BILOXI (SunHerald) – September 28, 2008 -- The problem of separating wind and water damage after a hurricane will not go away, U.S. Rep. Gene Taylor knows.
In fact, he has been educating his Texas counterparts on
what they can expect from the insurance industry after Hurricane Ike.
Sympathetic adjusters will handle flood claims for residents who have federal
flood coverage, cutting checks quickly with assurances that wind claims will be
In the end, the private carrier - who adjusts both claims
through an agreement with the National Flood Insurance Program - will offer
policyholders nothing, or pennies on the dollar, for wind damage to properties
also hit by tidal surge.
It is true that surge is far more destructive than wind. But
even insurance claims executives concede it is difficult, at best, to sort out
the cause of loss on Coastal properties obliterated by hurricanes.
Those with resources can wait for the courts to sort out the
damage, a process ongoing three years after Hurricane Katrina.
To Taylor and many residents of Gulf and Atlantic coast
states, a policy that combines the two hurricane hazards is the only sensible
solution. However, consumer advocates question the wisdom of expanding a
National Flood Insurance Program that is $17 billion in debt from Katrina,
subsidizes flood rates and is subject to the vagaries of politics.
And then there are the opponents who have the money to
organize e-mail campaigns, fund anti-federal wind studies and influence lawmakers:
the insurance industry and its lobbyists. The industry's campaign contributions
consistently rank in the top 10 of more than 80 monitored by the Center for
"You've got guys in $1,000 suits and women in $1,000
suits and $500 shoes going to bat against homeless people in Mississippi,"
said Taylor, who referred to residents without the resources to rebuild their
homes after Katrina. (In fairness, many of these residents lived on property
that flooded but were without flood insurance because of the outdated maps or
because they mistakenly thought their private insurance policies with
"hurricane deductibles" covered their hurricane damage.)
"They wander the halls of Congress. They monitor the
hearings. They regularly attend the candidate fundraisers. When we had wind vs.
water hearings, 95 percent of the people in that audience were lobbyists for
the insurance industry. They're everywhere."
The staff of Rep. Barney Frank, who has supported the
multi-peril bill, offered a compromise that would have created a pilot program
to test adding wind to NFIP. Taylor's senior policy adviser, Brian Martin, said
senators immediately leaked the offer to insurance lobbyists, who then publicly
blasted the proposal.
Despite the opposition, Taylor vows he will be back with the
same bill in 2010. He says he has been promised Frank's support once again to
pass the bill through the House Financial Services Committee.
"Here's the thing," Martin said, "the flood
insurance program is not part of the normal policy agenda in Washington. So
what happens when you have an area that only occasionally comes up, you have a
few people on the committees of jurisdiction who take interest and you have the
power the lobbyists have to run the show. Most of the congressmen and senators
are not up enough on the program to know when they've been misled."
J. Robert Hunter, president of the Consumer Federation of
America, believes the current multi-peril bill has serious flaws. Hunter is a
former Texas insurance commissioner and also has previously headed NFIP.
"It doesn't make sense to have a program implemented
without any standards - any land-use standards, any rate standards, any
underwriting standards. Nothing. Just run it. That's irresponsible,"
"Maybe you can have a federal program, but it's going
to have to be studied first. You don't do the study after you have a
Martin believes the multi-peril proposal includes the needed
guidance on issues such as building construction standards and rates. Unlike
the flood program, Taylor's proposal requires the wind program to pay for
itself by charging sound rates. Martin said he has asked Hunter to propose
language that would tighten requirements, but received no response.
Another consumer advocate, Amy Bach of United Policyholders
in California, understands the problems property owners face with insurance
after hurricanes. She said those who suffer the worst are property owners with
limited resources who are desperate enough to accept the insurance check
they're handed - whether it's fair payment or not.
"I've been working these catastrophes now for a long
time," she said. "Nothing changes. I've been to Galveston."
Still, Bach sees NFIP as a flawed and unapproachable
behemoth and the federal government as too inept to take on more risk.
"These are big problems that need big solutions,"
she said, "and I don't see any of them being solved overnight."
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