insurance policies was ambiguous. The Louisiana Supreme Court will hear arguments in that case Feb. 26.

Xavier and the other plaintiffs had asked the federal court to allow the state Supreme Court to rule on their suits as well. The 5th Circuit refused and the U.S. high court upheld that ruling Tuesday.

While we are certainly sympathetic to the arguments of the dubious effect the Chamber of Commerce has exacted on our judiciary we agree with the Supreme Court's ruling. The Flood Exclusion found in all private insurance policies is not ambiguous and these suits succeeded only in muddying the waters for all insurance litigation, much of which are far better grounded in insurance law. These Louisiana cases are not wind versus water; rather all the parties seem to agree flooding was the cause of damage. In our minds the obligations of insurers stop when excluded events are the clear cause of damage as is the case in these suits.

Finally we welcome Bellesouth, a real life example of the firehouse syndrome at work in the blogosphere. To their credit the Clarion Ledger has not banned Belle simply because she has a differing viewpoint though I am fairly certain Sid Salter would love to strangle her. Belle is new to the blogosphere and comes equipped with some strong opinions. We hope she will find the environment here conducive to learning the ropes and finer points of effective blogging.

sop