Insurer Group Calls Miss. AG’s Comments ‘Hysterical, Irresponsible’

April 18, 2006

Mississippi Attorney General Jim Hood’s recent comments comparing the insurance industry to Nazis are “hysterical and irresponsible,” claims an insurance trade group leader.

“Now that Hood’s inspired exercise in justice has met some resistance, his public rhetoric seems to get more hysterical and irresponsible,” said Charles M. Chamness, National Association of Mutual Insurance Companies president and chief executive officer.

“Initially he said the existence of flood exclusions in insurance contracts was ‘unconscionable’; last week a judge ruled that flood exclusions are valid and legally enforceable, so Hood has upped the ante by calling insurers ‘Nazis.’

Hood has sharply criticized insurers’ denial of Hurricane Katrina claims in Mississippi, saying companies are “in lockstep like Nazis locking arms, coming at those people down there on the coast.”

Hood has a lawsuit pending in state court over questions about what the insurance companies are obligated to pay.

“I think what insurance companies hope, they can bob and weave and drag it out and our taxpayer money will hit the ground down there and the pressure will be let off, and they can walk away,” Hood said.

He spoke at a luncheon sponsored by the Capitol press corps and Mississippi State University’s John C. Stennis Institute of Government.

Hood, a Democrat serving his first term as attorney general, filed a lawsuit Sept. 15 against five major insurers for refusing to cover damage caused by storm surge. Hood has said that the storm surge during Katrina caused an estimated $2 billion to $4 billion in Mississippi.

But Chamness dismissed Hood’s remarks.

“The fact remains that no private insurer ever collected a dime for flood coverage. Hood would force them to pay flood claims anyway in direct contravention of the principles of risk sharing and underwriting on which the property-casualty industry is built. One wonders what other industries Hood will sue for failing to provide goods or services to people who didn’t buy them,” said Chamness.

“Hood’s gambit could be economically disastrous for Mississippians. If insurers must pay claims for losses their policies didn’t cover, they will be forced top raise premiums to cover every conceivable peril, irrespective of whether it’s excluded in the contract. That could make homeowners insurance—and thus homeownership itself—unaffordable for many citizens of Mississippi.”

Chamness added that while ”nothing could stop the destructive force of Hurricane Katrina, the Mississippi courts can prevent another major catastrophe by rejecting Hood’s audacious assault on insurance contracts.”

Source NAMIC

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