My old friend, Bob Hunter, insurance director for the ConsumerFederation of America, cited a candid reader posting to my blog inhis testimony this morning before the Senate Judiciary Committee onwhether the industry deserves to keep its federal antitrustexemption. The posting, about insurer mishandling of HurricaneKatrina claims, came from James W. Greer, president of theAssociation of Property & Casualty Claims Professionals. Thefull reference follows.

(For NU's breaking news story on the hearing, click here.)

Mr. Hunter, who testifed that my blog “has other interestingposts on this subject,” included the following in his Senatesubmission:

Many concerns have been raised about the poor performance ofproperty-casualty
insurers in paying legitimate claims in the wake of HurricaneKatrina. Some have suggested that the lack of attention toindividual claims by some insurers may have been the result ofcollusion. Consider this startling blog entry from the President ofthe Association of Property/Casualty Claims Professionals, JamesGreer, posted on the Web site of Sam Friedman, Editor of theNational Underwriter (Your Own Worst Enemy, Continued,www.property-casualty.com, Feb. 21, 2007.)

James W. Greer, CPCU:

Although I live and work in Florida, my home is on theMississippi Gulf Coast where I have family spread from one side ofthe state to the other. I spent six months there leading a team ofover 100 CAT adjusters and handling the wind claims for the state'scarrier of last resort.

I personally walked through the carnage, saw the people, andfelt the sorrow. I climbed the roofs, measured the slabs, andpersonally witnessed very visible and clear damage caused by bothwater AND WIND.

I also observed something else that surprised me, and, after 28years as a claims professional who has carried “the soul” of abygone industry in my practices and preachings, I was ashamed ofthose to whom I had vested a lifetime career: An overwhelming lackof claims adjusters on the Mississippi Gulf Coast.

The industry simply did not respond. The industry appeared asdistant to the Miss. Gulf Coast as the federal government wasaccused of being to New Orleans. It was as if some small group ofhigh-level financial magnates decided that the only way to save theindustry's financial fate from this mega-disaster was to take atotal hand's off approach and hide beneath the waves and the floodexclusion.

While media reps repeatedly quoted, “Each claim is different andwill be handled on its own facts and merits,” the carriers behavedas one…if there was evidence of water, or you were within a certaingeographic boundary, adjusters were largely absent on thecoast.

(Actually, State Farm did have one of the largest CATfacilities, located centrally on the coast, but there was littleevidence of other carrier presence.)

I personally observed large carriers simply refusing to respond,or even consider arguments of wind involvement…well-rationalizedsets of facts, coverage and legal arguments. The silence fromindustry officials “far from the field” who retained the authorityfor claim decision-making was deafening.

In an article posted on the Association of Property &Casualty Claims Professionals' Web site shortly after Katrina hit,I described the catastrophe as “Claims Greatest Challenge,” andpondered the industry would respond. Now we know.

As a member of an old Aetna family that has been widelydispersed since its demise in the '90's, I remember the day whenleaders of that fine company routinely cited, and tried to honor,the social/moral contract the insurance industry had with society.It is clear that, in today's business environment, the soul of theinsurance industry is missing, and despite the rhetoric of its PRmachine, the industry no longer recognizes such a social/moralobligation.

As a lifetime claims professional, I will never quit writing,teaching and showing those who are interested the way things shouldbe done to serve the best interests of the industry and itscustomers according to the best practices and behaviors of a bygoneclaims age. Perhaps someday a change in mindset will once againbegin to evolve.

Clearly, for the Mississippi Gulf Coast, the Katrinacatastrophe, the animosity and the litigation, it was never reallyabout flood…nor was it about the flood exclusion. It was, and is,about the failure of the insurance industry to keep its promise…apromise that it will respond when loss occurs.

The only thing sold in insurance is peace of mind. The victimsof this storm, and certainly those in Mississippi, will never againfind peace of mind in insurance.

Actions do speak loudest. On the Mississippi Gulf Coast, theinsurance industry simply failed to act. In the end, it will paydearly for that decision, as will all of society.

James W. Greer, CPCU, President, Association of Property &Casualty Claims Professionals