Day: December 4, 2008

SLABBED welcomes Texas Windstorm Association and Ike victims to “the scheme”

Texas Windstorm Insurance (TWIC) has canned software programs that the Adjusters have to use for their estimates. The unit prices on the structures are about 40% low, old and outdated. The adjusters make choices on which unit price item to use and that usualy makes the estimate also low. Drawings must be made by registered Professional Engineers in the State of Texas. The engineer designs to the new codes but the costs in the software programs are not updated…

This gem of information was among the 74 comments to the Houston Chronicle’s story Homeowners battle for higher payouts to fix Ike damage.

Hurricane Ike blew some shingles off William Cognata’s La Porte home and loosened a lot more.

His roofer told him he needed to replace it, but his insurer offered $466 for repairs.

“Three roofers looked at it and told me to replace it. I’m no roofer, but I have some sense to know who to listen to,” he said.

Area homeowners have survived the storm, waited weeks in some cases for the lights to come back on and opened their homes to insurance adjusters.

Now, as residents slammed by Ike work their way through the recovery process, some are entering a new phase: the battle for what they consider a fair settlement of their claims.

Some are complaining to regulators, hiring their own experts and, like Cognata, turning to attorneys to get higher insurance payouts.

More than 1,700 Texans so far have complained to the state about their insurance companies — everything from claims delays to unsatisfactory offers and denials.

That’s a small percentage of the more than 530,000 claims filed already in the wake of Hurricane Ike, but state regulators say they’re monitoring the number of reports and how they’re resolved to make sure policyholders are treated fairly. The agency can require bigger payments if necessary.

“We certainly want to hear if there are any complaints about the claims process,” said Jerry Hagins, a spokesman for the Texas Department of Insurance.

Perhaps, Mr. Hagins will read the comments like this one in the Chronicle. Continue reading “SLABBED welcomes Texas Windstorm Association and Ike victims to “the scheme””

Breaking News: Former CEO of Louisiana Citizens Insurance Indicted

The Times Picayune is reporting the indictment of Terry Lisotta, former CEO of Louisiana’s state-operated insurance program.

Politics and law have a special relationship in Louisiana; so, I’ve linked a few background stories from former Louisiana Insurance Commissioner Jim Brown’s site below the lead story for those who would like to know more.

A state grand jury today indicted the former chief executive officer of the state-operated Louisiana Citizens Property Insurance Corp. on 14 counts of theft following a year-long investigation by Attorney General Buddy Caldwell’s office.

The grand jury returned the indictment against Terry Lisotta, who was criticized in two audits during the past 15 months by Legislative Auditor Steve Theriot’s office for ringing up more than $285,000 in expenses between 2003 and 2006 and charging the expenses to Citizens or two other state-related insurance entities.

Assistant Attorney General David Caldwell, the attorney general’s son and director of the public corruption and special prosecutions section of the office, did not rule out more indictments and said the investigations are ongoing. Continue reading “Breaking News: Former CEO of Louisiana Citizens Insurance Indicted”

GAO snapshots of NFIP miss the big picture

Rebecca Mowbray reports on the latest GAO snapshot of the NFIP.

The Federal Emergency Management Agency, which racked up $17.4 million in debt in the National Flood Insurance Program after the 2005 hurricanes, doesn’t set prices to adequately reflect the cost of the risk in the properties that it insures, leaving taxpayers at risk for picking up the tab, according to a report released Monday by the Government Accountability Office.

The report, “FEMA’s Rate-Setting Process Warrants Attention,” is the latest in a series of stinging assessments of the federal flood insurance program by the investigative arm of Congress.

While few would disagree that “stinging assessments” of FEMA’s management of the NFIP are in order, GAO’s decision to produce snapshots misses the big picture.

However, Brian Martin, friend of the slabbed and Policy Director for Mississippi Congressman Gene Taylor, brings it into focus with his response published in the Times Picayune today, Raising rates won’t fix the flood program.

The Government Accountability Office’s report about the National Flood Insurance Program’s premiums is remarkably short-sighted. The flood program needs structural reform, but its problems cannot be solved simply by raising premiums and eliminating premium subsidies.

GAO completely ignored the two things that are responsible for almost all of the flood program’s debt: catastrophic levee failures and unpredictable storm surge.

The flood insurance program is in debt primarily because it has paid out billions of dollars for catastrophic flooding after levee failures, not just in New Orleans, but in Missouri, Illinois and all up the Mississippi River system. It is not feasible to raise premiums enough to cover massive levee failures. We have to reduce the risk of catastrophic flooding by making sure that flood control structures are properly designed, built and maintained. Continue reading “GAO snapshots of NFIP miss the big picture”

SEC adopts new rules for credit rating agencies to protect against conflict of interest

Then, in late August, Hurricane Katrina hit the Gulf States, where Allstate had significant exposure. Because Allstate had been in discussions with the rating agencies before Katrina and was able to demonstrate the outcomes of its modeling, the groundwork had been laid for frank discussions about the company’s capital management options following Katrina, Rita and Wilma. As a result of these discussions and strong underlying performance, even in the face of substantial losses, Allstate was able to demonstrate an effective post-hurricane capital management strategy and maintain its ratings.

Bingo?

With this quote left in comments fresh on my mind (h/t Steve), news of the new rules adopted by the SEC caught my eye.

We told you last month about the under-reported role of the credit ratings agencies in helping to cause the financial crisis. The problem, in a nutshell, is that the major ratings agencies — Moody’s, Standard & Poor’s, and Fitch — are paid by the insurers (often investment banks) who are issuing the bonds. That gives the agencies a clear incentive to produce favorable ratings, or risk seeing the banks hire a different ratings agency that’s willing to offer a better rating. (emphasis added)

Continue reading “SEC adopts new rules for credit rating agencies to protect against conflict of interest”

Rip Van Winkle fills and files “kitchen sink” in Rigsby Qui Tam

Honest to goodness, if Rip Van Winkle didn’t wake up and file the Amended Answer for defendant Forensic Analysis and Engineering, it’s difficult to account for many of 67 defenses (yes, 67!).

New to the case or not, any Statue of Limitations that might apply would not consider the date an attorney makes an appearance; but, that’s only date that might, just might, be beyond some limit.

FIFTH DEFENSE

Some or all of the claims may be barred by the applicable statutes of limitations.

Like many of the defenses, the fifth had no supporting citation.  In those defenses with a citation, the reference was broad with no information on how it might apply.  For example:

THIRTY-SECOND DEFENSE

Some or all of the claims are barred by public policy.

A particularly bewildering defense are the many related to punitive damages beginning with defense thirteen and continuing through defense twenty-six save the one exception, defense twenty-five.

THIRTEENTH DEFENSE

Punitive damages violate the due process, equal protection, and excessive fines clauses of the constitutions of the United States of America and the State of Mississippi.

What makes the twelve punitive damage defenses so bewildering is that no punitive damages are sought. Continue reading “Rip Van Winkle fills and files “kitchen sink” in Rigsby Qui Tam”