Insurance issues swamping hurricane victims
BATON ROUGE -- Only during this period of Louisiana’s long history would Al Trautman be able to tell his story with little or no shock value.
People listen to his tale out of kindness, mind you, but it’s a yarn they’ve heard repeated all so often since last fall. You see, Trautman can actually stand in his bedroom and enjoy a panoramic view of his backyard.
In case you’re wondering, Hurricane Rita can be credited for the remodeling job.
All of this comes as Trautman reaches the ripe old age of 64, living most of those years in Lydia, a small community just south of New Iberia. While once a joyful place to coexist with nature and friends, Trautman now wonders if Lydia has been written off the map. He said no elected officials have come to survey the damage left by three feet of surge waters and the federal government is completely absent as well.
“I haven’t seen a single soul out here,” he said, four months after the hurricane made landfall. “It’s as if the storm didn’t even happen.”
Then there are insurance issues. His provider has yet to take even a peek at his property and there’s still no word on his original claim. Trautman thought he had flood insurance through a private insurer, but that can’t possible be, as the federal government is the only entity that provides such coverage. His insurer asked for another $2,400 last year and Trautman thinks it had something to do with elevations, but he’s not sure.
Like most others in his situation, it’s going to take Trautman some time to figure out what is exactly in his coverage. Maybe that's because most people would rather retest on the SAT than actually read the voluminous fine print in their homeowner's policies.
A recent survey by the Insurance Information Network, a nonprofit financed by the industry, found 27 percent of consumers haven't looked at their policies in three years. At least in part, this is probably due to policies being chocked full of what some attorneys refer to Da Vinci-type language, or arcane, circular verbiage.
But this situation may be about to change in Louisiana.
During the November special session, the state Legislature passed a law requiring insurance companies to place a one-page coversheet on all new and renewing policies stating what is and isn't covered, including damage from wind, flood and mold, as well as maximum payouts. One of the bills that created this law came from a north Louisiana lawmaker who argued last year that his constituents were having some of the same problems as people in Bayou Country.
It was the first real act of consumer kindness by the Louisiana Legislature concerning insurance issues after the storms, but for folks like Trautman, it’s sort of ho-hum.
“That’s nice, I guess,” he said.
Meanwhile, that fuzzy consumer feeling is taking a long walk off a short policy pier with a variety of issues. Entire legislative hearings have been dedicated to why adjusters aren’t inspecting damaged homes, why checks aren’t arriving and why insurers aren’t responding to claims. A special session next month called by Gov. Kathleen Blanco is expected to address certain insurance issues, but nothing has been brought forth thus far.
To add insult to injury, insurers are lining up to increase their rates. Allstate is planning an unspecified premium hike in 2006, according to a regulatory briefing, and the Louisiana Citizens Property Insurance Corporation recently announced that ratepayers could experience a 10 percent boost in coming years. Additionally, just a few weeks ago, the state’s insurance commission approved an average 23.3 percent increase for ANPAC Louisiana Insurance Company.
While the Legislature has limited authority over what the Louisiana Insurance Rating Commission does, some lawmakers are asking its members not to duplicate the ANPAC decision.
“These people don't have money to pay their bills because it went to pay the roofer, and yet the Insurance Rating Commission is going to put more of a burden on these people by allowing a company to raise their insurance rates," said Sen. James David Cain, a Dry Creek Republican.
J. Robert Hunter, former head of the National Flood Insurance Program and director of insurance for the Consumer Federation of America, a nonprofit advocacy group, said it’s all about profits and the train is already out of the station.
"Families will have to dig deeper into their pockets because insurers have been steadily increasing hurricane coverage deductibles and making other policy limitations," he said, via a written statement. “This liability shift back to consumers may take many by surprise.”
Another consumer group, Americans for Insurance Reform, recently released a comprehensive report documenting the insurance industry’s response to the hurricanes. Joanne Doroshow, AIR’s executive director, said many victims were foolishly looking to their providers for assistance that they couldn’t find elsewhere.
“But what many found was not help at all, but rather resistance by insurance companies to pay them anything, leaving victims frustrated and angry, not to mention destitute,” she said.
Indeed, this is a watershed moment for the insurance industry in Louisiana, as they are dealing with an unprecedented set of natural disasters. Everything about the industry is in the process of changing – how people obtain coverage, how they understand their policies and what they pay.
Unfortunately, how these factors will play out in coming months and years remains a mystery.
“We have a lot of good people who lost their houses in these hurricanes,” Trautman said in a follow-up interview from his temporary and rented home in New Iberia. “We’re trying to get help and move on, but all we can do is wait to find out what’s going to happen, and that’s not fair.”
Jeremy Alford can be reached at email@example.com.
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