Most of the Mardi Kossacks know my feelings on the insurance industry and its jaw-dropping, dishonest and in some cases, arguably fraudulent response to Katrina. Well apparently, at least one Voice of the Industry kinda gets it too... While I don't agree with everything he says (many homeowners settled their claims because they were simply too exhausted to fight), here is the bulk of an open letter to the industry... It may land me in diary jail, but it's just too good to cut short... emphasis is mine- cs
The letter is titled
"Why Is Everybody Beating Up on the Insurance Industry?" and it's written by Ted Besesparis, the Vice President of Communications for PIA National
(This is the Insurance Agents' Trade Association)
...After Hurricane Katrina, some in the insurance industry failed to realize that Katrina was viewed by the public as a national tragedy on the order of the terrorist attacks of 9/11, not merely as another bad hurricane. When national tragedies occur, the American ethic says that you are supposed to do more than you are required to do, not less. The brave firemen who entered the Twin Towers on 9/11 knowing that they might die trying to save others represent the kind of selflessness we expect of ourselves as Americans.
After 9/11, the insurance industry took great pride in paying claims and not niggling about them. The approach was, "Just pay it!" Then, Hurricane Katrina hit and there was a disconnect. The public regarded Katrina as a tragedy like 9/11 and expected a similar response. But the government and some in the insurance industry failed to respond to Katrina in the same way. While the federal government failed utterly, some in the insurance industry went back to niggling on claims, aggressively embracing the concept of "wind vs. flood."
The fact that one year following Hurricane Katrina, according to the Insurance Information Institute, most claims in Louisiana and Mississippi had been settled was overshadowed by the publicity given to the relatively few claims in dispute. Bad news always trumps good news. To be sure, this bad publicity was whipped up by trial lawyers who had a vested interest in litigation they were pursuing, but it nevertheless had the intended effect of tarnishing the industry and putting it on the defensive. There are times when it makes good business sense to pay more than you are required to under the letter of a contract, when the spirit of a contract should govern. This was one of those times.
An insurance policy by nature is a series of "technicalities." Some perils are covered while some are specifically excluded. But in the face of human suffering, it is sometimes difficult for the public to appreciate that insurance is a contract that, by design, excludes certain risks. The public may have a vague understanding of this, but at some level of catastrophe, people will stop accepting it. If a catastrophe is bad enough, or widespread enough, or horrific enough, people will stop seeing insurance as a contract and start viewing it more as a public safety net...
Insurance is often marketed in a way that broadly encourages customers to place their faith and trust in a company and an entire industry. This kind of overstated message encourages people to develop an inaccurate view of what insurance is and what it does. It promises too much. It sows the seeds of misunderstanding. It causes self-inflicted damage to the image of the industry.