Hurricane Katrina swept across the Gulf Coast, leaving historic levels of death and destruction in its wake. The storm caused an incredible $135 billion in damages, leaving thousands homeless, jobless and bereft of hope. Facing their darkest hour, many of the survivors found themselves victimized a second time by an insurance industry offering pennies on the dollar, refusing to honor many agreements, and claiming that the destruction had nothing to do with wind damage, which is covered under most policies, but was caused by floodwater, which is not. Shockingly, in the two years after the nation’s worst natural disaster, insurance companies have reaped more than $100 billion in profits.
Cover of Pattern of Greed 2006 pdfIn the year since Hurricane Katrina swept across the Gulf Coast, leaving historic levels of death and destruction in its wake, some in the insurance industry still haven’t made good on their promise to compensate area residents who find themselves near ruin. While the insurance industry enjoys record profits and bulging bank accounts, too many people are left waiting for the settlements that will help them get back on their feet. It’s no surprise. As this report relates, the insurance industry has made a practice of collecting billions of dollars from policyholders over the years and then stiffing them in their time of greatest need. Hurricane Katrina is just the most recent example.
This report demonstrates that the premise on which the insurance industry based its “tort reform” campaign of the last several years--that malpractice claims payments have been increasing--is false. Specifically, the data reveal that the amount the leading malpractice insurers project they will pay out in claims in the future has declined; that the amount they have actually paid out in claims has declined; and that their surplus--the extra cushion they have accumulated over and above the amount they have set aside to pay claims in the future--has increased to an all time high. In addition, the data reveal that notwithstanding the record surplus and profits of these carriers, they have generally declined to issue any dividends to their policyholders.