Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

Gene Taylor fought for his constituency and policyholders, as noted in Are We Doomed To Repeat This Again?

"I met with Gene Taylor, a United States Representative from Bay St. Louis, Mississippi, in early 2007 regarding this problem. Hurricane Katrina destroyed his home and those of friends. He understood that coastal policyholders with complete destruction were only getting the flood damage paid for under the coverage purchased through the National Flood Program. Despite homes miles inland being paid significant benefits under their all risk coverage from wind damage, coastal insureds suffering from a combination of wind and flood were generally getting paid pennies on the dollar for wind related damage. He and other coastal Representatives believe that the only solution available is to make available a policy that covers both the water and wind perils which occur during a hurricane."

Four months after I wrote that post, Hurricane Ike slammed into the Bolivar Peninsula. The same insurance scenario was repeated. It will happen again. With Taylor's defeat, the most vocal federal level advocate for insurance reform benefiting the property insurance policyholder has been silenced.

Things never stay the same. We all end up saying "good bye" at points in our life. I will always have fond memories of Gene Taylor and his dedication as a congressman to help those along the Mississippi Gulf Coast. Sometimes, noble quests are simply impossible dreams, but hopefully, he will continue the fight at a grassroots level. Have a great weekend!

In Industry, Taylor React To 'Compromise' Senate Wind vs. Water Bill, Taylor's position was noted:

Brian Martin, policy director for Rep. Taylor, contradicted reports that Rep. Taylor believes the Wicker bill is a good compromise between his bill and the five-year NFIP extension recently passed by the House that does not add windstorm coverage to the program.

“Wicker’s bill is not a substitute for Rep. Taylor’s legislation, H.R. 1264, the Multiple Peril Insurance Act,” Mr. Martin said. He said the Wicker bill is just an administrative procedure for resolving "wind vs. water" conflicts between the NFIP and insurance companies.

He noted that Rep. Taylor’s amendment to the five-year extension bill is “slightly similar” to the Wicker bill in that when there is a "wind vs. water" dispute, the homeowner would be paid and then the wind and flood policies would figure out how to allocate the loss.

Mr. Martin said that in Rep. Taylor’s amendment, The NFIP pays the homeowner and gets reimbursed later by the insurer for the wind share.
He explained, “I thought we would have some state and NAIC issues if we tried to make the private insurer pay the homeowner, so that is why we propose in our amendment that the NFIP pay the homeowner and then make the insurer reimburse NFIP after the allocation was decided.”

Currently, Mr. Martin and Rep. Taylor are continuing to seek floor action on the bill to add windstorm coverage to the NFIP.

Brian Martin is a very hardworking staffer working for Taylor's constituency in Mississippi. These flood insurance issues are political, social and financial. I first met Martin when we took a Rimkus engineer to meet Gene Taylor in Washington. The engineer’s original written opinion indicating that wind caused the damage had been changed without his approval to reflect that flood caused the damage. Martin and Taylor were obviously interested in meeting this engineer.

I applaud and wish good luck to Taylor and Martin in their efforts. They have a long, long way to go trying to prevent the heartbreak caused by the insurance industry selling a defective product. And that reminds of a song as our weekend is upon us:
 

In Bill Adding Wind To NFIP Introduced, May Be Discussed This Week, the National Underwriter addressed this recent development:

The House will likely consider legislation on Thursday that would add wind coverage to the National Flood Insurance Program, a plan opposed by the insurance industry.

The bill, H.R. 1264—“the Multiple Peril Insurance Act”—is sponsored by Rep. Gene Taylor, D-Miss. In discussions leading up to the House’s passage of a five-year NFIP extension last week, Rep. Taylor sought to attach an amendment adding wind coverage to the NFIP. But the House Rules Committee ruled it “non-germane” to the main bill, H.R. 5114, the “Flood Insurance Reform and Priorities Act of 2010.”

