Posted on 09/24/2005 1:01:43 PM PDT by Graybeard58
Should the insurance company still have to pay to fix your car?
That may sound like an idiotic question. If you wanted collision insurance, you should have bought it before the accident. But it's essentially what Gulf Coast trial lawyers are trying to pull in the aftermath of Hurricane Katrina.
The storm wrecked tens of thousands of homes and businesses in Louisiana, Mississippi and Alabama. However, many property owners living in flood plains didn't have flood insurance. Since the vast majority of Katrina's damage was caused by storm-surge flooding, the uninsured are on the hook for their losses because they did not take advantage of taxpayer-subsidized flood coverage.
Standard homeowners' and renters' policies redundantly and unambiguously exclude flood damage. The only flood insurance available today is from the Federal Flood Insurance Program, introduced in 1968. Private insurers don't write flood policies because the risks are so high for those who should have it that even the richest Americans would have trouble affording the premiums.
Sensing an opportunity to pull down a fortune in the judicial lottery, attorney Richard Scruggs, who became a very rich man picking the pockets of the tobacco and asbestos industries, says he is reviewing insurance policies to determine if flood exemptions constitute "unconscionable provisions."
Here's betting that Mr. Scruggs concludes they are and that he files a multibillion-dollar class-action lawsuit shortly thereafter.
In the event that ploy fails, the trial lawyers are working on Plan B. They're leaning on the states to pass laws requiring insurers to pay for all the damage inflicted by Katrina, regardless of how it occurred. Don't be shocked if governors and lawmakers are quite receptive.
Facing billions of dollars in losses to public property, facing mounting pressure to make homeowners and businesses whole, and confronting their usual budget-balancing struggles, they might see the demonizable insurance industry as the perfect slow-moving target onto which to offload all their Katrina-related losses and expenses.
Mississippi Attorney General Jim Hood isn't waiting for his state's lawmakers to act. He's filed suit against several insurers, demanding they pay for all Katrina-related damage.
The politicians should consider the consequences first. If companies must pay hundreds of billions for damages they never insured, many will stop doing business in those states. Others would go bankrupt, which would shift their debts to taxpayers.
The surviving companies would recover the money extorted from them by the government or the courts by raising premiums substantially for everyone else they insure, including their policy-holders in Connecticut.
The economic tsunami this would create would be ruinous. Untold thousands of employees in the industry would lose their jobs. The value of insurance companies' stocks and bonds would plummet, threatening millions of individual retirements accounts and imperiling public and private pension funds. The businesses large and small that feed off the insurance industry would be devastated.
It's bad enough the federal government subsidizes people and businesses in flood-prone areas. But to force insurers to write free flood insurance policies retroactive to Aug. 28 would mock the Constitution and wreck the economy.
All in a day's work for the trial lawyers.
Sick beyond belief.
Trial lawyers are the biggest scum in this country.
He needs a good dragging.
I relly like the idea of lawyers IN the levee.
If there's anything worse than the "arm-chair first responders" who want to sit around and second guess the President on down the line, It could be your category of pitiful "armchair worrywarts" who piously piss and moan along with all the other crybabies.
There has been more money stolen by politicians and lawyers manipulating the law than will ever be stolen with a gun. These guys make the folks at Worldcom and Enron look good.
How about this for a counter proposal? Sue the trial lawyers for the flood damages. They've written as many flood insurance policies as the insurance industry, zero. They've got lots of money. And, unlilke the insurance industry, tearing down the trial lawyers will be good for the economy. Which is enough for a government taking according to the Supreme Court.
All at the same time? Could be an opportunity here.
