WASHINGTON–Reacting to news that the oversight panel of the House Financial Services Committee plans a Feb. 28 hearing to probe insurance industry handling of Hurricane Katrina claims, one industry group official said the industry "welcomed" the investigation.
The timing of the hearing–which had been foreshadowed by a statement from the committee in early January–was announced by Rep. Mel Watt, D-N.C., chairman of the panel's Subcommittee on Oversight and Investigations.
Joseph Annotti, senior vice president, public affairs, for the Property Casualty Insurers Association of America, responded to the announcement by saying, "PCI welcomes the opportunity to demonstrate how thousands of insurance industry professionals responded to the unprecedented scope of the damage resulting from Hurricanes Katrina, Rita and Wilma in 2005."
The hearing is among a number of actions being undertaken by Gulf Coast members of Congress to pressure insurers to be generous in settling claims stemming from the 2005 hurricanes, and to hold down rate increases to homeowners and businesses in the area.
Just this week, legislators announced plans to introduce legislation in both the House and Senate that would substantively alter the McCarran-Ferguson Act, which exempts insurers from antitrust laws, and to revise the National Flood Insurance Program to provide all-perils coverage under the National Flood Insurance Program.
Several weeks ago, a number of senators from the Gulf Coast joined to introduce legislation calling for creation of a broad-based commission to study how the soaring cost of homeowner's insurance to Gulf Coast residents and businesses can be adjusted.
The panel's charge would be to report back to Congress on possible solutions as soon as possible.
"The hearing will examine concerns raised by both Democratic and Republican members of Congress about whether private insurance companies have been properly paying claims after Hurricane Katrina," Rep. Watt said.
He said it was being held "in response to concerns raised by a number of members from the Gulf Coast area, particularly Reps. Gene Taylor and Bennie Thompson, D-Miss., as well as Reps. William Jefferson and Charlie Melancon, D-La.
"It is important for the subcommittee to begin the process of examining the claims paying process by private insurance companies following Hurricane Katrina to establish a factual record for the committee to consider going forward," Rep. Watt added.
PCI's Mr. Annotti said the industry is "proud of the way we overcame obstacles to accessing consumers and storm-ravaged properties to settle millions of claims and help provide consumers and businesses the financial resources to rebuild their lives and communities."
Justin Roth, a director and federal lobbyist for the National Association of Mutual Insurance Companies, added, "While NAMIC is sympathetic to the plight of those homeowners who were affected by the storms of 2005, we believe that the current regulatory and judicial system are sufficient and should be allowed the proper time to remedy the few outstanding claims."
Mr. Roth added that NAMIC is hopeful this hearing will present an opportunity for members of the committee "to learn that just one year after Hurricane Katrina more than 95 percent of all homeowners' claims have been paid, while fewer than 2 percent are in dispute."
Dennis Kelly, federal media relations director for the American Insurance Association, added that the AIA "will work with Chairman Watt to the extent that the Subcommittee on Oversight and Investigations explores issues related to natural catastrophes and Katrina."
In his comments, Mr. Annotti added that PCI "looks forward" to working with public policymakers at the state and federal level to develop innovative solutions "so that the industry, government and consumers can better prepare for, respond to, and recover from future natural disasters."
Mr. Annotti noted, "A healthy and competitive insurance market is an important foundation on which to build a long-term solution that addresses the needs of consumers in the Gulf Coast and other disaster-prone areas of the U.S."
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