A day before the two-year anniversary of Hurricane Katrina's arrival in New Orleans, a trial lawyers group issued a report charging that insurance companies after that mammoth storm systematically denied paying policyholders "fair and just claims."

The 15-page study from the American Association for Justice (AAJ) in Washington was entitled "Pattern of Greed 2007: How Insurance Companies Put Profits over Policyholders."

Robert P. Hartwig, president of the Insurance Information Institute, said of the report, "It's a great piece of fiction. The insurance industry performed admirably in the wake of Hurricane Katrina, paying $41 billion in insured losses on 1.7 million claims" and "the notion that insurers are greedy is absurd."

But according to the AAJ report, insurers "collected billions in premiums from policyholders and then stiffed them in their time of greatest need" and "shockingly" took in $100 billion in profits in the past two years.

The AAJ said it was calling on insurance regulators to immediately initiate investigations into companies "that continue to unfairly delay and deny thousands of unresolved claims in light of the obscene profits insurers have pocketed over the past two years."

It added that it has a special Web site, "People over Profits" (www.peopleoverprofits.org/site), which enables citizens to contact their state officials with the same demand.

"While the insurance industry is enjoying record profits, thousands of people continue to live in FEMA trailers and other temporary housing, waiting for their policies to be honored," said AAJ Chief Executive Officer Jon Haber.

"It is a sad and shocking fact that after every natural disaster, insurance companies adopt a pattern of delaying and denying the payment of just and fair claims," he added. "We urge state governors and insurance commissioners to investigate this outrageous behavior and take action against it."

AAJ's report said after natural catastrophes, insurers offered pennies on the dollar, refusing to honor many agreements and pay policyholders' "fair claims" while making billions in profits.

"Time after time when a major disaster strikes, Big Insurance puts its profits ahead of its policyholders," according to Mr. Haber. "No region of our country is immune from natural disasters, so every American is at risk of being victimized by their insurance company as we have seen after hurricanes, tornados and earthquakes. The insurance industry's denial of fair and just claims to Katrina victims should be a wake-up call for all Americans."

AAJ's report is online at http://www.justice.org/POG2007.pdf.

Mr. Hartwig noted that insurers, rather than raking in huge profits in 2006, had underperformed the Fortune 500 Group for a 19th consecutive year. "Profits are not unreasonable by any standard and are below those of many major industries."

The report omits, he added, that there were record losses after Katina and that millions were paid by reinsurers as well.

Ninety percent of insurer profits, said Mr. Hartwig, are reinvested "to pay even larger claims in future that we know are coming."

The Institute, along with three other insurance associations, put out a joint statement, calling the AAJ report part of "a deliberate effort to pad the pockets of the lawsuit industry by drumming up litigation and high jury verdicts."

"The trial bar, hiding behind the name of the American Association for Justice, is using the second anniversary of Hurricane Katrina to manipulate American consumers by spinning a fictional tale...," said Carl Parks, senior vice president for government affairs at the National Association of Mutual Insurance Companies. "The facts tell a different story, and facts are stubborn things."

Hurricane Katrina generated the largest loss in the history of the insurance industry--1.7 million claims resulting in $40.6 billion in insured damage, note Mr. Hartwig. He said approximately 99 percent of homeowners insurance claims have been settled.

The insurance groups said trial bar-led challenges to insurance policy contract language--such as the exclusion of flood coverage in homeowners policies--have been rebuffed by federal courts in Louisiana and Mississippi.

"The trial bar's defeats in the courts are behind its concerted effort to get the media to focus on the small number of disputed claims, creating the false impression that insurers turned their backs on large numbers of Gulf Coast consumers," said Joseph Annotti, senior vice president for public Affairs at the Property Casualty Insurers Association of America.

In addition, "there has been very little reporting on the fact that Gulf Coast banks are swollen with payments from insurance settlements and that the majority of the rebuilding efforts in the region are fueled by those claims payments," said Marc Racicot, president of the American Insurance Association.

"Those homeowners and business owners who took prudent steps to adequately insure their property before the storm, particularly the purchase of flood insurance from the federal government, had the financial resources to rebuild in the Gulf Coast or to relocate," he said.

"Unfortunately, the dramatic demographic shift in the Gulf Coast has resulted in many businesses thinking twice before re-opening in the same location and many citizens seeking areas with better schools and public services," he added.

(This story was updated on Aug. 29 at 4:30 p.m. EDT.)

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