Insurers failed responding to Katrina, study says

Many insurance companies were ill-equipped in their response to Hurricane Katrina, exhibiting patterns of callousness, unfairness, and generally inept performance, according to a report recently released by the Americans for Insurance Reform (AIR), which is a coalition of public interest groups and a project of the Center for Justice & Democracy, . The report “The Insurance Industry’s Troubling Response To Hurricane Katrina” says that in some cases insurers’ conduct worsened the suffering of policyholders.AIR co-founder and executive director of the Center for Justice & Democracy Joanne Doroshow says the report indicates that when policyholders exhausted, traumatized, hungry and homeless looked to their insurance carriers for aid they were faced with resistance by their insurance companies. Doroshow, a contributor to the report that details actual case studies of numerous Golf Coast residents, says that many insurers’ were unwilling to pay their policyholders anything and this meant victims were left “frustrated and angry, not to mention destitute.” The report claims that the P&C insurance industry appears to be using the disaster as a rationale for rate increases and for the departure from certain areas. In the report, AIR makes some recommendations for insurance industry reform and improvements to the National Flood Insurance Program. Measures AIR calls for in the report include: * A moratorium on cancellations and non-renewals of homeowners insurance policies to give states time to develop plans for insuring homes that could not get or keep private insurance.* A freeze on home insurance prices.* Mitigation measures that prohibit or control construction in high risk zones.* Market conduct examinations by states to determine if insurers have been engaging in unfair claims practices in violation of state law. J. Robert Hunter, director of Insurance for the Consumer Federation of America, and former Federal Insurance Administrator and Texas Insurance Commissioner, says he feels it is important that Mississippi, Louisiana, Alabama and Texas take “firm steps” to assure homeowners that insurance will be available and affordable for the next hurricane season. “Insurance should be a policyholder’s road to recovery at times of personal crisis,” Hunter says. “After Katrina many insurance companies have too often been more like stone walls, blocking the way for policyholders to recover.”