LAKESHORE, Miss. -- A lot of people believe their homes were destroyed by tornadoes generated by Hurricane Katrina rather than the storm's killer surge, but John Trowbridge makes a more compelling case than most.
Trowbridge's modest two-story home near Waveland was demolished along with two neighboring homes while other houses of the same style and age in the neighborhood remained standing, despite taking about 8 feet of water. That led virtually every insurance adjuster and engineer who inspected the scene to conclude that a tornado touched down and caused the devastation, Trowbridge and his attorney say.
Yet his carrier Nationwide has paid him only $515.62 (after subtracting a deductible of about $2,000) and denied his request for additional payment, saying it was not liable because Katrina's storm surge caused at least some of the damage. "Loss resulting from water or water-borne material is not covered even if other perils contributed, directly or indirectly to cause the loss," Nationwide's adjuster wrote in his denial letter.
A spokesman for Nationwide said he could not comment directly on the case, citing both privacy issues and the pending litigation.
Trowbridge and his wife, Judy, are among thousands of homeowners battling their insurance companies in the ongoing wind vs. water debate that is still a prime topic of conversation among Katrina survivors and is seen as a major barrier to the ability of many people to rebuild in southern Mississippi.
Like bereaved victims passing through various stages of grief, many homeowners have followed a predictable pattern in their dealings with insurance carriers: Optimism that their claim will be honored, outrage when it is denied, bargaining that is usually fruitless, mediation and finally litigation.
'My blood pressure goes up'
We are now well into the litigation phase, as plaintiffs' lawyers have signed up perhaps 1,000 or more clients in south Mississippi alone, and cases are beginning to wend their way through state and federal court. Dozens if not hundreds of cases are pending as well in Louisiana, where frustrated homeowners have filed suit against insurance companies, levee boards and the U.S. Army Corps of Engineers over damage related to Katrina.
"Every time I hear the name Nationwide my blood pressure goes up," said Trowbridge, 51, a supervisor for Lockheed Martin at NASA's Michoud assembly facility in New Orleans.
Trowbridge's house was one of an estimated 134,000 that were destroyed or badly damaged in Mississippi, and several lawyers say many of the owners are turning litigious as they conclude they have few other options if they want to try to get more out of their insurance carriers.
"They are going to lose every single one of those suits once they get to trial," state Attorney General Jim Hood said of the insurance companies. "Those juries are not going to have any mercy on them."
Hood, who filed suit against major carriers on behalf of homeowners less then three weeks after Katrina swept ashore, called on the insurance companies to "come to the table" and negotiate an agreement offering an interpretation of their policies that is more favorable to homeowners.
"Otherwise they will continue to get hammered by juries for 10 years out," he said. "I want the insurance companies to do their part, nothing more."
The insurance industry contends that damage from storm surge is properly excluded as a type of flooding, which generally is covered only by separate flood insurance offered by the federal government that offers a maximum payout of about $250,000 for structural damage. Many homeowners who lost their homes in the storm were not required to carry flood insurance, and even some who had the coverage are suing for compensation for damage they say was caused by wind.
Lawsuit 'threatens ... industry's financial stability'
Hood's lawsuit "threatens to undermine the insurance industry's financial stability and its ability to respond not only to its obligations arising out of Katrina, but also its ability to respond to other claim obligations in Mississippi and elsewhere in the U.S.," said Dick Luedke, a spokesman for State Farm, the largest insurer of homes in the state.
The suit "is challenging the validity of contracts in Mississippi, and that threatens the foundation of the economy in that state and has enormous ramifications for every resident of the state," he said.
In addition to the case filed by Hood, litigation against the major insurers is moving ahead on several fronts.
Richard "Dickie" Scruggs, a well-known Mississippi plaintiffs' attorney who lost his own Pascagoula home to the hurricane, has filed lawsuits against five major insurance companies on behalf of seven clients, including Sen. Trent Lott and Rep. Gene Taylor, who both lost their homes. Scruggs has advertised heavily and says he has been retained by 850 clients who are prepared to sue in what amounts to a virtual class-action case.
