Mississippi Bill Would Eliminate ACC Clause In State

A Mississippi state senator is seeking to pass legislation that would establish a homeowners insurance policyholder Bill of Rights to eliminate language he says delayed claims payments after Hurricane Katrina.

Part of his bill would eliminate anti-concurrent causation exclusions in insurance policies.

State Senator David Baria, D-Bay St. Louis, said he has no animosity toward the insurance industry or any specific company. But he noted that the actions of most insurers after Hurricane Katrina, particularly when they invoked the anti-concurrent causation (ACC) clause, stymied the state's recovery and caused damage to both policyholders and the state's economy.

Mr. Baria said he was not in the legislature when Katrina struck but took interest in the recovery process as a homeowner in the state. He said some companies "did the right thing" after the storm, but others used the ACC clause to deny claims for wind damage because those claims also involved rising water and flood.

The lawmaker said he feels that these insurers did not heed the state insurance commissioner's proclamation to err on the side of paying claims rather than denying Katrina losses.

As time went by, Mr. Baria said, insureds who did not understand exclusions such as the ACC clause did not have claims paid in a timely manner.

In response, Mr. Baria said he helped a community activist put together a policyholder Bill of Rights that would be "an easy reference for policyholders to know what their rights are." The Bill of Rights was submitted to a legislator who agreed to sponsor it.

Mr. Baria said when he was elected to the Legislature in 2007 he had his own version of the Bill of Rights drafted, which was filed last year. He then re-filed the bill this year (Senate Bill No. 2386).

Under his legislation, Mr. Baria said a policyholder Bill of Rights would be attached to insureds' policies.

In addition to eliminating the ACC clause in Mississippi, Mr. Baria's bill would also place the burden of proving exclusions on the insurance company. The burden of proof is already on insurers by common law, Mr. Baria noted, but the bill would define that burden statutorily.

Mr. Baria said his bill would also eliminate the ability of insurers to contribute to insurance commissioners' campaigns. He said he is "not really fired up" about this final provision and would not press hard for it.

Regarding the bill's chances of passage, Mr. Baria said the Senate had a new Insurance Committee chairman last year, and Mr. Baria was told the new chairman, Eugene Clark, wanted to take time to understand the insurance issues better before acting on some legislation. This year, Mr. Baria said, Mr. Clark indicated he will consider the measure, but with no guarantee that it will pass. Mr. Baria said he considered that a breakthrough.

Julie Pulliam, spokesperson for the American Insurance Association (AIA), said her association supports the policyholder Bill of Rights that already exists as a regulation put forth by the state's insurance department.

She said AIA is working with the insurance commissioner to complete amendments to the Bill of Rights, one of which will require companies to attach a copy to policies issued to consumers.

She said her association does not support eliminating ACC exclusions in policies. ACC exclusions, she said, have been upheld in court cases after Katrina, and eliminating them "would be just a real setback in Mississippi" and would go against the existing policy in many states. She added that she "strongly disagrees" that ACC clauses held up the recovery process in the state and said the "enormity of Katrina" was more to blame.