In a note to colleagues sent today urging their support, Rep. Taylor argued that the bill would save taxpayers billions of dollars by reducing future disaster assistance costs after hurricanes and tropical storms. “As long as wind and flood coverage are in separate policies, there will be gaps in coverage and lengthy disputes over causation after hurricanes,” he said. Rep. Taylor contended that almost all companies in the private property insurance market would benefit from adding wind to the program.

“The NFIP relies on insurance companies to sell federal flood insurance policies,” he said. “The companies keep about 30 percent off the top for agent commissions, administrative expenses and profits, yet bear none of the risk.” This arrangement would continue under his legislation, Rep. Taylor said.

Reflecting the property and casualty industry’s position, Blaine Rethmeier, a spokesman for the American Insurance Association, said, “The entire industry opposes the bill, and no one thinks adding wind exposure to a program that is already $19 billon in debt is a good idea.” (emphasis added)

The strong insurance industry opposition to this legislation was also echoed by the Insurance Networking News in "Insurers’ Wild Week." The article included speculation by one insurance industry lobbyist that Taylor's language was included because of the upcoming election and had little chance of ever becoming law:

"While the Senate ratification of regulatory reform was largely perfunctory, the passage of H.R. 5114, the Flood Insurance Reform Priorities Act of 2010, was replete with last-second drama.

To the consternation of insurers, one of three amendments offered by Rep. Gene Taylor (D. –Miss.), passed by a voice vote and was included in the final bill. The amendment would require private insurers participating in the NFIP “Write Your Own” (WYO) program to remove anti-current causation clauses from their policies. Taylor, whose home was destroyed during Hurricane Katrina and later reached a settlement with State Farm, says the clauses enable participating insurers to shift damage caused by wind to the NFIP.

To be sure, the issue of whether to include coverage for wind damage has been one of the primary issues blocking a long term funding resolution for the NFIP. With the defeat of two of his amendments, a multi-peril insurance bill sponsored by Taylor may come up on the floor as a standalone bill this week. “It’s never over,” jokes Ben McKay, SVP, federal government relations for the Property Casualty Insurers Association of America. Surprisingly, given the number of Republicans representing coastal districts, the vote for H.R. 5114 fell largely along party lines. “There’s a lot of extra stuff in the bill, so if you wanted to find something to love or hate, it’s in there,” McKay tells INN.

[An insurance lobbyist] says that Taylor’s efforts may be largely quixotic, noting that when a bill that included wind coverage appeared in the Senate, there was 85 votes against it. “The Senate won’t pass a bill with wind and [even if they did] the president has said he’ll veto it,” he says. “This may a bit of political gift in a tough election year for Gene Taylor—at our expense.”

Yet, in his remarks on the House floor last week, Taylor’s ardor to include wind coverage seemed genuine as he challenged his colleagues to take up the cause. "Quite honestly, I would like to see which shill for the insurance companies wants to defend what they did to individuals in the Gulf Coast and what they have done to the taxpayers as a whole," he said." (emphasis added)

In April, Slabbed updated everybody on Gene Taylor's efforts in "Let’s talk multi peril insurance and NFIP reauthorization as Slabbed updates the Washington front." That post contained a link to Gene Taylor's testimony on the issue and Anita Lee's coverage of the topic.

Having met with Taylor on this issue and other claims conduct issues following Katrina, I am glad to see he has not given up on finding a way to prevent the insanity of this coverage issue in the future. On his website, Taylor made the following observation regarding what this bill would accomplish:

Another focus of this hearing is H.R. 1264, “the Multiple Peril Insurance Act” which has been introduced by Rep. Gene Taylor (D-MS). After Hurricane Katrina, property owners with an insurance policy expected to be reimbursed for the full damage suffered. However, insurers declined to cover wind damage under the homeowner’s policy if some of the damage was deemed due to flooding, and the NFIP supplement to the policy would only cover flood-related damage. In effect, property owners who had been paying for years for this insurance were caught in the middle of a legal dispute between insurers and the NFIP.

