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More on Mississippi's suit against insurance companies

From this:

If an insurance policy bought by the owner of a home or business says, specifically, that hurricane damage is a covered loss, that should be that.
So says Attorney General Jim Hood, who has named a bevy of insurance companies as defendants in suits filed in federal court.
If the federal government defines an area as flood-prone and offers taxpayer-subsidized insurance policies to owners of property in that area, then owners of property outside the identified flood zone should be compensated if they sustain flood damage.
So says Gov. Haley Barbour, who has been to Washington to see President Bush and to ask, in person, for such relief.
Some dismiss both actions as grandstanding, but they're wrong. People need advocates and Barbour and Hood, one a died-in-the-wool Republican and the other a died-in-the-wool Democrat, are going on the offense for victims of Hurricane Katrina, specifically the nearly 340,000 who have filed insurance claims.
Hood's argument is essentially this: If a policy says it covers hurricane damage, it should cover all hurricane damage including the storm surge of ocean water pushed ashore by high winds or by water overflowing from creeks, rivers and streams pushed out of their banks by a hurricane's downpour.
The insurance industry's response is this: For decades, flood insurance has been a "separate buy" through a taxpayer-subsidized program. Even policies that say they offer hurricane coverage almost always exclude, in writing, water flowing over land and into homes and other buildings. Tacitly, they are saying consumers should have known this or have been savvy enough to figure it out for themselves...

Allstate to reduce Gulf Coast exposure

From this:

Allstate, the largest publicly traded homeowners and auto insurer in the U.S., said it plans to scale back its exposure to the Gulf Coast homeowner's market following the devastation of hurricanes Katrina and Rita this summer.
Speaking at the company's third quarter earnings conference call with analysts earlier Thursday, Chief Executive Edward Liddy said Allstate would continue to provide assistance to those affected by the deadly hurricanes but would curb its exposure, a company spokeswoman confirmed. Liddy didn't provide an estimate of how much the company would scale back in the region.
The news came as Allstate, which had not previously disclosed its losses from hurricanes, said hurricanes Katrina and Rita triggered over $3 billion of catastrophe payouts in the quarter, up almost $2 billion from the same quarter last year. The company slashed its full-year operating profit target to between $2.35 and $2.50 per share from an earlier range of $6 to $6.40 a share as a result of the hurricanes...

NYT: James Lee Witt still cleaning up

The NYT offers a report on James Lee Witt in "FEMA Leader Under Clinton Makes It Pay":

...Soon after the storm hit, the State of Louisiana signed up with Witt Associates, a disaster consulting firm. Within days, Mr. Witt had become a fixture at the state's emergency operations center in Baton Rouge, advising the governor and sleeping in a trailer. He even figured out a way for FEMA to reimburse the state for his firm's fees, which the company estimates at $4 million to $6 million over the next year.
In Mississippi, Witt Associates swung into action to assist employees of Pinnacle Entertainment, whose Casino Magic Biloxi had been blown off its moorings and into a parking lot. Days later in New York, Mr. Witt appeared at a news conference with another client, the Allstate Corporation, to promote creation of a catastrophe fund to ease the financial burden on insurers...
..."James Lee Witt is giving his seal of approval to some companies, and I question whether that is appropriate as you leave government," said Danielle Brian, executive director of the Project on Government Oversight, which studies government contracts. "He is lending his credibility as a public official to help companies advance in Washington."
...Former President Bill Clinton helped enlist as partners former Transportation Secretary Rodney Slater and Gen. Wesley Clark, the former NATO supreme commander and Democratic presidential candidate. Former Treasury Secretary Robert E. Rubin reviewed the business plan. Former Senator John B. Breaux, Democrat of Louisiana, said he put in a good word for Mr. Witt with Louisiana officials. And former FEMA officials, with their own networks of contacts, are on his payroll...
...Some jobs undertaken by the onetime FEMA chief, though, could raise questions about his new role. After 9/11, his firm was paid more than $970,000 by the State of New York and concluded that evacuation plans at the Indian Point nuclear plant, plans FEMA had approved under Mr. Witt's watch, were inadequate. Last year, his company helped Louisiana officials respond to a FEMA audit, saying they had mishandled federal disaster money.
And when FEMA contracted last year to conduct a disaster-response exercise called Hurricane Pam for New Orleans, Witt Associates was identified as a subcontractor but ultimately was not asked to do any work because its fees were too high...

