IFA – Insurer admits to shifting costs to NFIP in Katrina case
An insurance company admitted to shifting its costs to the federal National Flood Insurance Program in the first wind versus water damage case from Hurricane Katrina to reach Mississippi’s high court.
Insurance company USAA made the admission in oral arguments before the Mississippi Supreme Court June 9 in a heavily watched case about whether carriers bear the burden of proof to decide the extent of property damage caused by wind and if carriers can void a homeowner’s wind coverage because of prior water damage.
A lower court had asked the state’s high court to interpret the “anti-concurrent causation” clause in homeowners’ policies as a precursor to it addressing a policyholder’s request for coverage from USAA.
Rep. Gene Taylor (D-Miss.) said USAA’s admission and the ongoing legal dispute validates the need for passage of the Multiple Peril Insurance Act, which would allow homeowners to buy a single policy from the NFIP that would cover wind and flood damage. The bill was part of the Flood Insurance Reform and Modernization Act died in Congress last year.
“Asking the court to sanctify the company’s decision not to live up to its fiduciary responsibility to the federal taxpayers and homeowners is outrageous,” said Taylor in a statement. “This act eliminates all opportunities for insurance companies to continue to betray coastal American homeowners and taxpayers.”
The NFIP is financed through homeowner policyholder premiums, which are subsidized with federal tax dollars. In the aftermath of Hurricane Katrina, the NFIP ran a $17.5 billion deficit while the property-casualty industry had $108 billion in profits in 2005 and 2006, according to Taylor.
Insurance and Finical Advisor
6/12/9
Magnolia Tribune
