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Insurance Industry Called to Account for Malfeasance
Improper Claims Denials in Response to Hurricane Katrina May Lead to Probe

(Wednesday, June 28, 2006 -Washington DC)—Legislation adopted by the U.S. House of Representatives on Tuesday requires the Department of Homeland Security to investigate widespread and well-founded reports that the insurance industry has improperly denied claims filed by victims of Hurricane Katrina.

“It's a shame the federal government had to take this action," said Jon Haber, chief executive officer of the Association of Trial Lawyers of America. “This isn’t the first time policyholders who have dutifully paid their premiums for years and years have been stiffed by the insurance industry.’’

The proposal compelling the department to investigate the insurance industry came in the form of an amendment sponsored by Rep. Gene Taylor, D-Miss., to a bill dealing with the national flood insurance program.

Katrina, which struck the Gulf Coast on Aug. 29, 2005, was the most destructive storm in American history, racking up damages totaling an estimated $75 billion. In many instances policyholders found themselves forced to accept pennies on the dollar from their insurance carriers as the firms cited numerous policy exclusions to reduce payouts. Hurricane victims in Mississippi, Louisiana and elsewhere learned that you can be a loyal policyholder who's paid premiums on time for years but it doesn't mean you can count on your insurer to treat you fairly after you've been devastated by a natural disaster.

In Mississippi, instead of helping residents, some insurance representatives tried to trick policyholders into signing waivers that would later make it easier to deny homeowners' claims, according to a lawsuit filed by the state. In Texas, Allstate refused to cover temporary living expenses that policyholders had already paid for unless the homeowners returned to their homes, documented the damage and sent the information to the company. For many homeowners who had evacuated, returning proved impossible.

Insurers rejected legitimate claims, insisting the policyholder’s property was not damaged by wind or rain – which would be covered – but by flooding from the storm surge – which is not. Taylor lost his home in Bay St. Louis, Miss., as a result of the historic storm and is one of those haggling with State Farm regarding whether the damage was caused by wind or storm surge.

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As the world's largest trial bar, ATLA promotes justice and fairness for injured persons, defends the constitutional right to trial by jury, and strengthens the civil justice system through education and disclosure of information critical to public health and safety. With 60,000 members worldwide, ATLA provides lawyers with the information and professional assistance they need to serve clients successfully and protect the democratic values of the civil justice system.