Pee on My Leg and Say It’s Raining Part 3: Marsha Thompson Joins Kevin Drawbaugh in the Drive by Reporting Craze

Since Lotus at Folo brought this report that aired on WLBT to my attention, I filed it away for further commentary, not only for its glaring factual inaccuracy (EA Renfroe is a claims adjusting firm not engineers), but also because of the sheer silliness of the logic used to frame the Rigsby sisters as document purloining perverts. I had to chuckle thinking of the State Farm commercial which no doubt aired at some point during the broadcast, informing us the good neighbor stands ready to sell us life and auto insurance; contracts that people such as Dr Leroy McFarland discovered post Katrina really were not worth the paper they were written on.

I filed Ms Thompson’s revealing report away as I was vetting the first Reuters story on the GAO report past some ordinary people off the coast to gauge their reactions to it and the context which it was framed. This is the paragraph that repeatedly came up in the feedback I received.

Study after study has come back with the same results, showing there is no evidence insurance companies improperly attributed wind damage from Hurricane Katrina to water,” said Justin Roth, senior federal affairs director at the National Association of Mutual Insurance Companies, an industry group.

“We fully expect this report to reach the same conclusion,” Roth said

Mr Roth’s artful wordsmithing must be appreciated in PR circles for its sheer intellectual dishonesty as is Mr Drawbaugh’s apparent willingness to serve as a mouthpiece instead of his stated vocation of reporter in the finest traditions of misinformation that would make Dr. Goebbels proud.

So how could Mr Roth be so confident in his statement, issued one day before the GAO report was released? Easy, the Three Wise Monkeys work for FEMA, and Mr Roth knew FEMA did not collect wind damage payment data in flood claims thus they had no way of knowing if NFIP was improperly charged for wind damage. This is what the GAO had to say on that exact subject:

FEMA officials stated that they did not have the authority to collect wind damage claims data from insurers. But without the ability to examine claims adjustment information for both the wind and flood damages, NFIP cannot always determine the extent to which each peril contributed to total property damages and the accuracy of the claims paid for losses caused by flooding.

FEMA cannot be certain whether NFIP has paid only for damage caused by flooding when insurers with a financial interest in apportioning damages between wind and flooding are responsible for making such apportionments.

However, when the public adjusters in Louisiana peeked under the hood of flood claim adjusting in New Orleans, they found a far different story than was conveyed by Roth and Drawbaugh:

“….a group of former insurance adjusters, identified only as the Georgia company Branch Consultants LLC, say they have reinspected 150 properties with flood and wind damage. In all cases, private insurance companies overcharged the federal flood program for storm damage while they underestimated wind damage.

“Every single one of them,” said Allan Kanner, a New Orleans attorney representing the insurance and construction experts as they pursue what they say is a violation of the False Claims Act on behalf of the federal government. “There’s a pattern here.”

In one striking example, the suit claims that a group of four-plex apartments in eastern New Orleans were compensated for flood damage with taxpayer money even though they experienced no flooding. Each building in same complex was paid only a pittance for severe wind damage on its regular property insurance policies.”

WLBT Jackson Joins in the Drive By Reporting Craze

In their anchor captioned report “Sex, Lies and Theft” WLBT tries their hand at character assassination. The story teller, Marsha Thompson, dutifully informs her viewers of Kerri Rigsby’s sex life and that the Rigby’s were “Stealing documents without State Farm’s knowledge or permission and then furnished copies to the Attorney general, US Attorney and Scruggs without permission.”

Following Ms. Thompson’s logic the Rigsby sisters, who publicly stated they believed they have witnessed crimes known in some legal circles as Racketeering, should have asked permission before calling the authorities. Following the Thompson logic means we should also obtain the permission of an armed robber before calling in a bank robbery. Thompson logic also evidently means the sex lives of witnesses to a crime are fair game too.

Is it any wonder around 26% of the public finds local TV news “believable” or that so few white collar crime witnesses are willing to come forward as whistleblowers. WLBT should hang their head in shame.

