Washington, DC—The American Association for Justice (AAJ) today called on insurance industry CEOs to defend how they continue to abandon Gulf Coast policyholders after reporting last week the largest profits ever—$63.7 billion. This follows the Insurance Information Institute (III) release yesterday of property casualty insurers’ 2006 numbers.
“2006 was a banner year for insurance industry greed, but for the hundreds of thousands of Gulf Coast policyholders abandoned by these very same insurance companies, it was a year of extraordinary suffering,” said AAJ CEO Jon Haber. “These corporations’ patent disregard for their customers’ lives, in the light of such unseemly greed, is inexcusable.”
Though the insurance industry had the highest profits in history last year, policyholders should not expect lower rates. In fact, the III report proudly admits that rates generally will remain flat, thanks to dropping millions of families up and down the Eastern Seaboard. Nowhere in their report do they attempt to justify their wholesale abandonment of coastal policyholders, despite years of customers paying into their policies.
Despite the insurers’ billions in record profits, homeowners in the Gulf Coast who have managed to continue being insured are now facing stratospheric rate increases. Last week, Allstate Insurance announced that its Mississippi homeowners will be socked with a 29% rate increase this year.
Though corporations have a duty to their shareholders to perform, the insurance industry has a special relationship with its policyholders. In fact, insurers have both a good faith duty to their policyholders, and are regulated by state laws that dictate profits must be adequate but not excessive.
Additionally, this is just the latest in a series of record profit years. In 2005, despite $57 billion in hurricane-related losses, the p/c industry made a record profit of $43 billion. Katrina, Wilma and Rita were the #1, #3 and #7 most expensive hurricanes in U.S. history, yet the industry raked in record profits.