Unintended Consequences of Flood Exclusion Avoidance Suits
Within 3 weeks of Hurricane Katrina, private and public lawsuits have sought to make private insurers pay for flood claims despite policy exclusions and decades of availability of subsidized flood insurance from the National Flood Insurance Program (NFIP). (Unintended Consequences: Mississippi AG's Complaint Seeking to Void Standard Flood Exclusions)
If they are successful in their actions, the unintended consequences for society are likely to be signficant. Societal impacts may include:
*** Exacerbation of already heavy underwriting losses by private and public insurers with Gulf Coast exposures;
*** Impairment of insurance industry capital available for coverage during recovery;
*** Possible destruction of the marketability of federal flood insurance;
*** Increased insolvency of insurers with Gulf Coast property exposure concentrations;
*** Cash flow or solvency crises in the affected states' Insurance Guaranty Associations, windpools and FAIR plans;
*** Declination by primary and reinsurance companies to write coverage in the affected states on reconstruction contractors, homeowners, apartment owners and business owners;
*** "Lock-in" legislation by affected states attempting to mandate availability and forbid withdrawal;
*** Creation of new state-run insurance availability plans operated by political appointees without insurance experience.
The uncertainty surrounding these ill-considered lawsuits are likely to have some immediate impacts, as year-end renewal cycles approach. Responsible insurers may begin issuing protective non-renewal notices as soon as any "lock-in" moratoria expire, in order to preserve their contractual rights. Reinsurers and "surplus lines" carriers, being largely outside of the reach of local regulation, may take action despite attempted "lock-ins" seen in past insurance crises.
Later consequences may include:
*** Expensive antitrust actions, based on Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993), to discourage insurers from withdrawing;
*** Federal mandates of purchase of flood insurance, just as it requires contributions to Social Security;
*** Federal reform of the flood insurance scheme to include "channelling" protection for the enforceability of policy exclusions, along the lines of the Price-Anderson Act or the Terrorism Risk Insurance Act (TRIA).
I relly like the idea of lawyers IN the levee.
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Problem is they're so full of hot air that they have no staying power. They wouldn't be able to stop a drop of water unless there was a buck attached to it.
Now, if the New Orleans officials would have been smart, they would have just a small pile of $1 bills in the breach in front of a bunch of lawyers and the immediate pile on would have worked as a temporary band-aid to stop the levee breach...
Unfortunately, as the sharks all quickly fed on each other and nothing was left but hot air, that band-aid would have collapsed too...
ANTI-DNC Web Portal at ---> http://www.noDNC.com
Concrete overshoes.
Scum is too kind a word.
Plus most politicians seem to be lawyers. No wonder things keep getting so screwed up and the tax payer screwed over...
Socialism/Communism at it's best.
I drove my lawyer to the levee but the levee was dry.
I'd bet every insurance policy was written or OK'd by a lawyer.
Let the class acion lawsuits against the lawyers begin!
New research has shown that if we took all the lawyers and layid them end to end around the equator, it would be a good start.
I don't know what will happen with Mississippi lawsuits on this, but Mississippi has a history of frivilous lawsuits, outrageous medical malpractice lawsuits, jury shopping.
Does anyone else remember the Mississipi nurse who called in to Rush show describing how doctors and nurses were leaving the state in droves because of out of control lawyers?
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http://www.house.gov/pickering/Tort.htm
"...The state of Mississippi is in a crisis -- doctors and nurses are leaving, clinics are closing, prescription drug costs are rising, and our loved ones' health is at risk. The lack of reasonable lawsuit reform affects every aspect of our health care system - it makes treatment and medicine more expensive and less available, particularly in rural counties. It also clips the wings of any community hoping to expand its economic base, because industry will not come to a county that cannot provide quality health care..."
But what about Louisiana? I can already imagine lawyers there suing the Federal government because Louisiana crooks used sub-standard materials to build those New Orleans levees.
Mortgage companies REQUIRE flood insurance, paid for by the homeowner, if the property is in a flood plain. Unless you own your property outright, you're legally obligated to have the insurance. EVERYBODY on the gulf coast that owns property knows this!
I don't live in a flood prone area but where I do live, mortgage companies damn sure require that I have insurance to cover tornados. No insurance equals no mortgage loan.
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