Louisiana Attorney General, Charles Foti, is suing insurance industry giants Allstate Insurance Company, State Farm Insurance Company, Lafayette Insurance Company, USAA Casualty Insurance Company, Farmers Insurance Company and Standard Fire Insurance Company, along with several other smaller insurers, for acting in
bad faith and conspiring to deceive the victims of Hurricane Katrina by providing lower damage estimates, offering lower claim payments and forcing many homeowners to take them to court.
Violation of Monopolies Act
The petition, recently filed in New Orleans Civil District Court, alleges the insurance companies “participated in an on-going scheme to rig the value of property damage claims paid by insurance companies to their insureds” in violation of the Louisiana Monopolies Act. According to a statement by Charles Foti on the Louisiana Attorney General’s website (www.ag.louisiana.gov/):
This alleged scheme gave insurers an unjust advantage over policy holders, which they used before, during and after one of the greatest disasters this country has ever suffered, by reaping huge profits from the misfortunes of persons whom they pledged to protect from the risk of loss. I believe this unjust advantage resulted in the unjust enrichment of themselves to the detriment of the state, policy holders, and commerce in Louisiana.
Reaction to suit mixed
Reaction to Foti’s lawsuit has been mixed. Spokespersons for the insurance industry have said that Foti’s claims are not true and point to the billions of dollars of claim payments that were paid to victims of the hurricane. While many consumer advocate groups have said that they believe that insurance companies may have conspired in order to cut their losses, proving so would be a monumental task. Unfortunately, it will be a task that Foti won’t be able to see through as he recently lost his bid for re-election. It’s still unclear as to what will become of the lawsuit once the new Attorney General takes office.
To view a copy of the complaint, see www.ag.louisiana.gov/LastestNews/Petition%20date%20stamp.pdf.
