NAMIC Calls Miss. AG’s Suit ‘Outrageous’

“It is outrageous for an attorney general from a state that requires regulators to approve insurance forms to retroactively seek changes in coverage already scrutinized by Department of Insurance staff,” Roger H. Schmelzer Sr., vice president of state and regulatory affairs for the National Association of Mutual Insurance Companies said in a statement released on Friday afternoon.

Schmelzer was responding to Mississippi Attorney General Jim Hood’s suit against insurance companies handling Hurricane Katrina-related claims. Eighty-nine NAMIC members write business in Mississippi.

“The typical homeowner’s policy covers wind damage but not damage caused by floods,” Schmelzer explained. “The National Flood Insurance Program has been in existence since 1968. To rewrite the insurance contract now is a grossly unfair outcome for consumers who have paid premiums for flood insurance.

“Attorney General Hood’s efforts to secure a temporary restraining order against insurance companies trying to pay claims could have profound, unintended consequences for Mississippians and the insurance industry in that state. If granted, the motion will effectively bring the entire claims paying process in Mississippi to a halt. Taking this action may have made a great headline, but its success will only leave people more confused than before.”

According to Schmelzer, the legal actions proposed by the Scruggs law firm are an annoyance with potentially serious consequences for storm victims.

“Mr. Scruggs’ ‘trial by media’ methods are well-known,” Schmelzer said. “What may not be understood, however, is that when a Mississippi policyholder chooses to work with him, the insurance company is obligated by law to deal directly with Scruggs instead of the policyholder. In the end, his strategy will only result in further delay.

“The process of recovery is underway. Baseless legal action, by any party, will only serve to mire recovery in a judicial briar patch instead of getting claims settled and putting lives back together,” Schmelzer concluded.