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On Going Debate Over Katrina Damage Points to Industry Failure

Hurricanes Wilma, Katrina, and Rita redefined the way insurance is handled on the Gulf Coast forever. In Mississippi, more and more property owners are being forced to go to the state wind pool for coverage after being dropped by their existing carriers or facing doubled premiums (or greater) in the years after the storms.

Rep. Gene Taylor, a Democrat from Mississippi, has proposed a law that would add coverage for wind damage to the National Flood Insurance Program — in fact, he’s proposed it three years in a row. Folks in the know say his measure doesn’t stand a chance.

Taylor has some fairly personal reasons to be interested in wind damage on the Gulf Coast. His house in Bay St. Louis was leveled by Katrina. His neighbors insurance claims were denied. His claim was denied. And he knows the long-term frustration of the debate in which the insurers have hidden lo these many years. What flattened your home? Wind or water.

Taylor and thousands of others on the Gulf Coast say that’s just a ruse. A way for the insurer to get out of paying legitimate claims. Where there was storm surge, they say wind did the damage.

Needless to say the Property and Casualty Insurers Association of America has been vocal in its opposition to Taylor’s proposed bill because it would take away what is now a “private business” and would not guarantee that the government’s rates would be less expensive. (The bill actually does stipulate premiums that are actuarially correct.)

Oh, the concern — 47,000 private jobs lost — $26 billion in wages down the toilet. Yeah, okay. Private business means private profit and on the Gulf Coast, a private profit largely realized in premiums with no pay out due to a loop hole so difficult to argue that the resulting court cases could go on for years.

Taylor’s bill may not be *the* idea to solve the insurance woes of the Gulf Coast, but the debate over the measure and the objections of the industry clearly illustrate that in that region, at least, that same industry has grossly failed to serve the people who are its very bread and butter.

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