Here is a story by Mike Kunzelman of the Associated Press that has more about the unsealed lawsuit alleging insurer overpayments of federal flood money that I mentioned in a post yesterday. If you read the story to the second page you will see a quote from me. I’ve said what I think about this concept of insurer ripoffs in a number of posts: I’m not saying it couldn’t happen, it just seems implausible that, human nature being constant over time, no one has noted that this occurred before. The Write Your Own program has been around for 24 years, and you would suspect that a bunch as malicious and larcenous as insurers are being portrayed to be would have long ago figured out how to milk this program exactly in the way they are accused of doing now.
There have been many occasions since 1983 where at least some wind and storm surge occurred as it did in Katrina, although it probably was not so widespread on any prior occasion. Are these insurers so uncreative that they never previously figured this scheme out, and did they not at least attempt a few trial runs previously, holding this strategy like a fifth ace up their sleeves until a really big combination of wind and storm surge? If not, then how is it they all hit upon this strategy more or less instantaneously when Katrina came ashore? Was the idea hatched post-Katrina at the Insurers’ Club Lounge, as representatives of the major insurers sat around, puffing on illicit Cuban cigars under the club banner — a pirate flag –chuckling over how earlier in the evening they had fleeced a widow of her life savings in a rigged poker game? You would think that the guy who came up with the idea, rather than sharing it, would seek a competitive edge by not telling other companies, perhaps leading them to foolishly pay out their own money while his company reaped the benefit of his fraudulent scheme. Again, I am open to all evidence, but it just feeds so naturally into the stereotype of insurers being pushed right now that it looks like propaganda to me. I’ll begin to take it more seriously when I see a proponent of the insurer rip-off argument answer this question, which they all dodge: if the insurers’ paying out of the flood money was wrongful, was it not also wrongful for the policyholders to accept the flood money? I think the answer is obviously yes, don’t you? If not, tell me how the first part can be true but not the second.