When State Farm pulled out of the claims side of the NFIP it blamed Congress on the pull out. "State Farm Mutual Insurance Company said it plans to stop handling claims for the National Flood Insurance Program but will continue writing policies." is one line I pulled from an early article on the event.1
Could the pull out have more to due with post-Katrina claims handling by State Farm and Allstate?
---Karpells said that, in his work as a public adjuster, he has seen the dual pricing on almost every Allstate adjustment that lists the damage line by line. And from his experience, Allstate is the only company that's doing it, said Karpells, a third-generation carpenter from Massachusetts who moved to Slidell several years before Katrina hit. Karpells said he believes that "someone is saying, 'On a flood policy, we use this database. On a wind policy, we use this database.' They're front-loading all the money on the flood policy." ---2
This is actually one of the main problems people like Gene Taylor and many lawyers had with post Katrina claims handling---the use of a biased claims handling model. One where a claims adjuster was hired by an insurance company to adjust the insurance company wind claim and the feds water claim. Seems logic would dictate it would open the process up to fraud at the least and second guessing smear tactics by the homeowners lawyers. Of course State Farm was caught using fake engineering reports and this matter went all the way to the halls of Congress when Jim Bechams engineering report was waved infront of the NFIP directors face by then Congressman Gene Taylor. The fact State Farm had to threaten ABC News with a massive lawsuit to prevent the use of audio of Mr. Beckham explaining how his engineer denied writing the report he received from State Farm shows how dangerous the practise of dual claims handling is for the industry.
I wonder why Allstate has not changed its claims handling model in a manner similar to State Farm?
I mean Allstate was caught red handed just like State Farm committing fraud against the feds. Why not change the model and end such problems?
The Weisses’ lawyer, Johnny Denenea, used the “track changes” function of Word software on the Rimkus reports from claims filed in Mississippi. (Check them out here: Rimkus document #1, Rimkus Document #2.) It revealed that conclusions supporting wind damage were changed to flood in the home office.
It revealed that conclusions supporting wind damage were changed to flood in the home office. Denenea says that, “one or two of the changes may be expected, but in each case that has been litigated involving Rimkus, the conclusions were universally changed from wind to flood. In not one case has there been a report that shows the report was changed from flood to wind.” In Denenea’s view, this supports the notion of a conspiracy to defraud the government.
Denenea says there are other examples of “false information” submitted by Allstate to the NFIP in the Weisses’ case. He cites forms that contain a reference to exterior and interior waterlines on the Weisses’ house, and a phrase reading “damage was extensive throughout the home.” The field adjuster, Mike Wells, denied under oath that he wrote this narrative report, noting that since there was no house there to inspect, there were no water lines, and no interior damage, to document.
Denenea also submitted evidence that he said showed the company fabricated the list of personal property damages, inflating the expenses billed to the NFIP. Merryl Weiss submitted a handwritten list of personal property the couple lost from the first floor of their home. It was mostly fishing equipment, and totaled $38,848.25. During trial depositions, the Weisses discovered that Allstate had submitted a list to the government that included furs, jewelry, and furniture valued at more than $139,000. Fishing rods were not on the list.
During testimony, field adjuster Mike Wells confirmed that the documentation sent to the NFIP did not match what the Weisses submitted. Denenea says he believes the process of falsely maximizing flood claims was encouraged by Allstate supervisors. To back up his claim, he points to the testimony of Allstate office adjuster, Mung Hatter. She said that all adjusters’ reports are maintained in a computer database and reviewed by managers Denenea believes insurers maximize content lists to take advantage of the highest bracket of the NFIP’s fee structure.
“When Allstate pays a claim under a flood policy, they are using the checkbook of the United States Treasury. When they pay a claim under their homeowners policy, they are using the Allstate checkbook. For every dollar paid out of the federal treasury under flood, Allstate takes a credit and keeps a dollar. Essentially Allstate is profiting at the expense of the American taxpayer.”
Rimkus promoted the entire group of workers involved in the court case just when it went to Court.
Rimkus Consulting Group Promotes Key Personnel to Oversee Growing Business Operations in the U.S.
HOUSTON, TX (Jan. 16, 2007) – Rimkus Consulting Group,
Those promoted include: Patrick Fisher, Central Region Construction Manager (based in New Orleans); Jeremy Hoffpauir, Manager of the New Orleans office; Mark Hook, Central Region Forensic Manager; James “Wes” Jordan, Central Region Property Manager; and Craig Rogers, Central Region Assistant Property Manager.
TAKING ALLSTATE TO COURT
The Weisses took Allstate to court in April of 2007,
One of Allstate's witnesses in the case was Craig Rogers of Rimkus Consulting Group, who wrote the final "revised" engineering report on the Weisses' home. Rogers said he didn't personally inspect the property until after he wrote the report, but instead based his conclusions in part on evidence gathered by other Rimkus engineers-a practice he described as common.
This is just one person's opinion on this.
There is no business reason for a carrier to remove itself from the "Write You Own" (WYO) Flood program. It is guranteed profit. I think the feds negotiated a deal with SF for them to withdraw and avoid an ugly legal battle.
As for ALL, they have not changed their program at all to my knowledge. Also, I don't think the issues of the engineering reports came up with ALL as they did with SF.
A jury felt Allstate didn't act in good faith in their use of engineering services.---
Richard Trahant, lawyer for Weiss, argued the house was 17 feet above sea level and that engineering data suggested only 14 feet of surge hit the area. "It never reached the bottom of the house," he said.
Allstate's Barrasso said sustained winds at the house did not exceed 100 mph.
"There was plenty of evidence to show the winds were not strong enough to topple this house and the storm surge was," she said.
Jim Neva, a surveyor and engineer who inspected the house for Allstate, initially told Robert Weiss, who is listed as the policy holder, and his wife, Merryl, that wind may have destroyed the home before the surge of water washed away its remnants.
He later backed off that conclusion, and deferred to engineering consultant Craig Rogers of Rimkus Consulting Group. Rogers, who wrote the final report on the home for Allstate, convinced Neva that storm surge demolished the house.
Rogers said he didn't personally inspect the property until after he wrote the report. He said he based his conclusions in part on evidence gathered by other Rimkus engineers — a practice he described as common. But Trahant questioned the move.
"Why did Allstate elect to rely on the one engineer who never set foot on the property until long after he stamped his report?" Trahant said in closing arguments.
Jeffrey Mika, 30, foreman of the 8-person jury, said the jury was persuaded by Allstate's decision to rely on the assessment by Rogers, who did not personally visit the site.
"We didn't feel that Allstate acted in good faith to settle this claim," Mika said