MetLife and Prudential are facing whistleblower lawsuits over how they handled unclaimed life insurance benefits. The lawsuit seeks over $1 billion in damages on behalf of Illinois State and was filed January 2011.
The lawsuit alleges that the insurance giants did not hand unclaimed life insurance policies to Illinois’ abandoned property department, said The Wall Street Journal. The lawsuit was just unsealed by a Cook County, Illinois state-court judge. (more…)
As the Texas Windstorm Insurance Association votes to replenish its reserves in the wake of Hurricane Ike, it appears that there is a dispute brewing over the association’s claim that its policies do not cover storm surge damage.
The Texas Windstorm Insurance Association covers 142,566 policies in the six Texas counties hardest hit by Ike. The amount of claims paid through the association depends on how much of the damage is determined to be wind-related. Texas Windstorm Insurance Association policies do not cover flooding and most other water damage. (more…)
Hurricane Ike could be the third costliest hurricane in history, with insurance claims expected to reach $11 billion.
In Texas, where Ike did significant damage to Galveston and Houston, there is concern about whether or not the Texas Windstorm Insurance Association, the insurer of last resort for 14 coastal counties, can weather the financial fallout for Ike. The Houston Chronicle reports that the association’s $100 million base, along with part of a $500 million catastrophic reserve trust fund, were already used up paying for damage caused by Hurricane Dolly and Tropical Storm Edouard earlier in the summer. So it will have to tap its backup funding sources to cover claims from Ike. That ultimately could cost Texas taxpayers. (more…)
While not as bad as first feared, it is expected that Hurricane Gustav insurance claims will reach $10 billion. One reason that damage estimates are lower than earlier predictions is that unlike what happened in Hurricane Katrina, levees in New Orleans and some surrounding communities held – although in some case just barely – sparing the area the catastrophic flooding that was seen in 2005. So far, flooding does not appear to be a major contributor to damages in the hurricane zone. Matt Bordonaro, spokesman for The Travelers Group, told Forbes.com that “We are seeing more of a wind event, than a flood event.”Hopefully, this means that victims of Hurricane Gustav will have an easier time with their insurance claims than was experienced following Katrina. Faced with staggering losses, insurers used many tactics to avoid paying Katrina damage claims. The fact that so much flooding occurred during Katrina aided the companies in their efforts. One of the major tactics that insurance companies used in Katrina was to find that property damage was caused by flooding, and not by wind. Conventional property insurance does not cover flood damage. (more…)
A disgraced lawyer’s conduct has left dozens – perhaps hundreds – of Mississippi residents suing State Farm Insurance over Hurricane Katrina damage claims racing to find new lawyers. Now, because of a federal judge’s decision to ban lawyers affiliated with Richard “Dickie” Scruggs from representing State Farm policy holders, Mississippi plaintiffs have just 45 days to find new attorneys.
U.S. District Judge L.T. Senter Jr. in Gulfport cited ethical concerns when he dismissed a group of attorneys who had been working with Scruggs on the State Farm Hurricane Katrina lawsuits in Mississippi. Scruggs is the well-known lawyer who pleaded guilty last month to conspiring to bribe a judge. While Scruggs had withdrawn from the State Farm litigation following his indictment on bribery charges late last year, members of his legal team went on to form the Katrina Litigation Group and continued representing plaintiffs in the Hurricane Katrina lawsuits. But Senter said that any attorney affiliated with Scruggs shared in the responsibility for his ethical lapses, as they were aware of them and did nothing to stop him. (more…)
Health Net Inc. has been ordered to pay $9 million to a California woman for illegally canceling her health insurance coverage after it learned she had been diagnosed with breast cancer. It is the first time that a health insurance company has been fined over its cancellation policies.
In the wake of the decision, Health Net said it would be implementing a freeze on policy cancellations that would last until the company sets up a third-party review panel to scrutinize cases. Health Net also said it would review its practices and the way its brokers and agents are trained. “Obviously we regret the way that this has turned out, but we are intent on fixing the processes to maintain the public trust,” a Health Net spokesperson told the Associated Press. (more…)
A New Orleans home owner whose home was destroyed during Hurricane Katrina has won an appeal against the home owner’s insurance company that denied his claim. By ruling against Lafayette Insurance Company, the Louisiana 4th Circuit Court of Appeals has given fresh hope to the thousands of Katrina victims who say their insurance companies acted in bad faith when they denied claims.
Lafayette had appealed an earlier state court decision that said the insurance company had to pay for damage to an apartment building owned by an Orleans Parish man that was caused by flooding brought on by levy failure following Hurricane Katrina. In addition to being a source of income, the building also served as the man’s home. Lafayette paid the policyholder about $2,700 for wind damage, but he estimates his home sustained a total of $223,488 in damage that should be covered. Lafayette maintained that because that damage was caused by flooding, it did not have to cover the loss.
Washington Mutual, the country’s largest savings and loan, is being targeted by the New York State Attorney General’s office for allegedly inflating the appraisals of houses for which it wrote mortgages. Fraudulent appraisals have left thousands of homeowners in that state with mortgages they can’t afford, and such schemes have been blamed for the turmoil in the current housing market. Yesterday, Andrew Cuomo, the New York Attorney General, said he was expanding a probe of mortgage fraud to focus on companies that packaged home loans and that were later resold to investors.
Washington Mutual and other lenders often write mortgages and then sell them as a group to investors. Last week, Cuomo accused Washington Mutual of pressuring an appraisal company to overvalue thousands of homes. Those mortgages were then sold to investors, who Cuomo says were misled about the value of the properties.