Fade out to the “Good neighbor” ad…..

sop

GAO National Flood Insurance Program Report: A View from Outside the Industry

Yesterday we pointed out several glaring omissions and factual inaccuracies in the Reuters drive by reporting on the General Accounting Office NFIP report. Today we see better coverage courtesy of Anita Lee at the Sun Herald. In addition to our analysis, Ms Lee points out some of the other conclusions reached by the GAO on the flaws inherent to the current program design:

The first flaw involves the three wise monkeys and the concept of see no evil, hear no evil and speak no evil. While that old proverb works well in our personal conduct it is an invitation to disaster when used to manage a federal program:

The flood-insurance program cannot accurately determine flood-claim payments on properties that were subject to both winds and flooding, because FEMA does not collect information on wind claims and does not require companies to explain how they distinguish between wind and flood losses.

The second flaw involves the security the program gives to it’s participants, even if property owner contracts for wind and flood insurance there is no way to know if all the damage will be covered due to Catch-22 like scams such as the anti concurrent clause built into wind policies and other coverage differences between flood and wind policies:

Property owners with separate homeowner, wind and flood insurance policies cannot know prior to a storm whether all their damage from a hurricane will be covered because of differences in the policy limits. The NFIP cedes the damage determination to the insurance company.

The system as currently designed fosters legal disputes because of Catch-22 scams such as the Anti Concurrent clause.

Legal disputes between wind and flood coverage have increased because of insurance companies’ anti-concurrent causation clauses that attempt to exclude coverage of wind damage if flooding contributed to the loss.

Most interesting is that FEMA seems to oppose the common sense recommendations, especially those that would require the bureaucratic FEMA monkeys to remove their blinders and examine how flood claims are adjusted and the damage is apportioned in multi peril events such as hurricanes by private insurers.

Given the insurance money that supports Senate politicians like “Renfroe” Richard Shelby and “Pac-Man” Christopher Dodd we certainly understand their insistence to sticking with the current “heads I win, tails you lose” setup for coastal residents whereby wind policies are essentially meaningless pieces of paper and taxpayers ultimately bear the burden for multi peril events like Hurricanes. However, from the appearance of Gene Taylor’s remarks quoted in the Sun Herald, the Catch-22 days of ordinary citizens unable to rely on their wind policies while insurance companies laugh all the way to the bank appear numbered. Thanks to the internet the truth will win this debate. Today’s Sun Herald story:

GAO points up conflict of interest

Insurers deciding in wind vs. water

By MARIA RECIO
SUN HERALD WASHINGTON BUREAU

The Government Accountability Office issued a report Wednesday on the National Flood Insurance Program that concluded insurers have “an inherent conflict of interest” in determining flood damage the federal program must pay, with the wind damage covered by private companies.

“I applaud the GAO for confirming that insurance companies have an inherent conflict of interest when they are allowed to determine whether to assign damages to their own wind-insurance policies or to the federal flood-insurance policy claims,” said Rep. Gene Taylor, D-Bay St. Louis, who lost his home in Hurricane Katrina.

The GAO concluded the program needs greater transparency and oversight of wind- and flood-damage decisions. The agency is the congressional watchdog arm and frequently investigates at the request of members.

“The report reinforces my proposal,” said Taylor, “to give homeowners the option to buy wind and flood coverage in the same policy.” The House passed Taylor’s provision in September but the bill is stalled in the Senate.

“I urge the Senate to pass this legislation in order to stabilize the insurance market in coastal states,” Taylor said. “I strongly support GAO’s recommendations that insurance companies be required to turn over their wind-claims files so that FEMA can verify that the companies applied the same standards to the flood insurance claims as to their own wind claims.”

According to the GAO, FEMA opposes the recommendation, which prompted Taylor to say, “I am disappointed, but not surprised, that FEMA opposes that recommendation. FEMA needs to recognize that its oversight responsibility is to protect federal taxpayers, not insurance companies.”

The GAO also concluded:

• The flood-insurance program cannot accurately determine flood-claim payments on properties that were subject to both winds and flooding, because FEMA does not collect information on wind claims and does not require companies to explain how they distinguish between wind and flood losses.

• Property owners with separate homeowner, wind and flood insurance policies cannot know prior to a storm whether all their damage from a hurricane will be covered because of differences in the policy limits. The NFIP cedes the damage determination to the insurance company.