Click to read previous related story, 'No assurances on insurance'
In one of the first decisions issued so far in the Katrina lawsuits, U.S. District Judge L.T. Senter denied Allstate Insurance Co.'s motion to dismiss one of Scruggs' cases and said Allstate would be liable for damage caused by wind and rain "regardless of whether a later inflow of water caused additional damage that would be excluded from coverage."
Another lawyer, Richard Phillips, has filed a separate class-action lawsuit against State Farm Fire and Casualty Co., contending that the carrier is improperly excluding losses caused by a combination of wind and water.
Trowbridge's attorney, Randy Santa Cruz of Bay St. Louis, is taking a slightly different approach, using engineering reports and meteorological data in an effort to prove on a case-by-case basis that his clients' homes suffered substantial wind damage before the storm surge hit.
Santa Cruz said insurance companies including State Farm and Nationwide are "badly misinterpreting" their own policies.
"I think it's an organized scheme on their part to avoid paying claims," he said. "They have to pay damage that would have occurred in the absence of a storm surge. They can't tell me there wouldn’t have been any damage without a storm surge. They have the burden to prove the existence of their exclusion."
'Fraudulent denial of claims'
Santa Cruz is also looking into reports that some engineering firms might have been pressured to change their conclusions to satisfy insurance company demands. In at least one case, an engineering report allegedly was altered to delete a reference to wind as the cause of damage to a Gulfport home and then signed with a forged signature, according to a complaint filed by homeowners Hubert and Joyce Smith. A lawyer for the engineering firm declined comment, saying the Smiths' complaint had not yet been formally served. A grand jury in Gulfport has subpoenaed insurance company documents, and Hood is investigating what his office described as the "the insurance industry's fraudulent denial of claims on the coast."
In Trowbridge's case, his wood-frame house was reduced to a heap of jumbled blue-gray lumber, insulation and assorted debris, while a half-dozen nearby homes of similar style and age were still standing and appeared structurally sound, although they had taken on up to 8 feet of water and needed significant repairs.
Only the homes of Trowbridge and two neighbors were destroyed so utterly that the experts who saw it concluded it must have been the result of localized intense wind activity.
"It is likely that tornadic activity occurred at or near the referenced address and caused substantial wind damage," said a report prepared for Nationwide by Conestoga-Rovers & Associates, an engineering firm. However, the report concluded that the house was destroyed by "a combination of forces consisting primarily of hurricane induced storm surge, wind-driven waves and the impact of floating debris."
Trowbridge's case is hardly unique. John "Corky" Hadden, 45, a financial adviser who owned a big home worth more than $500,000 in a prime Bay St. Louis location across from the yacht club, was left with little more than a slab and virtually no coverage from his homeowners' insurance. He, his wife and three teenage children are determined to rebuild on the same spot, where Hadden lived as a boy until the previous house was destroyed by Hurricane Camille in 1969.
Mediation ends in frustration
Just up North Beach Boulevard, Dr. Wesley McFarland, 82, and his wife, Rosemary, are staying part-time in a FEMA trailer on the now-vacant lot where they lived more than 50 years in a home that was worth more than $1 million with its contents, he said.
McFarland recently brought his case to a state-sponsored mediation hearing with a 42-page report he prepared, documenting what he called clear signs of wind damage to his former home. State Farm representatives offered less than 0.5 percent of what he sought. McFarland said, and the physician later appeared on a television advertisement paid for by Scruggs' law firm denouncing the mediation process.
Dr. Wesley McFarland and his wife Rosemary have little left of their home except for the front steps. (David Friedman / MSNBC.com)
The "slab claims" of Hadden and McFarland are among the most common type of insurance dispute being contested in Mississippi. State Insurance Commissioner George Dale, in a March 24 letter to State Farm, reminded the carrier that it cannot simply deny a claim for wind damage because the storm surge would have destroyed the home anyway. Instead, adjusters need to take into consideration accounts from witnesses and damage to neighboring homes and pay out whatever portion of the loss was due to wind, Dale said.
