Insurance complaints arising out of Hurricane Katrina
The State of Louisiana has compiled some interesting statistics with respect to the insurance response to Katrina. The hurricane created hundreds of anecdotal claims of under-payment, reneging on promises, delayed or deliberately underestimated repairs and mistreatment. The hard numbers are less open to interpretation and over-simplification. Some 6600 insurance disputes have landed in the local Federal Court with 3700 still pending. State courts are handling several thousand more. 4700 formal complaints were filed with the Louisiana Department of Insurance in 2006, alone, and for the six months after the hurricane, the department fielded 20,000 complaint calls per month. The state estimates that, on average, homeowners have been underpaid by $5700.00 each, in comparison to what the state believes they should have received. A group of former adjusters has filed a federal whistle-blower lawsuit, contending that insurers, including State Farm and Allstate, deliberately and improperly shifted damages from their own coverage to federal flood insurance programs. A federal investigation into similar claims arising out of Mississippi is pending. It bears notice that the property and casualty insurance industry reported profits of $48 billion in 2005 and $68 billion in 2006.