Mississippi Attorney General Jim Hood’s recent comments comparing the insurance industry to “Nazis” have been met with industry criticism. Among those responding was Charles M. Chamness, National Association of Mutual Insurance Companies president and CEO: “Now that Hood’s inspired exercise in justice has met some resistance, his public rhetoric seems to get more hysterical and irresponsible. Initially, he said the existence of flood exclusions in insurance contracts was ‘unconscionable;’ last week a judge ruled that flood exclusions are valid and legally enforceable, so Hood has upped the ante by calling insurers ‘Nazis.’
“The fact remains that no private insurer ever collected a dime for flood coverage. Hood would force them to pay flood claims anyway in direct contravention of the principles of risk sharing and underwriting on which the property-casualty industry is built. One wonders what other industries Hood will sue for failing to provide goods or services to people who didn’t buy them.
“Hood’s gambit could be economically disastrous. If insurers must pay claims for losses their policies didn’t cover, they will be forced raise premiums to cover every conceivable peril, irrespective of whether it’s excluded in the contract. That could make homeowners insurance–and thus homeownership itself–unaffordable in Mississippi.
“While nothing could stop the destructive force of Hurricane Katrina, the Mississippi courts can prevent another major catastrophe by rejecting Hood’s audacious assault on insurance contracts.”