That offers a huge opening for plaintiffs like Hadden, whose lawyer, Santa Cruz, talks about sustained winds of 130 mph and witness' accounts of tornados in the beachfront area.
"The evidence is going to be pretty clear that there was extensive wind damage before the storm surge," Santa Cruz said.
For his part Hadden still seems to have a hard time believing that his claim was denied outright.
"I have been very careful about how I handle my financial situation," he said. "I met regularly with my insurance agent. I don't mind paying for small things but I wanted to avoid catastrophic losses. I felt like I had done everything by the book."
After the hurricane, Hadden was so confident about his insurance coverage that he actually spray-painted a notice on one of the surviving concrete-block pillars of his home: "All is well. Thank God and State Farm."
Molly and John "Corky" Hadden lost their beachfront home in Bay St. Louis to Katrina. Click ‘Play’ to see and hear Corky Hadden describe their legal battle with their insurer.
Those last three words have since been covered over with more spray paint. "State Farm in my opinion made a business decision to force people like us to take legal action to try to recover our money," Hadden said. "I think it's a terrible way to do business, and it's really one of the single biggest factors holding back the recovery of our coastline, the way that we've been treated by the insurance companies."
McFarland, a large, outspoken man who still works three days a week as a physician at NASA's Stennis Space Center, is also furious about his treatment by State Farm. "These people sold me something," he said. "I expect them to pay me what they owe me. If it takes two years, four years or more, we'll wait."
Trowbridge, in a baseball cap and windbreaker, still stares at the scene of his home's wreckage with a mixture of sadness and disbelief. He remembers the name of virtually every insurance agent, adjuster and engineer he has encountered since he first saw the destruction two days after the storm. He and his wife, Judy, immediately turned around and drove 100 miles to Hattiesburg and then another 230 miles to Birmingham, Ala., to find a working phone and file their claim.
After weeks of calling and waiting to hear an answer, the Trowbridges finally were told just before Thanksgiving that their claim was denied. Trowbridge, angry but determined, called the adjuster's supervisor in Memphis, Tenn.
'Happy Thanksgiving,' and goodbye
"I said, 'Can't we negotiate about this? Offer me something, please. Deal with me.' He said their lawyers had decided they could win in court. He wished me a happy Thanksgiving and then hung up," Trowbridge said.
Trowbridge retained Santa Cruz as his attorney shortly afterward, and they continued to try to reach an agreement by going through a mediation hearing arranged by the state Insurance Department. About 1,650 policy-holders have scheduled mediation, with 189 of the first 216 cases settled before or at the hearings, according to the department.
But in Trowbridge's case, Nationwide was unwilling to offer anything more.
"I was actually hopeful that we could come to some sort of agreement," he said. "They told me that you should be happy you got your flood (insurance)."
Trowbridge was paid in full by the National Flood Insurance Program and got about $120,000, although his losses were much higher. The Nationwide policy valued the house and contents at about $230,000, said Santa Cruz, and the lawsuit also seeks payment for replacement costs, attorney fees and punitive damages.
The Trowbridges knew they were potential targets for a killer storm, and after the 2004 tsunami in the Indian Ocean began to make plans to move to higher ground. Last spring they bought a piece of land on Firetower Road, near one of the highest points in the county, and began working feverishly to remodel their home, putting in new floors, new kitchen fixtures and a remodeled bathroom.
“We were to the point of putting a sign out” to sell it, Judy Trowbridge said.
Now they have taken out a loan from the Small Business Administration and are beginning work on their new home some 15 miles to the north.
"There was a while that we thought we were going to have to seek medical attention for depression," John Trowbridge said. "It still is a depressing time in our life."
