That be the same locals that refused to purchase flood insurance despite being told explicitly that homeowners doesn't cover flood damage or the locals with no insurance at all that expect you and I to foot the bill?
Insurance companies are portrayed as the bad guys despite the fact that their aggressive challenging of claims and their restrictive policies are the result of years of claims fraud. Whenever someone speaks of upgrading from the settlement, or adding an extra room with the settlement money, etc they are profiting from an insurance claim that is designed to indemnify, i.e. to make one whole again. Those profits are recovered through higher rates for everyone or stricter settlement practices, there are no free lunches.
With Katrina, most homes were destroyed by the wind first and then the water.
State Farm & Allstate tried to weasel their way out of paying. But the law said otherwise...
http://www.yourlawyer.com/topics/overview/state_farm_katrina_claims