The Multiple Peril Insurance Act would allow homeowners to buy comprehensive insurance and know that hurricane damage would be covered without lengthy legal disputes over how much damage was caused by wind and how much was caused by flooding. Premiums for the wind coverage would be risk-based and actuarially sound. Coverage would be limited. The CBO has scored the bill as budget neutral.

The bill would also reduce future property damage by requiring participating communities to adopt International Building Codes. Windstorm insurance would be available only where the local governments adopt and enforce the International Building Code or equivalent building standards. Thus the bill would not only prevent insurers from shifting liability back to the federal government, it would also save taxpayers money by increasing the number of properties that are mitigated against future wind damage and paid for by insurance premiums rather than post-disaster federal assistance.

In the long run, we will have to pay for the losses we incur. We can do this privately, through the social product of insurance which spreads losses among geographic and time parameters. Similar to the debate about the investment in an energy efficient infrastructure not dependent on carbon, we need promote investment in buildings better hardened against perils of loss. Many of these steps will help reduce the severity of loss risk to private insurers doing business in coastal states.

I hate to sound pessimistic, but I cannot imagine that many insurers would remove a fairly standard clause found in most property insurance policies just to write insurance under the National Flood Insurance Program. I would expect that any final legislation extending the National Flood Program will not require the anti-concurrent clause to be removed from Write-Your-Own policies. And that may be a shame because Taylor's bill would stop the problem many devastated coastal policyholders are forced to resolve following a significant hurricane storm surge.

I am supposed to be in Poplarville, Mississippi tomorrow morning for an event with former client, Pearl River Community College. I was hoping to see Mississippi Congressman Gene Taylor about his efforts to demand a hurricane policy that covers wind, flood, and storm surge. I doubt any of this will happen, given the wide projections of landfall for Hurricane Ida.

Instead, Florida panhandle clients have been calling and asking what to do. Storm surge is probably the most potentially devastating aspect of Hurricane Ida unless a tornado or microburst hits. Florida panhandle beachfront businesses and residents have suffered pretty significant beach erosion since Hurricane Ivan. Generally, there is far less protection from the impact of waves, surge and flood in most areas from Gulf Shores, Alabama, eastward to Cape San Blas, Florida. These are beautiful white sand beaches that have had significant growth since the early 1970's.

This is what a Florida panhandle resident and meteorologist Rocco Calaci has to say about Hurricane Ida this morning:

Hurricane Ida has shown everyone that she is on her own schedule. The storm moved faster than anticipated and now is weakening sooner than expected. Current sustained winds have dropped from 105 mph to 80 mph and should make landfall as a very minimal Category 1 hurricane and weakening as it moves over land.

Hurricane Ida is moving slightly towards 340 degrees from its' position at 16 miles per hour. This is an increase of 4 miles per hour in the forward speed. The different models seem to agree that Ida will make landfall early Tuesday morning near 7:00AM. The media keeps saying landfall will be at Pensacola Florida, but it will probably be inside the Alabama border at Orange Beach and Gulf Shores Alabama.

No one has sighted Jim Cantore from the Weather Channel, so the exact landfall spot is iffy. Al Roker from NBC will be in Pensacola for the landfall of Hurricane Ida. The last time Mr. Roker was in Pensacola was during Hurricane Ivan and he was a lot heavier then. Hopefully someone will be holding on to him during his live broadcasts tomorrow.

What is interesting is that there are still some numerical models that place the landfall near New Orleans, but the upper level winds at 30,000 feet will keep Ida along the Alabama - Florida border. Winds will steadily increase throughout the day as Ida moves closer to shore. Wind speeds tomorrow morning will be around 50 to 60 miles per hour sustained with higher gusts along the immediate coast line. As Ida continues to weaken, these wind speeds will most likely decrease.