Trying to remember 'normal'
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the whole concept of insurance makes my blood boil. I do not live in a Katrina affected area, however, I can feel their pain. Anyone who has ever had to deal with insurance should understand. What is the point of having insurance if it doesn't do what it is intended to do? I think insurance (including medical and car, etc) needs to undergo a reform of sorts. It is getting out of control! Not only will Katrina victims have to deal with this, but the rest of the customers across the united states will pay as well, in one form or another. It is ridiculous.
leslie, Oklahoma city (Sent Apr 3, 2006 12:59:54 PM)
I haven't found an honest insurance company yet. I read the entire Trowbridge story and the movie Rainmaker came to mind. Its a racket and its legal, can't get a mortgage without it. I hope the insurance companies are compelled to pay you folks its only fair. Im sure the insurance companies will turn to the federal government for a bail out.
Maureen, Houston (Sent Apr 3, 2006 1:00:33 PM)
The insurance companies are not the only obstacle to rebuilding and/or repairing -- if the insurance company pays, and you are unfortunate enough to have a mortgage through companies such as HSBC (f/k/a Household Finance -- a predatory lending company), they hold the insurance money hostage until you pay for the repairs, then want you to pay for THEIR inspectors to inspect what has already been inspected numerous times. Most of us ordinary people do not have $20,000 or more to put on a new roof, or whatever needs to be done. During the six months plus that you fight with your insurance company and then your mortage company, your home is sustaining more damage as a result of not being able to make permanent repairs. It is a never-ending cycle of bad business, bad faith, and no-government oversight.
Madaleine D'Andrea, Delray Beach, FL (Sent Apr 3, 2006 1:04:01 PM)
The insurance companies played this game with us in '92 with Andrew. Many companies even refused to write windstorm policies in S. Fla. and forced homeowners to obtain policies through a state-operated JUA. We ended up with iffy coverage from a company we'd never heard of, but there wasn't much choice. Strangely enough, though, the same companies still offer flood insurance in S. Fla (which is required since most of the area is considered a flood zone). Same thing, different storm. I wish everyone the best of luck.
CC, Seattle, WA (Sent Apr 3, 2006 1:08:14 PM)
As an insurance agent in a hurricane prone state (Florida), I am at a loss as to how an insurance company can determine cause of loss when the entire structure is completely gone. Did the wind destroy it first and then swept away the debris by surge? Or was it completely destroyed ONLY by the surge? Having been an agent for 26+ years, please believe me when I state that I am no fan of insurance companies but by the same token I am still shocked at the vast majority of homeowners who live near the ocean but adamantly reject flood insurance. They will only purchase it when forced to do so by their respective lenders. It is really quite baffaling.
Mike Watkins, Naples, Florida (Sent Apr 3, 2006 1:16:10 PM)
The bigger question is where is the insurance from the insurers? It has never been the insurance companies policy to pay the stated value. They spend hundreds of thousands of our dollars gathering information to include in the FINE PRINT! of the policies they offer as an on slot of legal red tape, big words, and confusing langauge. How is it our homes values can increase with area improvements, developments, etc. but when it comes time to pay, the Adjuster with their handy pen can devalue the area 50% or more? You pay a premium for $250.000 that what you should get. We do not pay half our premiums, so why get half it's (Stated)value?!! It's time for an Insurance Company to do just that, Pay out on what they insurer.
Beatrice Miles (Sent Apr 3, 2006 1:24:11 PM)
My place was destroyed nearly 2 years ago in Hurricane Charley (Florida), so I sympathize with anyone who did not have flood insurance from the federal agency (National Flood Insurance Program) that offers it. But the commercial insurance policies are very clear that damage from rising water (flooding) is not covered. Historically, insurance companies have NEVER covered such damage anywhere in the U.S. It is too common and too devastating. The lesson is: If you live in an area where it is possible that your home will be destroyed by rising water or a storm surge, get a policy from the National Flood Insurance Program. Read your homeowner's policy! Your policy is a contract. If insurance companies are forced to pay by means of lawsuits, it will set a precedent. In effect, it means that no contract will be binding. Think about that. Your lender could decide to triple your car payment or demand payment in full immediately - because your sales contract is worthless! The contractor you hired to build an addition can take your down payment, knock down your living room wall and then come back in a year to finish the job - or not. If you think our courts are a backed-up mess now, just wait. It also means that insurance companies will not write new policies, so your mortgage lender won't lend you the money to build or buy a new home, and businesses won't invest in an area where businesses cannot be insured. Trial lawyers will be glad to sue insurance companies on behalf of folks who didn't have national flood insurance, because they'll take two-thirds of the class action settlement and leave an even bigger economic disaster. When communities can't rebuild, business comes to a screeching halt, and unemployment goes through the roof, a small settlement (after the lawyers' take) will be cold comfort for the people who have already lost so much. Suing insurance companies is a very bad idea, being promoted by the likes of Trent Lott's brother-in-law and a couple of attorneys general who have their eyes on the governor's mansion.
