Our associate editor, Mark Ruquet, came up with a brilliant column in this week's edition of NU, speculating on how differently life might have turned out for Sen. Trent Lott and the insurance industry had the Mississippi Republican–who lost his house in Hurricane Katrina–gotten his coverage through an independent agent rather than a direct writer.
Mark's key point (click here to read his complete column) is that while Sen. Lott had flood insurance (and collected on his policy), if he'd gone to an independent agent, he might have been more likely to have been counseled to get excess flood coverage from a private carrier, which would have kicked in after his federal insurance had maxed out, leaving him well short of what he needed to replace his home.
Had the senator had such excess coverage, Mark suggests, he might not have gone ballistic after his homeowners' carrier–State Farm–declined to pay for any damages because of the standard flood exclusion and anti-concurrent-causation language in his policy.
Besides suing, that cold shoulder prompted Sen. Lott to use his position as a U.S. senator to make life miserable for the entire insurance industry. He slipped a provision into the funding bill for the U.S. Department of Homeland Security mandating a study of Katrina claims-handling, and he has led the charge to revoke the industry's federal antitrust exemption under the McCarran-Ferguson Act.
Would an independent agent more accustomed to dealing with wealthier homeowners like Sen. Lott had made a difference in the coverage he received? And if Sen. Lott had the excess flood coverage he so obviously required, would he have launched his crusade to punish the industry he felt had wronged he and his fellow Mississippians? What do you think?
Meanwhile, as we reported Friday on our Web site, Sen. Lott's lawsuit against State Farm is still scheduled to go to trial this June. The Trial of the Century (even though it's been a short century thus far) would mean even more bad publicity for an industry already sporting a black eye.
There is still a chance the case will be settled, and State Farm–as well as the industry in general–would like nothing better than to make this go away. However, it would look awfully bad for Sen. Lott to back off just because his own case is settled, so don't expect any benefit for the industry overall should State Farm put this challenge behind them.
Would an independent agent have made a difference in how this scenario played out?
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