Coalescing Coastal Insurance Consumers: Gene’s Staff Spreading the Good Word

As we catch up with the news I saw this out of Cape Cod last week in the Barnstable Patriot. (H/T Yallpolitics)

They read us down there in the Deep South. And that could maybe save Barnstable property owners a pocket full of money on home insurance. All it might take is a national coastal coalition of fed-up ratepayers.

Unfortunately, coastal homeowners, despite all their griping and little else, aren’t that easy to coalesce.

We got a note from a Mississippi congressman’s office after our business page carried an interview recently on Paula Aschettino’s 6,000-strong, grass roots Citizens’ for Homeowners’ Insurance Reform, which has been jousting with this state and insurers for several years over the roughly 400 percent increase in the Cape’s coastal insurance premiums and/or blatant abandonment by private insurers.

The office of U.S. Rep. Gene Taylor of Mississippi’s 4th District, which was pummeled into crisis by Katrina, wanted us to get them in touch with Mrs. Aschettino. We did. But we also perused the congressman’s Web site containing considerable information about insurers and their propensity to, in the congressman’s terms, “screw” the premium payers.

“People who played by the rules and expected insurance companies to play by the same rules got screwed,” Taylor, a Democrat and ex-Coast Guard search and rescue boat skipper, has said in the wake of Katrina. But more than talk, he has filed a bill, HR-1264, the Multiple Peril Insurance Act of 2009 that, in summary, would allow coastal homeowners for the first time to buy a comprehensive government policy that covers flood and wind damage, which is not now the case.

That would end, he says, the private insurance industry’s “lengthy disputes over how much damage was caused by wind and how much by flooding,” a legal knot that has slowed or negated payment of claims and impeded recovery from the storm’s devastation to this day.

Taylor notes that insurers dealing with Katrina policyholders admitted in court that, ”We wouldn’t pay a dime…unless sued.” He notes a major insurer’s directive to claims adjusters that “Where wind acts concurrently with flooding to cause damage to the insured property, coverage for the loss exists only under flood coverage, if available,” often leaving wind insurers off the hook. The insurers call that an “anti-concurrent causation” clause often found buried in their contracts, Taylor says.

The public should know that government flood coverage was initiated in the ‘60s as a safety net only after private insurers bailed out, a precursor of what is happening today on Cape Cod with wind insurers either unceremoniously dropping coastal home policies altogether and/or increasing rates along with ridiculous deductibles that hardly make the insurance worthwhile.

“Insurance companies have jacked up premiums and reduced coastal risk from Texas to Long Island and Cape Cod (as) more property owners have no alternative other than state wind pools, the states’ insurers of last resort,” Taylor says. In Massachusetts, everybody knows that last resort insurer by the acronym FAIR, which has been described by a spokesperson in Atty. Gen. Martha Coakley’s offices as “…not really a fair plan” for its continuing demand for rate increases in the face of millions in profits.

While Taylor says insurers failed in their mission to protect homeowners by denying claims after Katrina, “property insurers had $48.8 billion in profits in 2005, $67.6 billion in 2006 and $67 billion in 2007.”

A spokesperson from Rep. Taylor’s office said last week a “reaching out” conversation had been held with Aschettino, alerting her to the existence of an ally in the Taylor bill and to US. Rep. Barney Frank’s support for it. Taylor’s Web site, by the way, contains substantial information on the insurance industry and its particular mistreatment of coastal policy holders, along with a five-minute film to help along.

Aschettino’s effort to move politicians and bureaucrats in this state to the point of actual relief from high home insurance rates in coastal areas has not been rewarding, even though the end of the state’s rate-setting policies in the auto insurance sector did open that field to competition with more insurers returning with lowered rates.

Taylor’s spokesman noted one particular question asked by Aschettino regarding Taylor’s bill. What would it cost? It’s a question that can’t be answered with certainty until it moves along…if it ever does.

Similar to the health care issue now raging, Taylor’s bill injects more government into private industry’s domain, a prospect that conservative radio talk show hosts now running the country will not allow.

Coastal homeowners complaining about high or no insurance will either sit by or actively support Aschettino, Taylor and those of their ilk who are providing rallying points for fairness.

Those interested in learning more about Taylor’s plan and the effects of Katrina can visit instead of being browbeaten with misinformation from television’s fact-bending opinionators.

5 thoughts on “Coalescing Coastal Insurance Consumers: Gene’s Staff Spreading the Good Word”

  1. Here is a little social psychology work on why people “scew” others—

    Today the good people at TED posted a video of Philip Zimbardo’s talk–brimming with humanity and good will–from the conference earlier this year. Zimbardo is, of course, the psychologist who designed the Stanford Prison Experiment in 1971. More recently, he was called upon to be an expert witness at Abu Ghraib trials, an experience that led him to write “The Lucifer Effect: Understanding How Good People Turn Evil.”

