State Senate GOP Blocks House Insurance Measures

“What you risk reveals what you value.” Jeanette Winterson

I’m reminded of that quote when I think of Republican Senator Eugene “Buck” Clarke, chair of the Senate Insurance Committee who just last month proclaimed his ignorance of the interplay of insurance issues with existing state law and used that lack of knowledge to kill every Katrina related reform introduced in the State Senate. The reported party line as recounted multiple times in the Clarion Ledger was something along the lines of:

But his legislation languished in the Insurance Committee chaired by Sen. Eugene Clarke, R-Hollandale, before dying under a deadline.

Rather than bring the bills out of committee and up for debate before the full Senate, Clarke said he wanted more time to study the issue. This is his first committee chairmanship. He’s starting his second term as senator.

We also have this blurb from a Natalie Chandler news story from February:

Senate Insurance Committee Chairman Eugene “Buck” Clarke said it is not likely any such bills would survive his committee .

“I feel for people on the Gulf Coast, but we’ve got totally new leadership in both chambers,” Clarke, R-Hollandale, said.

Both chairmen said they need a year to acclimate themselves to their new positions.

The House Insurance Committee has since found their sea legs and passed House Bill 498, similar to one of the 7 reform measures introduced in the State Senate by Senator David Baria.   The bill, aimed squarely at the anti concurrent clause, which in operation shifts responsibility for claims adjusting to the policy holder when a covered peril occurs with a non covered peril the measure requires an Insurance Company to adjust their claims and figure the cause of loss. This is important because though the anti concurrent clause gives insurers a pass to adjust their claims in good faith with their customers, NFIP rules clearly state participant insurers must provide a proper adjustment of claims involving flooding so taxpayers are not stuck with non covered wind obligations, as appears to be the case to as much as $9 billions dollars with Katrina. So how does Senator Clark and his political benefactor Phil Bryant react to HB 498, a consumer friendly and US Treasury friendly measure? They kill it. But now we are given new reasons from the State Senate GOP per today’s Sun Herald story:

HB 498, offered by Rep. Michael Janus, R-Biloxi, would have put the burden on insurers to prove a claim is not covered in a policy when there is a dispute; it died when the Senate Insurance Committee didn’t take it up.

The committee killed seven Katrina-related insurance-reform measures offered by Sen. David Baria, D-Bay St. Louis, earlier this session.

Committee Chair Eugene “Buck” Clarke, R-Hollandale, said Friday his committee wouldn’t take up the Coast delegation’s insurance reforms because he said they would pile mandates on insurance companies, and that would likely drive up insurance costs, which have slowed Katrina recovery.

Supporters said HH 498 was needed in case the Broussard “slab” case ruling is overturned on appeal. The ruling in the lawsuit, filed by a Biloxi couple after the storm, said insurers must prove a claim is not covered in a policy when there is a dispute.

So there you have it, Senator Clark is finally being honest about whom he serves in the legislature and it is not the people of this State. So far the solution has been to throw taxpayer money at the problem, which is not a long term solution or preferable to addressing the root causes of our insurance crisis. Senator Baria summed up the fallacy of Senator Clark’s remarks best in Monday’s Clarion Ledger story on this topic:

Sen. David Baria of Bay St. Louis, whose companion Senate bill did not survive, said, “Insurance is not regulated at the federal level in any way. That means that we have the responsibility” of making sure policyholders are protected.

Indeed with Phil Bryant and the Eugene Clark serving big insurance instead of the voters underscores the need for a federal solution for an industry that has little oversight, an anti trust exemption and a blank check from our state Senate.

Update: I found a statement released by Senator Baria on the Jackson Watch Blog maintained by the Jackson based reporters for the Sun Herald. Senator Baria’s statement in its entirety:

Today (Tuesday) is the deadline for committee action on the Premium Payer Bill of Rights (HB 498) and Senate Insurance Committee Chairman Clarke has announced that he intends to let it die via “pocket veto.” This is the same maneuver that Sen. Tommy Robertson employed last year to kill the cigarette/grocery tax swap. As a result of this move, the legislature will have allowed another year go by without taking one single step to reform the way insurance claims are handled in Mississippi after a catastrophe such as Hurricane Katrina.

The House version of the bill, which was stripped down version of the Senate bill, would have placed the all-important burden of proof on the insurance company in a “slab” case. The Senate version would have also voided the grossly unfair anti-concurrent clause exclusion as a matter of public policy. This is the provision buried in policies that allows the insurance company to deny claims when wind causes damage, but water later flows into the structure.

It has been said alternately that the issue needs more study or that the legislation would impose mandates on the insurance industry, but neither reason holds much water. In the two and ½ years since Katrina no study committee has ever been appointed. Concerning mandates, there are no mandates in the bill except that a requirement that the rights of consumers and duties of the insurer be spelled out and attached to every policy. This “mandate” may add $.05 to the cost of a policy.

While recovery has stagnated on the Gulf Coast due to insurance issues, and thousands of claims remain unresolved, the legislature will let another year go by without action. This is a disservice to all Mississippians, not just Coast residents. The next time a catastrophe strikes it may be somewhere else in Mississippi and it will be too late to correct the problems in getting claims paid that were exposed by Katrina.

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