State Farm Dreams
A paralegal at the Port of New Orleans gave me a photograph from the September 22, 2008, Times-Picayune. She entitled the photo, "State Farm Dreams." I share it with you below.
First Reports Of Ike Damage
Our office in Houston has been without power for a week. Tina Nicholson, who heads up our Houston office, held out for awhile, but has worked out of Gulfport since Wednesday. Frank Chimento spent most of the week working out of the Houston Omni, which is flooded with adjusters from all over the country. Initial reports have ranged from $8 billion to $18 billion in covered damages. The sense I get is the $18 billion figure may be breached.
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AIG's Bailout
On Monday, I was working on the Port of New Orleans lawsuit against Factory Mutual, when it dawned on me that the Port's current property program was underwritten by Lexington Insurance Company. I wondered how many large corporate risk managers were calling their brokers concerned that a possible bankruptcy by AIG would affect an entire range of corporate risk management. Tuesday brought even more concern. I received messages from annuity brokers, including one that I have not heard from in eight years, telling me that the settlements of lawsuits which were funded by long term annuities probably were not in jeopardy and that we had acted "reasonably" by placing those settlement funds in AAA rated insurance companies which were subsidiaries of AIG. I did not like the tone of those emails because they implied that former clients may bring suit against me if the AIG collapse effected those annuities.
Continue Reading...State Farm Gears Up For Ike
State Farm has apparently made a significant push in manpower and communications regarding the adjustment of claims in Louisiana and Texas. It takes thousands of adjusters and sufficient communications to get the job done promptly. Delay caused State Farm's old claims mantra under Frank Haines--"pay neither a penny more nor less"--has no place in the claims process, especially following a catastrophe. Good luck to the company with the "Good Neighbor" slogan. Many of my policyholder colleagues simply hate when I say anything nice about State Farm or any other insurance company. I appreciate that, especially if they feel that they have been wronged by insurance company adjusters or attorneys.
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Hurricane Ike is going be similar to Ivan and Katrina
Wind versus flood. Insurance companies will use causation to deny claims just as they did in the hundreds of cases we litigated after Ivan and Katrina. We will retain meteorologists and structural engineers as this issue will be litigated in Texas and western Louisiana. Rimkus and Haag are located in Texas. I wonder how many outcome oriented reports they will issue this time around to support lowers claims payments by insurance companies. I wonder whether the insurance industry has made a bonafide search for engineering firms that are not beholden to them and who will write reports that are in the customers' best interests. I am not holding my breath.
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Slabbed
My collegues and I coined a new term in 2004, following Hurricane Ivan. We became co-counsel with the prominent Pensacola firm of Levin, Papatonio, Thomas, Echner & Proctor. They brought a brilliant attorney, Bobby Loehr, out of semi-retirement to work with me on their insurance claim litigation. We referred to hurricane cases where nothing was left of our clients homes or businesses as "slab cases." It was an important legal designation because of the anti-concurrent causation issues and the then applicable Florida Valued Policy Laws. Upon my arrival in Mississippi just following Katrina, it was obvious to me the same litigation was going to ensue; there were thousands of "slab" cases. We actually noted these cases because they generally had the most significant damage and the most unresolved legal questions.
Continue Reading...A Work and Play Saturday
After a long day of work, I called a client at 11:38 on Saturday night to confirm the resolution of a long and hard-fought lawsuit. An attorney in our Houston office and my paralegal immediately emailed, thanking me that they could stop working around the clock to prepare the case for trial. My work day started at 5 am, checking out the Hurricane Ike forecast. Following a two hour run with my St. Petersburg running buddies, I was on a plane with David Pettinato, our firm's hardest working attorney. We flew to Ft. Lauderdale to meet with public adjusters and sign the closing of a large case David recently won.
Continue Reading...Gustav Claims Estimates Reduced
As Hurricane Ike menaces Florida and possibly other areas of the Gulf Coast, insurance industry analysts have re-evaluated Hurricane Gustav. Now that insurers have some preliminary estimates, it appears that the $10 billion valuation of claim severity will be much lower, possibly less than $5 billion. See "Insured losses mount, slowly, as Gustav damage keeps homeowners away," BestWire, 09/03/2008, Carr, Sean P., and "Coast residents file 1,500 storm claims," Clarion Ledger, Ayres, Jeff, 09/05/2008. That is fantastic news. Insurers in the Louisiana and Mississippi markets do not need further justification for raising rates or simply leaving those markets. Re-insurers are important to provide capacity; eight figure catastrophes significantly affect the ability of insurers to purchase reinsurance contracts. Unfortunately, Hurricane Ike may change all that. Working very late on Friday night, I spoke with an opposing State Farm attorney. We agreed that Ike would devastate Mississippi and Louisiana. There is only so much emotional trauma people can take, much less the financial hardships these storms cause.
And The Beat Goes On
Just when the lights are turned back on, roads cleared and the messes cleaned up from Tropical Storm Fay and Hurricane Gustav, here come the next two platinum hits on the 2008 Storm Charts. Tropical Storm Hanna cannot seem to figure herself out. She will likely move along the Carolinas and up the Atlantic Coastline. Hurricane Ike is very, very troubling. Already a category 4 hurricane, Ike is aiming for South Florida--the worst possible place to come ashore. A category 4 hurricane that hits Dade or Broward county will cause unprecedented property loss. Moreover, it would be a financial catastrophe to the state of Florida, as the legislature agreed to underwrite the hurricane insurance policies. I pray Ike goes elsewhere, and it is a long way from land. However, the initial models look bad. Insurers and policyholders should prepare and plan for the logistical needs in the aftermath of what could be one of natures worst storms.