FEMA-contracted call center gave false info about flood insurance

Oct. 4, 2005 - Hundreds of thousands of hurricane flood victims along the Gulf Coast are only now realizing they were misled by the government on their need for flood insurance.
State floodplain officials tell ABC News that the floodplain maps, created by FEMA and used by the federal government, are both outdated and inaccurate. They also say the government has known of the inaccuracies.
Based on those maps, residents of parts of St. Bernard Parish in Louisiana were told that they did not need federal flood insurance. They lived in sections of the parish that fall outside FEMA's designated Flood Hazard Area...
The confidential audit, prepared by James, found that large numbers of callers were badly misled about their need for flood insurance. ABC News obtained the audit documents from a source other than James. Members of Congress have repeatedly asked FEMA for a copy of the report. As of today, FEMA officials say the agency has not yet turned over the audit.
"Three-thousand calls a month - 500, 600 calls a month of which were gravely erroneous. That's a serious problem," said James of the report's findings.
FEMA says it has since replaced the Tallahassee answering service with another one, but that does little for those who relied on its maps.
"The people who relied upon these maps, in many cases, ended up in harm's way, flooded, without flood insurance, and had no idea that they were in danger," asserted Steve Kanstoroom, founder of, a Web site advocating for flood victims...

Louisiana wants FEMA to upgrade Superdome

Apparently they forgot to add something to their $250 billion aid package. Tim Coulon, chairman of the Louisiana Stadium and Expedition District, wants FEMA to pay to upgrade the Superdome so it can be used as a shelter in the future. If FEMA won't pay, he says it shouldn't be used. They want upgraded bathrooms, an enlarged concourse (could double as the latter in a pinch), and the like. They also want insurance companies to pay part of this.

Allstate won't pay flood claims

From this:

"The Mississippi attorney general's view [is] that we should pay for claims -- flood claims even though we never insured those," Allstate's [Chief Operating Officer Tom Wilson] said during a speech at a Banc of America Securities conference in San Francisco. "We do not intend to do that."

James Lee Witt not lobbying for Allstate

For now that is: "Witt's firm postpones Allstate job".

The firm counseling Gov. Kathleen Blanco on hurricane relief efforts has temporarily set aside another client -- the nation's largest private insurance company -- to avoid a possible conflict of interest.
While working for Louisiana, James Lee Witt Associates will not lobby Congress on behalf of Allstate Insurance Co., company vice president Barry Scanlon said Tuesday...
"We're suspending any work … for the duration of the time we're working with the governor, just so there's not even an appearance of a conflict of interest," Scanlon said...
The state's contract with James Lee Witt Associates, released late Monday evening, lays out a schedule of rates for company employees ranging from $50 per hour for a data entry clerk to $275 per hour for counseling from the company's namesake and leader James Lee Witt...

Mississippi sues insurance companies: pay for all damage

The state of Mississippi is suing various insurance companies that are trying to avoid paying out billions of dollars. Apparently the policies have provisions restricting damage to wind and rain, rather than flooding. Only about 30% of houses in the affected areas of MS and Alabama had flood insurance.
UPDATE: There's a later roundup in "Lawsuits over storm-surge damage put insurance industry on the defensive".

James Lee Witt works for Louisiana; to lobby for Allstate

WASHINGTON (AP) - The former FEMA director hired by Louisiana to help lead its Hurricane Katrina recovery effort has registered to lobby for an insurance company that wants Congress to create a natural disaster "catastrophe fund."
James Lee Witt and his firm, James Lee Witt Associates, registered Tuesday to lobby for Allstate Insurance Co. Their mission: "to draft and introduce model legislation creating a natural disaster catastrophe fund," the registration says.
Witt's lobbying for the fund comes while he's on the payroll of the state of Louisiana. Gov. Kathleen Blanco hired him earlier this month as a consultant to advise her on the state's hurricane relief work.
Witt headed the Federal Emergency Management Agency in the Clinton administration. His Washington firm lobbies on disaster issues for several clients.
Witt's experience at FEMA was among the reasons Allstate hired him, company spokesman Michael Trevino said.
"He's an expert," Trevino said...

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