• Legal disputes between wind and flood coverage have increased because of insurance companies’ anti-concurrent causation clauses that attempt to exclude coverage of wind damage if flooding contributed to the loss

Pee on My Leg and Say It’s Raining Part 2: Reuters Story Contains Glaring Omissions and Falsehoods

After I read yesterday’s Reuters story on the fight to reform the flood program I thought it strange it contained this paragraph which I knew to be inaccurate:

The Senate bill would extend the NFIP for five years and improve flood maps used in the program. But a vote by the full Senate on the bill has been blocked by lawmakers from Louisiana who are concerned that it would boost insurance rates there.

Fast forward to today and this Reuters story which contains almost the exact same wording for the reason for the hold on the senate version of NFIP re authorization:

The NFIP’s post-Katrina debt would be forgiven under a bill approved in October by the Senate Banking Committee. The Senate bill would extend the NFIP for five years. But a vote by the full Senate on it has been blocked by Louisiana lawmakers who are concerned it would boost insurance rates in their state.

The second story, concerning the release of the GAO report on the National Flood Insurance Program, boiled the report down the following:

The GAO, the investigative arm of Congress, said questions remain about the Federal Emergency Management Agency’s handling of flood-damage claims processed by private insurers under the National Flood Insurance Program (NFIP).

The GAO urged Congress to empower the agency to examine both wind and water claims data related to hurricane damages. It also said state regulators need to strengthen licensing and training requirements for insurance adjusters.

Alabama Republican Rep. Spencer Bachus said the GAO report contains “sensible recommendations” and deserves further discussion in the House of Representatives Financial Services Committee, where he is the ranking Republican member.

However, while Rep. Bachus is the ranking Republican member of the committee Mr. Drawbaugh evidently did not see fit to report on the reactions of the Democrats running the House Financial Services Committee to the GAO report they ordered. Curious.

I also found it equally strange that Mr Drawbaugh as did not report on the “inherent conflict of interest” in the current system of private wind insurers adjusting flood claims or the problems associated with damage related to multi peril catastrophes like hurricanes contained in the GAO report:

Insurance coverage gaps and claims uncertainties can arise when coverage for hurricane damage is divided among multiple insurance policies. Coverage for hurricanes generally requires more than one policy because private homeowners policies generally exclude flood damage. But the extent of coverage under each policy depends on the cause of the damages, as determined through the claims adjustment process and the policy terms that cover a particular type of damage. This process is further complicated when the damaged property is subjected to a combination of high winds and flooding and evidence at the damage scene is limited. Other claims concerns can arise on such properties when the same insurer serves as both NFIP’s write-your-own (WYO) insurer and the property-casualty (wind) insurer. In such cases, the same company is responsible for determining damages and losses to itself and to NFIP, creating an inherent conflict of interest.

Though we are not so called “professional” news reporters at the Insurance Issues Forum, I was able to land a copy of Senator Vitter’s letter to Senators Dodd and Shelby by contacting Gene Taylor’s office and simply asking for it. Since Mr. Drawbaugh did not see fit to speak with either of Louisiana Senators or HR3121 sponsor Rep Gene Taylor I guess it is understandable, though somewhat unprofessional that he reported a false reason for the hold on the Senate re authorization of the National Flood Insurance Program. Concerns over “boosting insurance rates” was not the reason Senator Vitter had a problem with the Senate version of the bill, rather:

I believe any legislation reforming the flood insurance program must make an increase in the maximum coverage levels available to policyholders. As you know, your bill does not do this. The current coverage levels have not been increased since 1994. With inflation and increased home prices since that time, the current coverage levels are severely outdated. The bills passed by the U.S. House of Representatives last and this Congress increased the current maximum levels of $250,000 for residential properties and $500,000 for non-residential properties to $335,000 and $670,000 respectively. These reasonable adjustments in the coverage levels would bring more certainty and affordability to the insurance market.

