AG to look into fraud complaints

Biloxi Sun Herald
February 7, 2006

State Attorney General Jim Hood has launched an investigation into possible fraud by insurance companies in handling Hurricane Katrina claims.

An insurance adjuster told investigators that he sent claims in for payment, but the company cut the amounts actually paid. The adjuster has since left the business, Hood said.

"If anybody has any information regarding fraudulent denial of claims," Hood said, "call our office." He said his insurance fraud division is handling the investigation. Hood offered the information in hopes that insurance company insiders and policyholders would come forward to report fraudulent practices.

Hood would not say which company the adjuster worked for or offer other details because the investigation is ongoing and may or may not result in charges.

Hood also said Monday during a meeting with the Sun Herald that he is pressing for a hearing before U.S. District Court Judge Tom Lee regarding a civil lawsuit against Mississippi's major insurers.

In the lawsuit, Hood argues that insurance policies should cover all property destruction from Hurricane Katrina, including damage caused by storm surge. His lawsuit maintains that policy language excluding damage from water is too ambiguous.

Hood filed the lawsuit Sept. 15 in state court, but the insurance companies had it moved to federal court. He hoped for a quick ruling on what the policies should cover, but he hasn't gotten it.

"It's been dead in the water since October," Hood said. "That's what is frustrating me. I know there's nothing on that federal judge's docket that's more important."

Many property owners were without flood insurance because they were unaware private insurance policies purport to cover only wind damage from hurricanes.

Insurance companies maintain their policies are clear and they should not be asked to cover damage for which no premiums were collected.

"Insurers are working as hard as they can to get these claims settled as quickly as they can and as fairly as they can," said Carolyn Gorman, a vice president of the Insurance Information Institute, an industry organization. "When all is said and done, it will be shown that the industry is not engaging in anything fraudulent in the resolution of these claims."

Gorman also said an insurance adjuster recommends a settlement amount on a claim, but the insurance company might disagree for any number of reasons and go with what it considers a more accurate figure.

"The adjuster is certainly a key link in the chain," Gorman said, "but not the only one."

Insurance fraud

Mississippi Attorney General Jim Hood asks that anyone with information regarding insurance fraud contact the Consumer Protection Division of his office: 1-800-281-4418.

Copyright © 2006 by The Sun Herald

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