To The Editor: I write to commend Steve Piontek for his Sept. 5 editorial regarding Hurricane Katrina’s aftermath in New Orleans and the Mississippi and Alabama Gulf Coast areas.
With my wife a native New Orleanian, our son and daughters born in New Orleans, a son and daughter Tulane graduates, a daughter now a displaced resident from New Orleans and countless relatives and family friends, most displaced from New Orleans, and others still unaccounted for, we followed Katrina’s approach and have followed events since then.
We already are hearing that property & casualty insurers are indicating that incurred losses were the result of the flooding and not the result, either partially or totally, from windstorm, broken water pipes or fire, which are normally covered by their policy. It makes me shudder, thinking of the property owners while they wait for the responsible insurer(s) to determine the portion of the loss they owe and they receive necessary funds.
Lest we want mass exodus and geographic shift of population, as some are predicting, New Orleans and the Mississippi Gulf Coast cities, businesses and residents will not only need extensive funding in order to recover and rebuild, as the editorial points out, but they will also need to have these funds available quickly to them if they hope to recover some semblance of what they had before the hurricane hit.
In the editorial you indicate that contributions from individuals and other sources will not be enough. You suggest that government will need to “step up and meet the needs of its devastated citizens” and provide funding “at the same rate as it has been doing in Iraq.” You also suggest, “if there ever was a time for government to be creative and generous, this is it.”
Perhaps this is the time for the insurance industry as well as government, state and federal, to be creative. They need to come up with a mechanism which will allow property owners to receive indemnification due them for their losses quickly. Before final determination is made as to who is on the hook–the P&C insurer or flood insurer or determination is made for what portion of the loss the insurer(s) is/are on the hook. Thereby providing much needed funds which will allow these folks to get on with the chore of rebuilding their homes and getting on with life as usual.
This might be accomplished via a trust fund set up with federal funds and supervised by the state’s insurance commissioner. Disbursements would be used as a secured advance against claim amounts which insurers will need to pay. Such advances would be secured by insurers’ liabilities (could be 100% assigned as a liability to be posted in the financial statement of each insurer of the property as a means to encourage speedy and efficient claim process). Repayment of disbursed funds would be made via insured’s assignment to the insurer(s) of claim benefits to be received to first satisfy such advances. Repayment could also require that the insurer pay a market rate of interest if claims disposition is not carried on efficiently, appropriately and exceeds a normal period of time.
This is a wonderful opportunity for the P&C industry and government to partner together, be creative, show a soul and help those who have suffered loss from Hurricane Katrina in the speediest and most efficient way possible.
New Orleanians will tell you that “you may move away, but you never leave New Orleans.” And so it is, after a couple of decades since we left New Orleans, while looking at news clips of the flooding the other day, my wife looked at me and said “that’s home.” Let’s hope that the insurance industry and government will move efficiently, properly and speedily so that those still “home” may get on with rebuilding that wonderful area and city–New Orleans.
Peter J. Bondy
Bondy & Associates, Inc.
Fort Lauderdale, Fla.