Also, flood insurance reform legislation should allow policyholders new lines of optional coverage, including coverage for business interruption and full replacement costs of contents. Businesses in Louisiana continue to suffer as we recover from Hurricanes Katrina and Rita, and skyrocketing insurance costs and fewer providers offering coverage remain among the most significant barriers to full economic recovery. These new coverage options, which could be offered at market rates so as not to add any additional financial strain on the program, would go a long way in providing some stability and affordability to the insurance market.

Additionally, I believe Congress must address the overall insurance crisis along the Gulf Coast centered on the lack of coverage options and affordable rates for wind damage. Lack of available or affordable general liability coverage including wind coverage is now one of the single biggest obstacles to recovery. Rates have skyrocketed well beyond what seems necessary to cover the risk and are not abating. Either wind coverage should be added to the National Flood Insurance Program at market rates as the House-passed bill does, or we must take other action outside the flood insurance program to address the broader insurance crisis. This could include a catastrophic backstop, similar to what we have for terrorism risk insurance.

We stand ready to correct any factual inaccuracies we find in hard news reporting on this issue, which impacts so many along America’s coastlines. Reuters owes us a correction.

sop

AIken v USAA: The Verdict

Hailed in some circles as a major victory for insurers, the jury has spoken and awarded David and Marilyn Aiken $64,000 in their suit against USAA. We certainly respect the jury verdict and will no doubt find irony in the praise accorded our gulf coast based jury by some who previously had written us off as incapable of fairly dispensing justice. That praise will last until Nguyen v State Farm begins next month, but that is a different case with different fact patterns. A tip of the hat also to David Rossmiller for his analysis of the verdict though I would add the “jury pummeling” of Allstate in Weiss was deserved despite Mr. Rossmiller’s earlier protestations to the contrary. As I mentioned yesterday the fact the Aiken’s received anything from the jury indicates they felt USAA was not monetarily fair in how this claim was adjusted.

In any event here is the story in today’s Sun Herald on the Aiken verdict and link to the jury instructions as we close the curtain on Aiken and await Nguyen.

By ANITA LEE [email protected]

A jury in U.S. District Court awarded USAA Casualty Insurance Co. policyholders only $64,000 for wind damage to their Pass Christian vacation home, which was destroyed by Hurricane Katrina.

David W. and Marilyn M. Aiken already had received $178,205 from USAA, including loss of use, but sought total coverage for their home, boat house and contents. Full payment would have amounted to $427,087 more.

The Aikens also sought damages to punish the insurance company, claiming USAA purposely minimized their claim. But District Judge L.T. Senter Jr. did not allow the jury to consider punitive damages, ruling USAA had legitimate reasons for its decision.

The Aikens maintained a tornado destroyed their home long before Katrina’s tide, covered by federal flood insurance, surged ashore. However, USAA said it covered damage that could have been caused by wind and excluded from payment any damage caused by tidal surge or by wind and tide acting together. The property was subjected to 20 feet of water, minus wave action, according to USAA’s experts.

The plaintiffs argued those experts were biased, but the evidence failed to support this contention.

Senter told the eight jurors before deliberations that they should take into account the Aikens’ acceptance of $278,000 in coverage from the National Flood Insurance Program, which indicates they acknowledged some damage from the tide. The jury also had to consider the previous USAA payment and could not award the Aikens more than the total policy coverage.

That left the jury to consider an amount from $0 to $272,238 for structural damage and $0 to $154,849 for destruction of contents. Based on the evidence, the jury awarded $17,000 for structural damage and $47,000 for contents.

Senter also told the jury the Aikens had met their initial burden under the insurance policy of showing windstorm caused an accidental direct physical loss of their property.

USAA then had the burden to prove the portion of the loss excluded by its policy, which is storm surge or a combination of surge and wind.

Tidal surge damage is excluded from coverage, Senter instructed, “even if wind contributed to cause this flood damage.” He explained to the jury: “All damage to the property that was caused by storm surge flooding is excluded even if the storm winds concurrently or in any sequence caused or contributed to this excluded storm surge flood damage.”

Senter’s instruction on the so-called “anti-concurrent cause” exclusion dovetailed with a recent ruling from the 5th U.S. Circuit Court of Appeals in the lawsuit Tuepker vs. State Farm, a Katrina case from the Coast. The ruling clarified when a homeowner can expect to recover wind damage. As State Farm argued, the appeals court found the wind damage must occur independently of storm surge for coverage to apply.

