Louisiana Regulators to Check Over 2,500 Complaints Against Three Insurers

By Alan Sayre
Associated Press

Louisiana's top insurance regulator ordered reviews Wednesday into consumer complaints about the way Allstate Insurance Co. and St. Paul Travelers Cos. handled homeowner claims after hurricanes Katrina and Rita.

Insurance Commissioner Jim Donelon said the Department of Insurance also would perform a market conduct examination on Louisiana Citizens Property Insurance Corp., which administers the state's high-risk pools for homeowner coverage, after it completes its examination of Allstate and St. Paul Travelers.

Donelon also said examinations into the handling of homeowner claims could be extended to other insurers in the future.

The examinations of Allstate and St. Paul Travelers were ordered after the insurance department reviewed the number of customer complaints received in relation to each company's market share, Donelon said.

The insurance department received 1,287 from Allstate customers, 230 from St. Paul customers and 1,011 from Citizens, said department spokeswoman Amy Whittington.

If the complaints are upheld, the companies could face fines. Whittington said the investigations would each take about three months.

Over 90 percent of the claims resulting from Hurricane Katrina have been settled, according to the New York-based Insurance Information Institute. However, consumer advocates contend that most claims were settled well below a homeowner's policy limit, making it difficult to cover major damage or totally replace residencies.

St. Paul Travelers spokeswoman Jennifer Wislocki said such examinations are "a common practice after such a large event as Hurricane Katrina and we will give the department our full cooperation."

Allstate, through spokesman Mike Siemienas, also said his company would cooperate fully. He said Allstate had settled about 94 percent of its storm claims.

Allstate, Louisiana's second-largest home insurer behind State Farm Insurance Co., has two major homeowner coverage companies in Louisiana Allstate Indemnity Co. and Allstate Insurance Co. that, together, comprise about 22 percent of the Louisiana homeowner market. State Farm has about 35 percent of the market.

St. Paul Travelers carries about 3.6 percent of the market. Citizens has about 7.6 percent of the market.

Citizens is the target of a state court lawsuit seeking class-action status that claims the Citizens Fair Plan, the insurance plan of last resort for homeowners and renters who do not live in coastal areas of the state, did not adjust claims in a timely fashion, leading to additional property damage for policyholders.

Citizens officials have said 92 percent of the claims have been paid and any delays were due to communications difficulties after the storms.

In Mississippi, hundreds of homeowners have sued Allstate and other insurers for denying their claims after Hurricane Katrina.

Mississippi Attorney General Jim Hood has said he is investigating allegations that insurance companies fraudulently denied policyholders' claims. As part of Hood's criminal investigation, a judge has ordered State Farm to turn over copies of their Katrina engineering reports.

Richard Scruggs, a high-profile attorney who represents nearly 3,000 homeowners in Mississippi, has accused State Farm of pressuring engineers to alter their conclusions about whether wind or water damaged homes. Insurers say damage from wind-driven water, or "storm surge," is classified as flooding and is not covered by their homeowners' policies.

Source: Associated Press (www.ap.org)

From Insurance News Net (www.insurancenewsnet.com)