    You can buy his book, or better yet, watch the video. (And then buy his book.)

    Zimbardo’s central theory won’t be too surprising to anyone even remotely familiar with his work: Many people who do horrible things are not necessarily born “evil.” Determining why good people turn evil, or do evil things, has been his life’s work. A lot of it, it turns out, has to do with circumstance. Evil, as Zimbardo sees it, is when power is abused in such a way that it hurts people physically, psychically or emotionally. And “if you give people power without oversight, it’s a prescription for abuse,” he says.

    To illustrate his point he uses the Abu Ghraib prison scandal to examine how ordinary soldiers–who would be called “bad apples” by the government that asked them to oversee prisoners with inadequate training and oversight–did things that were extraordinary for their brutality. (In a somewhat related note, this week the 2nd U.S. Circuit Court of Appeals upheld a 2006 ruling by Judge Alvin K. Hellerstein ordering the release of the Abu Ghraib pictures to the ACLU.)

    With the caveat that “understanding is not excusing” evil, Zimbardo ends on a positive note: sure, the power to commit evil resides dormant in us all. But so does the potential for great heroism.
    Somehow I think Dr. Zimbardo would be a welcome addition to the Congressional look into State Farm and their house of pain known as the claims processing center. Steve

  2. Sound familar to those who study Katrina claims handling by State Farm?

    (“The situational forces that were going on in [Abu Ghraib] — the dehumanization, the lack of personal accountability, the lack of surveillance, the permission to get away with anti-social actions — it was like the Stanford prison study, but in spades.”)Zimbardo


    Wired: Do you think it made any difference that the Abu Ghraib guards were reservists rather than active duty soldiers?

    Zimbardo: It made an enormous difference, in two ways. They had no mission-specific training, and they had no training to be in a combat zone. Secondly, the Army reservists in a combat zone are the lowest form of animal life within the military hierarchy. They’re not real soldiers, and they know this. In Abu Ghraib the only thing lower than the army reservist MPs were the prisoners.

    (Steve thinks of the number of new “adjusters” who were given weekend adjuster courses and told improper claims handling methoids. Think of how many seasoned adjusters who had to be replaced by these rookies. Think of how much money one made when compared to their former lifes as cooks at McDonalds for example. Think of how much they wanted to please their new employers to ensure a longer deployment and a return engagement.)

    Of course what does it say about an organization who persecutes whistle blowers?—

    Wired: You’ve said that the way to prevent evil actions is to teach the “banality of kindness” — that is, to get society to exemplify ordinary people who engage in extraordinary moral actions. How do you do this?

    Zimbardo: If you can agree on a certain number of things that are morally wrong, then one way to counteract them is by training kids. There are some programs, starting in the fifth grade, which get kids to think about the heroic mentality, the heroic imagination.

    To be a hero you have to take action on behalf of someone else or some principle and you have to be deviant in your society, because the group is always saying don’t do it; don’t step out of line. If you’re an accountant at Arthur Andersen, everyone who is doing the defrauding is telling you, “Hey, be one of the team.”

    Heroes have to always, at the heroic decisive moment, break from the crowd and do something different. But a heroic act involves a risk. If you’re a whistle-blower you’re going to get fired, you’re not going to get promoted, you’re going to get ostracized. And you have to say it doesn’t matter.

    Most heroes are more effective when they’re social heroes rather than isolated heroes. A single person or even two can get dismissed by the system. But once you have three people, then it’s the start of an opposition.

    So what I’m trying to promote is not only the importance of each individual thinking “I’m a hero” and waiting for the right situation to come along in which I will act on behalf of some people or some principle, but also, “I’m going to learn the skills to influence other people to join me in that heroic action.”

  3. With a little luck the girls could be the poster child of the movement to strengthen whistleblower legislation. Surely their treatment would be fodder for stronger laws. Depends on the outcome of the discovery and case I would propose. I think Obama might want to aid the girls if it gets him what he wants…(steve)

    FEW Washington Update

  4. Wow. Maybe this guy, who has experience in insurance, would be of some help to the girls. If the case gets going who knows might sign on to help bring the case to Washington…

    14 West Erie Street
    Chicago, IL 60610-3811
    Phone: (312) 751-1170
    Fax: (312) 751-0438
    E-mail: [email protected]

    Illinois Department of Insurance, 1969 – 1971
    Chairman, Insurance Consumers Advisory Panel

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