On October 11, Senator Trent Lott (R-Miss.), the former majority leader and one of thousands of homeowners on the Gulf Coast involved in disputes with their insurers over coverage for damage from Hurricane Katrina, said he was angry about the insurers’ “insensitivity and outright meanness” in rejecting many homeowners’ claims.  He said  that he inserted a provision into a bill signed last week by President Bush directing the Department of Homeland Security to investigate potential fraud by the insurance industry.  Lott said he sought the investigation because he believed that the insurers shifted the cost of many claims to the federal flood insurance program that they should have paid themselves. “I think it was systematic,” he said.

Lott also said that he told his staff to investigate the industry’s tax rates and was working on a bill that would challenge insurers’ exemption from antitrust laws. State Farm rejected Lott’s claim for the loss of his $400,000 home in Pascagoula, Mississippi. Lott is suing the insurer. Representatives of the insurance industry deny allegations of fraud and some suggest that Lott is improperly using his position in Congress. Lott said he was not acting solely out of personal motivation. “I’ve had my own experience, but a lot of people have had similar experiences,” Lott said. “They have abused my people, my friends, the people I love.”

Insurers state that they have paid $13.6 billion in Katrina claims in Mississippi and have settled 95 percent of the state’s 355,000 homeowners claims. Lott said that he also planned to introduce legislation requiring insurance policies to prominently explain in plain English what is not covered.

After Insurer Rejects Lott's Claim, He Takes Action (New York Times 10/11/06)

October 17, 2006