View this article online: https://www.insurancejournal.com/news/national/2006/10/22/73479.htm
A Democratic-controlled House would look into insurance industry practices criticized for shifting the financial burden of Hurricane Katrina claims onto the taxpayer, a lawmaker who headed a Katrina task force said Thursday.
Rep. Gene Taylor, D-Miss., said the Democratic task force was recommending a repeal of the federal antitrust exemption as it relates to price-fixing in the property insurance market and the creation of government-backed all-perils disaster insurance to close current gaps, particularly from flood damage.
Taylor, who lost his own southern Mississippi home in the 2005 storm, said “the biggest Katrina fraud of them all” was the insurance industry practice of declaring that hurricane damage was due to flooding — a federal government responsibility — rather than wind, covered by private insurance.
“State Farm, Nationwide, Allstate and other insurers paid hundreds of thousands of wind claims inland, where they could not possibly blame the storm surge, but denied wind claims near the coastline, where winds were stronger and water was also present,” said the Democratic report prepared by Taylor and Rep. Charlie Melancon, D-La.
The report also calls for stronger federal oversight over property insurance practices.
Taylor said the insurance industry, which makes large contributions to both political parties, has so far been successful in blocking legislation that might alter its practices. But he said he had assurances from House Democratic leader Nancy Pelosi and top Democrats on the commerce, finance and judiciary committees that his issues would be taken up if Democrats capture the House in the Nov. 7 election.
“Unlike the folks who run the House now, these issues will at least be discussed; we will get a vote,” he said at a news conference.
Among the other recommendations made by the task force:
• Rebuild levees and flood controls to higher standards.
• Relieve FEMA of its recovery mission, assigning the responsibilities to appropriate federal agencies.
• Reform FEMA contract procedures to eliminate noncompetitive contracts.
• Re-equip National Guard units to fulfill civil support missions. Taylor said more than 40 percent of Mississippi National Guard units were in Iraq when Katrina hit and much of their equipment had been left behind in Iraq.
_Establish waterborne fuel delivery capability.