Mississippi Insurance Commissioner George Dale has issued a bulletin to insurance companies urging insurers pay all valid claims from Hurricane Katrina. The bulletin warns insurers that if they deny a claim, they will be required to prove to both regulators and homeowners that damage was caused by water and not wind.
“In some situations, there is either very little or nothing left of the insured structure, and it will be a fact issue whether the loss was caused by wind or water,” Dale said. ” . . . I expect and believe that, where there is any doubt, that doubt will be resolved in favor of finding coverage on behalf of the insured.”
Dale has also instructed all insurance companies to fully inspect any damaged property before a coverage decision is made.
The bulletin said MID has been working with Mississippi consumers and the insurance industry to ensure that Mississippians impacted by Hurricane Katrina are treated fairly and receive compensation in a timely manner.
“The situation is very bad but is improving, adjusters are issuing checks daily for additional living expenses and for payments of other claims, however, I expect and believe that where there is any doubt, that doubt will be resolved in favor of finding coverage on behalf of the insured,” Dale said.
According to an article in the Washington Post, Dale’s position startled many insurers and reinsurers, who are concerned they are being pressured to pay claims for damage they did not insure.
Even in Florida, with its many hurricanes, regulators “haven’t ever tried to do that,” said Brad Kading of the Reinsurance Association of America.
Some industry officials told the Post they did not view Dale’s action as alarming.
“I think this is just a cautionary bulletin to lay out what his expectations are,” said Julie Pulliam of the Atlanta office of the American Insurance Association, a trade group. “He has been very good to work with, and we expect that to continue. We are at the very beginning of this process. There’s a lot to come.”
By some estimates, reinsurers will pay about 40 percent of insured losses from Katrina and primary carriers the rest, assuming normal treatment of flood losses. If insurers pay claims that the reinsurers reject, their efforts to spread their risk will be negated, perhaps threatening their solvency.
But much remains uncertain with regard to losses, irrespective of who pays them. “We are still totally in an assessment-type mode, of how much and where,” said John Marlow of the AIA’s southwestern regional office in Austin.
The department has set up a special out-of-state-only 1-800 number so residents of Mississippi who have been displaced to other states by Hurricane Katrina may contact the department with insurance assistance questions. The number is 1-866-856-1982 and will be operational for the next 30 days. MID offices will be open extended hours, from 7 a.m. to 7 p.m. Consumers may call 1-800-562-2957 (in-state) or 601-359-2453.
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