Sandra Palmer (Sent Apr 3, 2006 1:27:58 PM)
I see Nationwide is as horrible as ever - they tried (unsuccessfully) to screw us over after a house fire 20 years ago, and ended up paying thousands more than they would have had to if they had dealt with us fairly. I've made it a point since then to spread the word the Nationwide is NOT on your side! The experience one of the factors that persuaded me to become a lawyer.
Sally Bunnell, East Hartford CT (Sent Apr 3, 2006 1:29:10 PM)
With hugh losses related to weather related catastrophes really states that Homeowners policies lost definitions need to be standardize nation wide as the truth in lending laws are for buying and selling homes. Also the loses needed to be spread through the country and not in a per state or area.
For the life of me I cannot understand it that it was the insurance companies that started it all. They insured the houses in harms way to begin with. When you can see the waves from your front door it doesn't take rocket science to figure that one out.
George Sica, Lake Worth, FL (Sent Apr 3, 2006 1:30:26 PM)
This story and other like it caused me to cancel all but the most remedial insurance required by law. I have decided to self-insure. I don't trust any insurance company to do the right thing. In my Constitutionally-protected opinion, the insurance industry is no better than the Mafia. If everyone in the country who could afford to self-insure did so, we could run these crooks out of business and then someone could wish THEM a "Happy Thanksgiving" as they sit in the unemployment line where they belong.
Scott Bourne (Sent Apr 3, 2006 1:38:15 PM)
My heart goes out to
all Hurricane Katrina
and Hurricane Rita victims.
Do not forget the thousands of
victims here in South Florida
from Hurricane Wilma.Including Alot of
Senior Citizens.In rentals,with friends
awaiting help to rebuild and go home
again.Mostly,roof damage causing
inside water damage and big time
mold and asbestos issues.
E Martin Fort Lauderdale,FL (Sent Apr 3, 2006 1:39:20 PM)
another beaming example of powerful corporations squeezing the little guy and choosing to litigate rather than meet their financial responsibilities; the good 'new' capitalistic way. it's a very
calculated path; how many individuals have the financial resources, time or emotional reserves to climb that legal mountain.
it's becoming a tired story; we get it from the oil companies, credit card companies, health insurers, our neighborhood banks; seems to be the norm rather than the exception among corporate America today.
it's not enough to earn a fair rate, the idea is to crawl into every American pocket and take more by deceptive practice; then place the burden on the individual to prove corporate actions unlawful. in so
many instances the judicial process is grossly influenced by the depth of pockets. these 'trusting and honorable' corporate business tactics are perpetuated by our legislators and lawmakers, who, obviously represent the best interests of their constituents. leaves the little guy with few options.
when the little guy is continually taken advantage of, with nowhere to turn, he will either fade away or fight back. the assertive individual will do his homework, researching the public record on select
unscrupulous corporations, meticulously taking names and addresses and visiting these corporate decision makers in their workplace and on the darkened streets of their home-towns where there is no hiding behind
the corporate banner.
when we loose our way concerning 'right and wrong' in society, maybe there's much to be said for creative 'schoolyard justice' concerning personal accountability for poor human behavior.
philip jewell, raleigh,nc (Sent Apr 3, 2006 1:44:27 PM)
Why is it that when I gamble, I must pay out my losses?