Once Ida makes landfall tomorrow morning, winds will lower to tropical storm strength in general, but be aware of isolated gusts that could be as high as 65 miles per hour. From eastern Mississippi towards New Orleans, winds will be from the Northeast and East at speeds between 45 to 55 miles per hour on the shoreline. Gusts will be a bit higher, but the local environment plays a significant part in gustiness at each location.

Hurricanes release destructive energy over widespread areas. As I am writing this, insurance catastrophe adjusting teams are making final staging plans. There is a myriad of significant decision making at governmental levels. These decisions pertain to evacuation calls for low areas, shelters, governmental closings, etc. The impact on local communities cannot be overstated as a result of Hurricane Ida--even if it is a relatively late storm that is expected to weaken--nobody will take it lightly.
 

Below is an exchange between a Mississippi Justice and Nationwide’s lawyer during the Corban oral argument. Justice Pierce stretches a hypothetical position to show the illogic of Nationwide’s argument. I found it most recently at the end of Slabbbed’s post, Have we seen the end of rational economics? Behavioral Economics explains the Scheme:

“Justice Pierce:…. if 95 percent of the home was destroyed (by wind), and then we have the event of the storm surge, then you would not pay a dime?

MR. LANDAU: Your Honor, if we prove that the storm surge was sufficient to cause – we have that burden, again, and that is absolutely crystal clear.

If we can prove that the storm surge was sufficient to cause all of this, it is no answer then to say, ‘Yeah, but I’m going to show it — I’m going to have somebody come in and say, “Look, guess what, the window was broken before the storm surge came and then wiped away the whole house.

But you don’t get into those kinds of issues precisely because of the sequencing of the damage.

JUSTICE PIERCE: So you wouldn’t pay a dime?

MR. LANDAU: If – again, we wouldn’t pay a dime for things where we can carry our burden, which is right there in the policy, of showing that the loss was caused concurrently –

JUSTICE PIERCE: I’m giving you — the example is 95 percent of the home is destroyed, the flood comes in and gets the other five percent, and you know that.

Does your interpretation of the word “sequence” mean you pay zero?

MR. LANDAU: Yes, your Honor.”

If this is Nationwide’s position, they should make it clear to every policyholder. Then policyholders and potential customers would have fair warning that Nationwide is not on any policyholder’s side. Some may suggest that insurance policies need warning labels that there is no peace of mind because that position clearly contemplates illusory coverage. To be fair, I have found that Nationwide adjusters in the field do not adjust claims using this interpretation. Why Nationwide allows its attorneys to do so in court is beyond me. Slabbed is to be congratulated for publishing this absurd legal argument and for publicizing the problems resulting from Nationwide’s anti-concurrent causation clauses.

Slabbed highlighted Nationwide’s argument in Breaking: Gene Taylor sends letter to DHS Secretary Napolitano on Nationwide’s stunning admissions in Corban. Representative Gene Taylor has repeatedly tried to prove that insurance products available cannot adequately protect policyholders when a hurricane is accompanied by storm surge. Slabbed has reported in depth on Taylor’s efforts to pass legislation correcting this problem.

Discovery in Mississippi Katrina litigation has proven difficult. There is little downside for an insurer to refuse to turn over information and either objecting for a myriad of reasons or requesting a Protective Order which prevents policyholder attorneys from checking the veracity of the discovery the insurer did turn over. Early in litigation, State Farm would answer the same requests with different responses and far different documents. This did not last long. Now, State Farm objects to disclosure of internal information regarding the claims decisions impacting Mississippi claims. This evidence is crucial to reveal the true story of what, why and how the insurer created its wind/water protocol.

Slabbed reported on this recurrent issue recently in Keeping score #3 – Who has the balls?. The post quoted Mississppi attorney Judy Guice’s brief argument that a federal magistrate was not following longstanding discovery precedent. Her rhetoric shows that she has the guts to pointedly stand up to a federal judge:

“For no good reason expressed, State Farm unilaterally rewrote Plaintiff’s discovery and produced only limited documents relating to claims…This arbitrary restriction was approved by the Magistrate Judge. Given that such discovery is not only allowed within the broad parameters of the Federal Rules of Civil Procedure but more specifically by the same Magistrate’s own orders in similar cases, the restriction in this case is clearly “contrary to law.