Washington State Voters Say No to Big Insurance and Yes to Ending Institutionalized Claims Abuse

This past November, despite insurance companies spending millions on the election, Washington State Votes passed the “Insurance Fair Conduct Act” which allows for treble damages against insurance companies that treat their customers in bad faith. Predictably the insurers played from the old script of threatening higher rates if they were forced to behave responsibly. Not as predictable were the voters that ratified the law, evidently tired of being mistreated by insurance companies.

“Companies (that) act in good faith are not going to have a problem, its not going to cost any more money , its not going to be any legal action and its not going to cost them treble damages because if companies deal with their customers in good faith, there is no penalty.” said Mike Kreidler, Washington State Insurance Commissioner when interviewed about Washington State Fair Claims Act.

Why would any business be against treating it’s customers fairly? One look at the profit made from institutionalized customer/claimant abuse reveals the answer.

Anderson Cooper has reported on the issue of insurance bad faith repeatedly since Hurricane Katrina, possibly because he was moved by the treatement of ordinary men and women here in Mississippi by their insurers after the storm. The following video clip is from a report on CNN on the Washington State Vote and is well worth watching. Enjoy.

sop

Shareholders strike back: McKinsey Not Good for Owners

We note with some disappointment that Cowboy’s efforts to enlist the help of another insurance law blogger with a case document went unanswered but in this day and age of the internet even non legal lay people can come by case documents. Such is the case in Fojas v. Ackerman et al and Allstate Corporation, a shareholder derivative lawsuit filed January 18, 2008. This news broke on the Allstate Message Board at Yahoo Finance where the authors of this blog have become board regulars telling our story of insurance bad faith and was confirmed yesterday evening by Forrestgrump55i, an ally in this battle between ordinary citizens and the insurance giants.

The suit contains a well written account of the institutionalization of claimant abuse as part of the big insurance business model:

In 1992, Allstate hired McKinsey & Co. (“McKinsey”), a global management consulting company which assists corporate executives in identifying ways to improve the performance of the company, to “redesign” Allstate’s claims handling procedures. The “new” claims handling procedure was implemented by Allstate in 1995. According to the McKinsey reports, the claims handling procedure would increase Allstate’s stock price and add $700 million to Allstate’s revenue.

The engagement of McKinsey lasted approximately five years, during which time McKinsey constantly updated Allstate management in reports and power-point presentations (“McKinsey reports”). Certain of the McKinsey reports came to light in Geneva Hager v. Allstate Ins. Co., 98-cl-2482, Fayette Circuit Court Kentucky, a civil action filed by an Allstate policyholder against the Company alleging bad faith claims handling. During the trial in October, 2007, the plaintiff’s lawyer outlined how the McKinsey reports essentially detail a course of action designed to avoid paying claims, and when claims were paid – – pay less.

According to a July 9, 2006 article in the Lexington Herald-Leader, the McKinsey reports were obtained by lawyers in several additional civil cases, but were all subject to protective orders, until a bad faith claim was asserted in New Mexico (“New Mexico litigation”). In the New Mexico litigation, the plaintiff’s attorney refused to consent to a protective order. Allstate argued that the McKinsey reports were trade secrets, and appealed the trial court’s findings that they did not constitute trade secrets. Following the unsuccessful appeal on that order two years later, Allstate refused to turn over the McKinsey reports, leading to the entry of a default judgment against Allstate, which again Allstate appealed.

In the Hager litigation, the judge ruled in 2001 that the McKinsey reports were not trade secrets; in order to avoid the inevitable appeal, however, the parties agreed to treat the documents confidential to keep the litigation proceeding. Eventually, certain pages of the McKinsey report were made public during the October 2007 trial, but the majority remains confidential.

Allstate continues to attempt to maintain the confidentiality of the McKinsey reports, no matter what effect it has on the Company, its reputation or its finances.