The insurance industry gambles, with the assistance of statistics and underwriters, that they will make money. I am mandated by the government to hold auto and home insurance - mandated to put my money on the gambling table for their play. I know they've taken losses, but where are the insurance executives reducing their incredible salaries and benefits as the big gamblers that lost the bet?
I want a list of the insurance companies hiding behind greedy lawyers. I will change my business!
David Irwin (Sent Apr 3, 2006 1:53:16 PM)
I wholeheartedly agree with the gentleman that said Nationwide is on your side. After having insurance with them for 25 years, we were dropped two days before Katrina. Wish our family luck because we are still homeless after 6 months. THANK YOU NATIONWIDE!!!!!!!!!!
Brenda Guessford, PO Box 5 Kennedyville MD. 21645 (Sent Apr 3, 2006 1:57:04 PM)
I look at the comercial on tv, YOU'RE IN GOOD HANDS WITH ALLSTATE and it makes me want to throw up. No matter how much of the fine print you read there is always something they say you missed. I dealt with the same agent for 18 years and I would not trust him again for nothing.
Carolyn Johnson, Baltimore Ohio (Sent Apr 3, 2006 1:58:22 PM)
Well, if I had State Farm or Nationwide, I would drop it and go to someone else. I'd also be sure to tell them that this is the reason why. If enough people do it, it will really hurt their business.
km (Sent Apr 3, 2006 1:59:17 PM)
My hope is everyone does get their money, but the rest of us need to do our part to help this happen. I always shop for my insurance on a regular basis. I was recently watching a State Farm add and thought of calling them. Not anymore.......... I have dealt with Alstate, and will not again.
My fear is these scummy people that run the industry will buy enough of Congress, the Whitehouse, and our courts that they become insulated from lawsuits. If you people do dnot like what thees people are doing they should look at the legislation that was ennacted that makes them think they can unilaterally do this to their customers. They should then look at who was holding the power when that legislation was passed. It will not get their money, but it might return our laws back to us.
larry Simon (Sent Apr 3, 2006 1:59:23 PM)
Yet another fleecing of America. Our administration and the insurance companies should be ashamed of themselves. I feel embarrassed for them.
Robin Hurtado (Sent Apr 3, 2006 2:00:50 PM)
Insurance companies are as crooked as a dog's hind leg, and they are more than willing to sell you a bill of goods in order to get you on their tally. Then they do a song & dance when it's time for them to pay the piper. Insurance companies need to answer to government regulation, and not their own bottom line. If they say they are going to cover your losses in the event of a catastrophe, then that should be what they are going to do, not do what they feel like when the time comes. And it's not just for damage to homes either. Auto accidents are another example, and medical claims, too. America needs to start standing up and quit being ripped off by big business, big oil, and big utilities. It's sickening what the government has allowed to happen in this country.
Pat Marren, Auburn NY (Sent Apr 3, 2006 2:01:13 PM)
I live in Jupiter Florida, we have had the eye of three different hurricane pass within 30 miles of our home in the past 2 years. Wilma went right over our heads. We have shutters & used them. We protected our home and property the best we could. We didn't file any claims for Frances or Jeanne in 2004. We have a 3% deductible and feared a claim would raise our rates. My husband and sons repaired all our damage out of pocket. With Wilma our damage was more severe and we had to file a claim. We heard all the news stories of all the insurance companies denials of hurricane claims. We were really fearful of what we could be looking at. But we were lucky, our insurance company St. Johns, they were professional and treated us fairly. Our deductible, at $5000 was still a challenge but St. Johns paid up. The scary thing is, our damage was not catastrophic. It was ugly and inconvevient, but we never had to leave our home. I think the larger the claim the harder they look for reasons to deny it. As Americans we can't let them get away with it. They collect our money like clockwork but hide from our claims. These people who lost everything are owed more. Sure hurricanes are costly and inevitable. But they can't take our money for decades of minimal storm activity then deny us during the years of increased activity. That's certainly a crime. PLEASE Lord put me on one of those juries!
