A View From The Press Box

I have to wonder if flood insurance reform will happen this year, especially since this interim report tells the Congress almost nothing.

Rep. Taylor "knows" the insurers dumped wind claims on the NFIP, has "evidence" in "dozens of cases," but somehow never offers specifics.

The study says it found "no evidence" that insurers did that, but still says they might have. In short, this report will change the minds of no one.

Meanwhile, Congress must debate yet another appropriations bill for the wars, finish work on the 2008 budget, and deal with the numerous investigations going on, all while the financial markets are collapsing.

Think a flood reform package with a controversial new provision is going anywhere this year? I can't see it happening.

Tim Dodge
Director of Research & External Communications
Independent Insurance Agents & Brokers of New York, Inc.

The millions of wasted FEMA dollars post-Katrina would easily comp any misplaced flood dollars. Why don't Rep. Taylor, et al concentrate on recovering those dollars and other flagrant examples of government misspending and leave the private insurance industry alone?

Politicians and their finger-pointing... Don't they think we can't see through their tiresome strategy.

It is refreshing to find something that you believe in has been validated.

I will agree with several disclaimers right up front. I recognize that this is an "interim report" that won’t be finalized until 2008. There may be changes to some conclusions.

I strongly believe, however, that the principal finding--no evidence of improperly shifting losses to NFIP--will remain intact.

For the present, however, as you note in your online news report on the study, “The Department of Homeland Security has reported to Congress that it has uncovered ‘no evidence’ that insurers improperly shifted Hurricane Katrina wind damage losses to the government’s flood program.”

Will this cause the professional naysayers (Messrs. Hunter, Lott and Taylor) to step back, take a breath, and think before speaking? I doubt it.

As a matter of fact, Rep. Gene Taylor’s spokesman has already been quoted as saying, “We know that insurers shifted liabilities to NFIP. The evidence is there in dozens of cases that have been reported…” That can be explained by the actions of a single, over-zealous claims examiner.

“The report appeared to clear the Write-Your Own insurers, who administered federal flood insurance policies, and insurance agents and claims adjusters handling Katrina from allegations by a host of people—including some members of Congress—of improper claims handling and/or fraud.”

And finally, “The report by Richard Skinner, DHS inspector general, however, was not a clean bill of health for insurers.”

The nature of the insurance industry is such that a "clean bill of health" is not our goal. For the time being, just stop slandering us. Think before you speak (I know that is going to be difficult, just give it a try!)

I would agree with Mr. Dodge's conclusion that no action will be taken in 2007 to reform the NFIP, and predict that 2008 will be a no-action year, as well.

However, I reserve the right to change my mind if we have a very destructive hurricane season similar to 2005.

I think it would be foolhardy to raise the NFIP coverage limits and also add another peril, such as wind, when large amounts have to be borrowed just to pay off the Katrina claims under the current limits.

I both agree and disagree with some of Mr. Reilly's comments.

I agree that Congressman Taylor and other critics of the flood program should put-up or shut-up with the so-called evidence they have of claims fraud.

They sound a little like the late Senator from Wisconsin, Joe McCarthy, who claimed to have massive evidence of communists working in the State and other departments of the federal government.

If they had the evidence they claim, I think we would have seen it by now.

On the other hand, I believe there is an inherent conflict of interest when a WYO carrier writes both homeowners and flood on the same property and a claims adjuster handles both sides of the transaction. There is too much incentive for the adjuster and the carrier to allocate more of the claim on the flood side.

Call me skeptical or whatever, but I believe greed is a strong emotion, and I do not think our industry is any more honest or ethical than any other. There will be some individuals and companies that will take advantage of the situation, contrary to what Mr. Reilly implies.

We have provided the evidence. Look at the documents on Rep. Taylor's Web site. Read Rebecca Mowbray's articles in the Times Picayune. Read the whistleblowers' False Claims Act filings in Louisiana and Mississippi. Read State Farm's Wind/Water Claims Handling Protocol. Read the depositions on the Scruggs Web site of adjusters who were instructed to pay flood policy limits before ordering a damage assessment.

Read the engineering firm's e-mails available on several Web sites. Look at the engineering reports altered by people who never visited the properties.

There is no question that State Farm and others tried to assign all damage to flooding where wind and flooding combined. They paid wind claims in Tennessee, 300 miles inland, but denied wind damage on the coast, where winds where the most destructive.

They only started settling claims after they were hit with punitive damages, and Judge Senter affirmed that the insurer has the burden of proof.

They did not prove that all the damage or even how much damage was caused by flooding. They tried to force homeowners to prove that damage was caused only by wind in order to collect what was owed them.

The adjusters have testified that State Farm trained them to do that. That is why I said we know it happened. The evidence is overwhelming.

The question is where is the Justice Department? Where is the Katrina Fraud Task Force? How long does it take to get someone with official enforcement power to look at the evidence that is out there in the public domain?

With global warming, wind and flood is no longer coverages every homeowner should be without! Can you guarantee no wind (tornado, hurricane,wind shear, etc.) to most homeowners?

As these become more common, when we will insure everyone--not just past victims--and make it insurance again instead of a give away?

When will we stop talking to ourselves and care about society, and think in terms of fairness and ethics without some occurrance that makes insurers look greedy and stupid?

I manage several insurance guaranty funds in the Western part of the country. We are not directly involved with the wind vs. flood controversy that has been publicized so greatly over the past several months, but I've handled a few (thousand) claims over the past 40 years and am generally familiar with how the industry processes claims.

I've never worked for a company that would intentionally, as company policy, try to cheat on the portion of a divided claim that should be paid.

That's not to say that there are no such companies, but it's not really my point.

My experience has shown that catastrophe claims adjusters usually--on instructions of the insurers they work for or represent--pay claims generously in favor of the insureds in trying times such as the aftermath of Katrina.

However, regardless of how industry members evaluate claims under their policies, what puzzles me is the big hue and cry about how consumers and the NFIP are victimized by companies that don't allocate properly.

Was the entire allocation left up to the insurers? Didn't the NFIP exercise any oversight?

Aren't there any NFIP claims examiners or supervisors that look at allocations and amounts on individual claims, and shouldn't they know if the allocating insurers are trying to shortchange the NFIP?

Where's the professionalism in the national plan?

I'm sure the NFIP was overwhelmed by the numbers from Katrina--as was the industry--but it's a double standard if the involved insurers are expected to be perfect, while there are no expectations of the government plan, except to criticize in hindsight the efforts of those who actually did the work.