In a September 12, 2007 order entered in an action styled Dale Deer v. Allstate Ins. Co., Case No. 0516-CV24031, Circuit Court of Jackson County, Missouri, Allstate failed to respond to an Order to Show Cause issued to address, in part, Allstate’s prior violations of two court orders requiring responses to discovery, and was found in civil contempt of court. The court ordered Allstate to pay $25,000 per day beginning September 14, 2007 until the discovery sought was produced. Allstate instead appealed, and the appeal is pending. If penalties accrue to date, Allstate would be faced with sanctions of approximately $3 million at this juncture.

This suit represents an important new front in this battle of profits and corporate greed over people. Settling claims should not be a game of low ball and hard ball; rather claims should be adjusted fairly to the proper amount.

sop

A Big Mississippi Coast Welcome to Russell

Our readers will notice we have added Russell to our blog family as a moderator. Russell is a friend of mine from the financial blogosphere with a specialty expertise in financial services issues, mainly banking and options trading. After Katrina, Russell was one of the first people to step in and help my family in those dark early days; later he came down on helped me catch up the work in my construction practice as a field expert doing job site visits. If his lovely wife would let me, I’d steal them away from North Carolina in a heartbeat. Drago’s almost sealed the deal……:)

Besides his acumen understanding the complex world of financial service companies he also brings invaluable experience working with FEMA as a disaster field employee in locales such as Puerto Rico and the Carolinas. Russell also broadens us geographically as the issues surrounding coastal insurance also impact his home state of North Carolina.

Russell is also a member of the Order of Davichy, a very select group of investors known for their range of blogging and investing expertise. I’ve got the gin covered Bro. 😉

sop

Aiken v USAA: Rimkus Gets a Free Pass

Rimkus skates because they were not hired by the Aiken’s according to a ruling yesterday in Aiken v USAA. I will certainly remember Judge Senter’s ruling letting Rimkus off the hook next time one of my colleagues is hit with a malpractice suit by a third party over an audit report. On it’s face this decision means its open season on us consumers by the hired guns of big insurance since they appear “not accountable” for their work product to third parties.

Rimkus and James W. Jordan had a contract with USAA to adjust the claim, notwith the Aikens. As a result, Rimkus did not have a duty under Mississippi law to deal fairly and in good faith with the Aikens, as does USAA. The insurance policy USAA provided the Aikens is considered a contract.

Even if the Aiken’s prevail in their suit monetarily this will be a loss for the greater cause of fairness in claims adjusting so long dominated by claimant abuse since the McKinsey recommendations were adopted as the new gold standard by the insurance industry.

In any event today’s Sun Herald story.

Judge dismisses Rimkus from USAA suit

Senter said there was no proof of gross negligence
By ANITA LEE

GULFPORT –Insufficient evidence of gross negligence and fraud led a judge to dismiss Rimkus Consulting Group Inc. and a company engineer from an insurance lawsuit after the policyholders’ case was presented to a jury in U.S. District Court.

USAA Casualty Insurance Co. hired Rimkus to inspect the Pass Christian vacation home of David W. and Marilyn M. Aiken, which was destroyed by Hurricane Katrina. USAA is still presenting its arguments, and the case could go to the jury as early as today.

Rimkus and James W. Jordan had a contract with USAA to adjust the claim, not with the Aikens. As a result, Rimkus did not have a duty under Mississippi law to deal fairly and in good faith with the Aikens, as does USAA. The insurance policy USAA provided the Aikens is considered a contract.

The Aikens maintain USAA ordered an engineering report that would minimize wind damage to their property, insured for more than $680,000. USAA paid them $178,205 for wind damage. They received maximum benefits of $278,000 for damage from tidal surge under a federal flood insurance policy. USAA also adjusted the flood claim.

U.S. District Judge L.T. Senter Jr. noted the Aikens accepted the flood insurance money even though they contend a tornado destroyed their vacation home and boat house before Katrina moved ashore.

“At most, the evidence against Rimkus and Jordan would support no more than a finding of simple negligence in the investigation of the claim,” Senter said in dismissing them from the case. “The testimony and evidence are not sufficient to support a finding that these defendants handled this matter in a grossly negligent or wanton matter with malice or with reckless disregard for the rights of the insureds.”

