Insurance Issues In Wake Of Katrina

Floor Speech

INSURANCE ISSUES IN WAKE OF KATRINA -- (House of Representatives - March 09, 2007)

Mr. TAYLOR. Madam Speaker, I have the great fortune to represent the people of south and coastal Mississippi, and I never want to miss the opportunity on their behalf to thank the other people of our great Nation for the help that has been provided to us in the wake of Hurricane Katrina, both individuals, Rotarians, college kids. But so many people have just been magnificent in their helping South Mississippi after the storm, and we want to thank you.

There has, Madam Speaker, unfortunately been a group that has been particularly unhelpful to the recovery of south Mississippi, and that is the insurance business, in particular the property and casualty business around the country.

I want to bring to your attention just one of the many of the thousands of homes in south Mississippi that were destroyed by the storm. The people there had insurance, contrary to what the Wall Street Journal will tell you. They had insurance against flood. They had insurance against wind. And when the storm came, they thought they were covered. And they woke up the day after the storm, and their homes were gone.

This is a sketch of Will Clark's home in Pass Christian, Mississippi. Being very fond of his place, he hired a local artist to sketch it. This is what it looked like the day before Katrina. That is what it looked like the day after.

Will, being a good businessman, had $250,000 worth of homeowners insurance on his home. The folks from State Farm, within a few days of the storm, came to his property, looked around, said they saw no evidence of wind damage, despite all the things you see knocked down by the wind, and paid him nothing on his insurance claim. A $250,000 policy paid him nothing.

The next homeowner I want to bring to your attention is the home of Mr. and Mrs. James Scanlon. This is what it looks like. The Scanlons had $304,000 worth of insurance on this home. The day after Katrina, it looked like that. The Scanlons were with Nationwide Insurance Company. Nationwide paid them $13,000 on that damage. For those of you who have done some remodeling yourselves, you know that $13,000 might replace that front door and maybe that window; $304,000 worth of insurance paid them $13,000.

The third one I want to bring to your attention is the home of Ms. Diane Quinn in Biloxi, Mississippi. To give you the magnitude of this storm, it stretched all the way from New Orleans to Mobile, Alabama. This is what Mrs. Quinn's home looked like the day before Katrina. She had $249,000 worth of insurance with Allstate Insurance Company. The day after the storm, her home looked like that.

Within days of the storm, in addition to all the other trauma she had been to, the folks from Allstate, I believe that is ``The Good Hands'' folks, came and told her that they would give her $10,000 for the loss of her home.

Mr. Speaker, there is zero Federal regulation of the insurance industry. When people came to me with claims like that and said, ``What can you do for me,'' I had to give them the unfortunate answer, ``Absolutely nothing.'' But it wasn't just these folks who were harmed by the storm, you see; it was every American.

The people that did pay claims was our Nation's flood insurance policy. The Nation's flood insurance policy is written in a way that we hire the private sector to sell that policy, and we hire the private sector to adjudicate the claim in events like this.

The problem that came in is, when those insurance agents went to those three properties, and even though the Navy tells us we had 5 hours of hurricane-force winds before the water got there, the insurance agents said, ``We see no evidence of wind damage. So, therefore, we are not going to pay you on your homeowner's policy; you have to pay your flood policy.''

Under the law, they are required to have a fair adjudication of the claim. And yet, at the same time that they require our Nation to have a fair adjudication of the claim, folks like State Farm and Nationwide are sending out memorandum to their claims adjusters, and this is a quote: ``Where wind acts concurrently with flooding to cause damage to the insured's property, coverage for the loss exists only under the flood coverage.'' That means that not only these folks were cheated out of their homeowners policies, but you as taxpayers were cheated to pay claims that should have been paid by the insurance industry.

Now, the folks who run that company, a gentleman by the name of Ed Rust to be particular, rather than expressing remorse for what his company did to the people of America, was rewarded this year with a $9,890,000 bonus for telling folks like that, ``We're not going to pay you.''

Madam Speaker, this needs to be investigated. There are claims adjusters who were so disgusted with what they saw and what they did to individuals that they have turned the insurance industry in for this fraud that has been perpetrated upon the American people.

Madam Speaker, this Democratic Congress needs to keep faith with the people of America and investigate this, because I am convinced that the biggest Katrina fraud of all was ripping off the American taxpayer to the tune of billions of dollars.

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