The Wind Versus Flood Dispute: A Conflict of Interest; A Review of the Proposed Multiple Insurance Act of 2009

July 20, 2009

John H. Rice, Jennifer Powell Miller

When Hurricane Katrina struck the Gulf Coast on August 29, 2005, the destruction left in her wake was impossible to measure. Wind and water leveled communities, destroyed homes, stole cherished belongings, and washed away the carefree lives of residents caught in her path. Each citizen, business, and unit of government was impacted by the scope and breadth of the disaster. As the waters receded, survivors faced the next challenge, rebuilding more than 300 years of history lost to the storm. Property owners looked to the federal government and the insurance industry to provide the means to put their lives back together, depending largely on federal disaster relief assistance and the proceeds from separate flood and wind insurance. As rebuilding and recovery efforts began, thousands of insurance claims were filed. Claims adjusters were forced to evaluate the loss suffered and make determinations as to the cause of the damage and destruction of properties—wind versus flood—determining whether the private insurance industry or federal government would have the obligation to pay. In the midst of the recovery process, allegations were made that corrupt evaluation policies adopted by several insurance companies led to the denial of many wind insurance claims. These allegations and the general retreat of the private insurance industry from off ering wind coverage in coastal areas after the hurricane necessitated a reevaluation of wind and flood insurance policies...

The Wind Versus Flood Dispute: A Conflict of Interest; A Review of the Proposed Multiple Insurance Act of 2009