A report Rimkus sent USAA in December 2005 concluded Katrina’s wind or water was sufficient to destroy the house and boat house, saying the percentage of damage wind caused before the storm surge arrived could not be determined.

At USAA’s request, Rimkus issued a supplemental report in March 2006 that detailed construction components wind could have destroyed before tidal surge destroyed the building superstructures. USAA based its payment to the Aikens on the March report. Rimkus and USAA witnesses said the supplemental report was meant to clarify how much the Aikens were owed, not to deny coverage.

From Insurance Regulator to Insurance Lobbyist: Incest in the System

It turns out George Dale is not the only local insurance commissioner going straight from his elected office to work in the Insurance Industrial Complex. Strangely Adams and Reese was silent on their hiring of Robert Wooley, the first insurance commissioner in Louisiana in several years not in jail because of corruption. This quote from the story sums up why none of the authors of this blog trust our insurance regulators and is the basis for our opinion that federal oversight of this industry is well past due:

“Bob Hunter, a former Texas insurance commissioner who is director of insurance at the Consumer Federation of America, said that Dale’s new job at a law firm that represents so many insurance interests is another unfortunate tale of regulators caring more about the industry than the people who elected them.

“Nothing surprises me any more. The insurance industry and the regulators are so intertwined. We’ve had now two presidents of the NAIC (National Association of Insurance Commissioners) go directly to lobbying jobs with the insurance industry, and we’ve had so many former insurance commissioners head off in that direction, it’s disgusting. How can the public trust state regulation with all this going on?” Hunter asked.”

sop

AIken v USAA Continues: More Employees Take the Stand

Yesterday the trial resumed after the holiday break with Rimkus and USAA employees taking the witness stand. From the looks of the Sun Herald story, yesterday was not very eventful as employees from Rimkus and USAA took the stand to deny the engineering reports were changed simply to save USAA money. Given what we have found regarding the McKinsey consulting recommendations regarding claims handling and its apparent widespread use across the insurance industry as the new claims adjusting bible I have a hard time believing those statements. This would never come out in Court but I’d love to see if just one of these altered engineering reports resulted in a favorable change for the claimant/insured. Forgive the sarcasm but I suspect if such were the case pink pigs really do fly…..

sop

USAA employees testify in case
By ANITA LEE [email protected]

GULFPORT –Employees testified that USAA Casualty Insurance Co. did not conspire with engineering firm Rimkus Consulting Group Inc. to deny coverage to a couple after Hurricane Katrina.

“Absolutely not,” said Rimkus manager Paul Colman, whose denial was echoed by two USAA claims managers testifying in the second week of the U.S. District Court trial.

The three were called to the stand Tuesday by the plaintiffs’ attorneys, who are trying to prove USAA pressured Rimkus to change reports that would minimize what the company owed for wind damage.

USAA paid David W. and Marilyn M. Aiken $178,205 for wind damage on a policy that exceeded $680,000 in coverage for their Pass Christian vacation home. The Metairie couple is seeking full coverage, plus punitive damages based on the allegation their claim was denied in bad faith.

USAA employee William McNamara, who supervises adjusters and coordinated work by engineering firms after Katrina, testified Tuesday afternoon. He said Rimkus provided reports for USAA on 200 properties. McNamara also verified he called Rimkus to request its engineering report on the damage be corrected and include more detail.

McNamara said he was not attempting to change the engineering company’s opinion about the cause of damage. Instead, he said, USAA needed the wind damage detailed in order to estimate what the Aikens were owed.

Rimkus had closed the file in December, after sending USAA a report that said, in part: “It cannot be visually determined from the remaining physical evidence the percentage of damage resulting from surge forces and the percentage of damage resulting from wind forces.” Federal flood insurance covered the Aiken’s damage from storm surge, paying them policy limits of $250,000 – less than half the home’s value.

A day after McNamara contacted Rimkus in March 2006, the engineering firm sent USAA a “supplemental report” that listed construction components most likely damaged by wind, including gutters, the roof, siding and trim. The supplemental findings also said a storm surge of 20 feet above ground, excluding waves, destroyed building super- structures.