NEW YORK, Sept 14 (Reuters)
By Joan Gralla
Mississippi Attorney General
Jim Hood plans to sue insurance companies to force them to pay
for flood damage to homes in the wake of Hurricane Katrina, a
source familiar with the matter said on Wednesday.
The Democrat attorney general believes that Katrina's
horrific winds caused the flooding, said the source, who
declined to be named.
Homeowners insurance typically does not cover damage from
floods but does pay for damage caused by wind, according to
Jim Auden, a Chicago-based analyst with Fitch Ratings.
"(Hood) is calling illegal the provisions that prevent
homeowners from getting a claim on their property that was
destroyed in the hurricane," the source said.
The attorney general was expected to announce the lawsuit
as soon as Thursday morning.
Hood's office is also investigating reports that claims
adjusters are offering homeowners an extra $3,000 in living
expenses if they sign waivers for flood damage, the source
said.
The three insurers with the biggest market share in
Mississippi, where even homes outside the flood plain were
inundated, are: State Farm Mutual Group, at over 30 percent;
Mississippi Farm Bureau Mutual Insurance Co., with nearly 20
percent; and Allstate Corp. (ALL.N:
Quote,
Profile,
Research) , at almost 10 percent, according to the
Insurance Information Institute, a trade group.
Allstate spokesman Michael Trevino said: "Flood insurance
is the province of the federal government. Allstate homeowners
policies all contain an exclusion indicating that flood is not
covered by the Allstate policy, regardless of the cause of
that flood."
A State Farm representative declined to comment.
The National Flood Insurance Program, run by the Federal
Emergency Management Agency, only offers homeowners up to
$250,000 to rebuild damaged properties. And the maximum for
replacing property is $100,000.
Companies that estimated the amount of damage done to
insured property -- homes and commercial buildings -- by
catastrophes such as Katrina have raised their initial
estimates, Fitch's Auden said.
For example, Risk Management Solutions now sees an insured
loss ranging from $40 billion to $60 billion. The company at
first predicted $35 billion of losses, Auden said.
Such estimates easily top the $21.5 billion of losses
inflicted by Hurricane Andrew in 1992. (Additional reporting
by Chris Sanders)
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