…

Plaintiff has sought discovery of documents relating to meetings conducted by State Farm concerning the handling of Hurricane Katrina claims. Acting in a manner contrary to law, the Magistrate Judge protected State Farm from this discovery. Indeed, State Farm has not even been required in this case to produce documents it has produced in other cases.”

I feel for Judy Guice because we have experienced the same frustration. Possibly, this type of pointed argument will be more successful. For a non-lawyer social media web site, Slabbed has done an excellent job portraying the emotional frustrations advocates and policyholders are living through in the Katrina litigation. I will reenergize my efforts in our remaining cases and become more active in coordinating efforts among policyholder attorneys along the Mississippi Gulf Coast to do my best to ensure that those lingering matters also achieve justice and consideration.

I simply do not have time to read Slabbed everyday. Yet, I have no hesitation in suggesting that many can learn a great deal from the posts. The ideas are exceedingly original. I am certain that those in the insurance industry dislike Slabbed because it does have a tendency to demonize the industry and those supporting their status quo. Imagine if all your best friends, neighbors, and family had to endure financial ruin caused by insurance not paying following a devastating catastrophe like Hurricane Katrina. I imagine your rhetoric towards insurers and their agents would not be very complimentory either.

We get told similar stories by other adjusters so long as it is "off the record."

A person with significant experience in the insurance industry, Deborah Moroy of Dimechimes,  wrote in response to Playing the Float and the Wisdom of Warren Buffett:

"I am fiercely committed to improve claims handling in the insurance industry while maintaining positive networking environments. I do not allow any negative posts or adjusting firm or carrier specific "blasting" among our members. I promote the discussion of claim handling in general but regularly post links to great blogs and articles found on the Internet. It has been 3 years of extremely hard work since I cannot post carrier information or ask adjusters to upload file samples so they don't violate carrier code of conduct requirements. So, my sole source of info is through training info I find on the web. The info found on the majority is worthless except in generic format........"

It should be against public policy for insurance companies to have any trade secrets regarding claims practices and there should be even a stronger public policy regarding any codes of conduct which prevent any adjuster or employee from disclosing improper methods or activities of claims adjustment. If we allow insurers to hide behind these shields, all we do is silence the otherwise courageous adjusters because the attorneys for the insurers will threaten them with civil action.

The classic example is the civil prosecution of the Rigsby sisters. They told a story of a State Farm adjuster holding numerous reports which were not being sent to policyholders but were "revised." The revised reports were always worse for the policyholders because they allowed for State Farm to deny claims. Had their story stopped there, they would have been terminated. But their actions went further with Dickie Scruggs, and the rest has been fodder for demeaning posts by the insurance industry.

Still, the message is clear from the insurance industry: We have a Code of Silence that you violate at your own risk.

We have initiated discussions with legislators at the state and federal level regarding these concerns. I could probably use the experience of Congressman Gene Taylor as an example. I took one of the Rimkus engineers to Washington to explain and show how his report was changed and signed without his permission. He did this in front of Taylor. In the civil action, the engineer called just before his deposition to tell us that Rimkus was getting him an attorney. At the deposition, he could barely recall the meeting with Taylor.

While there are legitimate reasons for adjusters and insurance company vendors to remain silent regarding the private information of customers and claimants, laws and contracts which further goals or activities of claims misconduct should never be allowed and there should always be exceptions to any arguments of privacy. The insurance industry should never be allowed to take any retribution against those that publicly make others aware of wrongful claims conduct. Otherwise, the insurance industry is acting like another illegal industry with a code of silence. 

If the insurance industry were really trying to stop bad claims practices, they would be up with me in Washington and in Tallahassee trying to help. I will write and call them to let you know where they stand. Stay tuned.