S. Martin (Sent Apr 3, 2006 2:02:15 PM)
This is an empirical example that "Tort Reform" is merely a ruse. "Citizen groups" which, are typically sponsored by insurance companies, are quick to blame all their woes on "those plaintiff lawyers." However, voters then learn, after Tort Reform is passed, that not all lawsuits are "frivolous."
Adam Vanek (Sent Apr 3, 2006 2:02:55 PM)
Consumer Reports ranked insurance companies a few years back based on customer satisfaction... I think it's about time for them to update this information so that people can make an informed decision when purchasing home owners insurance. In light of the problems everyone's been having since last year's hurricanes, we went with a company that has underwritten very few policies in our area... the logic is that if a major disaster happens here, they won't have sticker shock from a large number of claims. Maybe we'll be treated like individuals instead of being lumped into a large group that is rubber stamped with "Claim Denied". But even going this route, you never have a guarantee, no matter what your policy says in writing, that the company will do the right thing. It's all one big roll of the dice.
And another thing... AllState informed us when we were shopping rates that they won't carry earthquake insurance at all starting next year. I sincerely doubt that they will go to much trouble to tell their current customers about this change. They even had the gall to tell us that they were on the "leading edge" and that all the other companies would follow their lead. Who steps in and fills the gap when the insurance community decides that covering a particular natural disaster is no longer cost-effective?
Katie, Memphis TN (Sent Apr 3, 2006 2:02:55 PM)
I'm going to try and word this the best I can.
Imagine being told if you invest in company "A" in the stock market, you could NEVER take a loss, and would ALWAYS show a profit of 10-12% per year.
You would now be an investor in an insurance company.
Not a common stockholder, but a member of the board of directors, a Major Shareholder.
You see, major insurance companies have a neat little deal. They collect premiums year after year and collect REAL profits (Not profits they show in thier yearly disclosures) of over 10 BILLION dollars a year. (They have clever "legal" ways of hiding profits and showing them as investments into the company)
Even if company "A" has claims in a year that real 20 BILLION dollars, company "A" has at least 1/2 that money in liquid assets on hand, and 10 times that amount in available credit for the other 1/2.
So why the concerns about "Bankrupting the insurance industry?"
Well, as board member "A-1" you have been told you will have a return of 10-12% per year on your investment. Nobody is going to tell you or show you different. So what happens is this. Instead of honoring your policies, you deny everything possible. You claim "Bankruptcy" as the only alternative because even though you could take loans to cover the money needed, and pay it all back next year, then start showing profits again the year after, you want your investment return THIS YEAR, and next year, NO MATTER WHAT.
It's a risk free investment. That's what insurance is. It has become this because of massive payouts, lobbying, and plain lack of democratic responsibility.
So, to finish this up. A company with the proven ability to show assets and profits of over 200 billion dollars over a ten year period should NEVER be allowed to file bankruptcy, EVER. They have a base premium group (policy holders) of "X" dollars a month that guarentees them "Y" dollars for "Z" number of years.
If as a regular everyday joe, if I tried to file bankruptcy because I had to lay out 10% of my 10 year income out in one year, and showed the proven assets and future assets the way insurers can, the judge would tell me to pay up and shut up.
Am I fundamentally wrong here?
Sorry for the spelling ;-0
G. Behrend, Anytown, USA (Sent Apr 3, 2006 2:03:09 PM)
People don't read their policies when buying their insurance. Clearly, everybody missed the big flood portion, which is always a part of the storm and the fact that the federal government actually covers it, if you buy it! Ahh...I know what happened! No one told them to buy it! It is called the National Flood Program and should be mandatory for all property owners in all coastal areas. Insurance companies should not have to bear the brunt of ignorance or lack of interest.
Luis Ruiz, Miami, FL (Sent Apr 3, 2006 2:06:37 PM)
The business relationship is always between the carrier and the agent. The insured doesn't factor into the equation. The insured is just one small piece of business while the agent represents a large block of business. The answer? Hold your agent accountable for their carrier's actions. My agents understand they will represent my interests in the event of a catastrophy. If litigation takes place they will be a target as well as their carrier.
Jeff R. (Sent Apr 3, 2006 2:08:39 PM)
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