Following is yet another clip from Gene Taylor’s town hall meeting which touches on the heart of why so many people on the Mississippi Gulf Coast feel as though they have been swindled by their insurer: The Anti Concurrent Clause. Pictured in this New York Times story from 2006 that explains the concept is Marilyn Haverty, a lady I’ve known since I was a child growing up in Waveland with her children back in the 70’s and 80’s. Miss Marilyn and people like her are the reason this blog exists.
There’s no question that the anti-concurrent clause is bad for policyholders,’’ said Adam F. Scales, an associate professor who teaches insurance law at the Washington and Lee University School of Law, in Lexington, Va. “It’s not fair because it defeats policyholders’ reasonable expectations.’
Robert Hunter, former Texas Insurance Commissioner and Director with the Consumer Federation of America contends consumers do not understand such clauses buried in the fine print of their policies. George Dale seemed to agree in an interview he gave the Sun Herald that ran back in March 2006, when he claimed ignorance that insurers would use the clause to deny coverage: (The Sun Herald link is long gone but thanks to Anita over at the Did we survive Katrina or Not? blog we have this quote from the story.)
Q: So, you might not have realized how this was going to be interpreted when it was approved?
A: Oh, I’m admitting that with just the volume of the number of type policies – and there are hundreds of them in the course of a year that comes through my rating division – there may be other things that are in policies that would have gotten approved by my department by accident.That’s just the volume of the business that they do. Let’s hope it’s a minimal number of things that were approved.
I would submit that if this nation’s *longest serving insurance commissioner and his staff of lawyers had little clue to the meaning of this language then consumers had no chance of understanding the language. In fact most down here feel such language is a scam as the reason they bought the policy in the first place was to cover the one event insurers now claim it didn’t cover, a Hurricane.
[youtube=http://www.youtube.com/watch?v=fyhHP6Emgfk]
* – Mr. Dale was soundly beat in the party primary in August 2007 thus ending his term of service to the insurance industry.
sop
Is “concurrent causation” BAD for policyholders? Sure. Anything that results in a lower claim payout is “bad” for the policyholder. An insurance company checking the policyholder’s math can be “bad”. A carrier insisting that only covered claims be paid is “bad”, as it means less dollars paid. “Bad” isn’t the issue.
“Fair” IS the issue. The attempts by many on the Gulf Coast to rewrite their policies AFTER THE LOSS is not, to my way of thinking, “fair”. A deal is a deal. The concurrent causation language is there for a reason: to be sure that flood losses are paid for by flood insurance. Carriers didn’t collect premium for the flood risk and they don’t want to pay for losses they didn’t collect premium for.
The attempts by Lott, Taylor and others to demagogue the issue just make it worse. The more people howl about the evil insurance companies, the more those companies are likely to conclude that:
1. on contested issues, they can’t get a fair hearing in front of a (fill in the blank) MISS, LA or ALA jury, and therefore
2. without a fair system of dispute resolution, the better answer is to simply not write policies there.
From a homeowner’s carrier perspective, the Gulf may simply be more trouble than it is worth. It presents a boatload of risk, and resists any attempt to try and properly underwrite that risk. Taylor and others want to dump that risk on the US taxpayers. That is fine, if people in Ohio and ND and Colo and elsewhere don’t mind subsidizing the Gulf’s choice to live and build in flood and storm territory. But make no mistake: that is the heart of the problem, not concurrent causation
claim guy, if you haven’t read my post here “Wind – Breaking News” please do so that we’ll be talking the same language when I reply.
I’ll wait to hear from you.
Glad to see you again, btw.
Mr. Claims Guy you did a great job of succulently summarizing most of the insurance industry talking points with regard to the Katrina litigation and frankly you are ahead of your time because some of these issues are topics for future posts. I’m going to take your points and present another viewpoint.
I agree fair is the issue and disagree anyone tried to re-write their policies after the storm. The anti concurrent clause did not relieve insurance companies of their obligation to adjust their claims in good faith. In the Broussard case, Chip Merlin on his blog presented the following legal theory along with a few facts:
“At trial, it appeared that State Farm