[Congressional Record Volume 153, Number 7 (Friday, January 12, 2007)]
[House]
[Pages H496-H497]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         SOLVING THE INSURANCE CRISIS FACED BY KATRINA VICTIMS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Mississippi (Mr. Taylor) is recognized for 5 minutes.
  Mr. TAYLOR of Mississippi. Mr. Speaker, on behalf of the people of 
South Mississippi, I want to thank my fellow Americans for the 
incredible generosity they have shown the people of south Mississippi 
in the wake of Hurricane Katrina. Literally within hours of that storm, 
fellow Americans who were National Guardsmen, who were Coast Guardsmen, 
in the Armed Forces, the Army, the Navy, the Air Force and Marines. 
They were there helping the people of south Mississippi recover.
  Since that time, the people of America dug into their pockets as 
taxpayers. They dug into their pockets as individuals. They sent 
Christmas presents, and they donated their time. From school kids to 
senior citizens, they all came to south Mississippi to help.
  It seems like for a while everyone was trying to help south 
Mississippi, and then the harsh reality was that not everyone really 
was going to help; that there was actually an element in corporate 
America that thought they could use this storm as a way to make a lot 
of money. I am referring to the property and casualty business that 
insured many of the people in south Mississippi.
  Mr. Speaker, almost as soon as the roads were cleared of trees and 
power lines and dead animals and all the things, we found, 
unfortunately, in the wake of Katrina, representatives of property and 
casualty companies were showing up on people's lots, what was left of 
their homes, and telling them that they had found a reason in the fine 
print of their policies not to pay.
  Even before I made my way back to Congress, and it took about 2 weeks 
after the storm for me to get here, they were already working the 
lobbies, buying steak dinners, buying lobster dinners, buying champagne 
and telling my colleagues, well, you are going to hear from those 
people in Mississippi; and, you know, yeah, we denied them, but they 
are not very smart. They didn't have enough insurance. They built their 
houses too close to the ground, and they flood all the time, and that 
is why we had to tell them no.
  So, Mr. Speaker, we need to change that. But before I tell you why we 
need to change it, before I need to tell you what we need to do, I want 
to give you a couple of examples.
  Remember they said they are not very smart? This was the home of John 
and Molly Hadden. John has a Master's in business from Tulane 
University. They said their home was too close to the ground. As you 
can see, it was about 11 feet off the ground, or 22 feet above sea 
level. They said they were underinsured. If you had gone down Beach 
Boulevard in Bay St. Louis, Mississippi, a week before Katrina, this is 
what you would have seen. A beautiful home, less than 10 years old, and 
built to all the current standards. If you would have gone down that 
same road, when you could go down that road, a couple weeks after the 
storm, this is what you would have seen.
  John Hadden, being an MBA, a pretty good businessman, knew that to 
replace this, should something bad happen, would cost a lot of money. 
He had a $650,000 insurance policy, to which the folks from State Farm, 
16 months later, have given him nothing.
  If you had gone a little farther down that street before the storm 
you would have seen approximately a 130-year-old house owned by Joe and 
Betty Benvenutti. Joe is himself in the insurance business. This house 
had been there and survived no telling how many hurricanes, five in my 
lifetime, and many more prior to that. Joe, being in the insurance 
industry, knew the importance of being properly covered. So for this 
beautiful classic historic home, Joe and Betty had $586,000 worth of 
insurance. Yet 16 months later, their carrier, State Farm Insurance 
Company, has paid them nothing, and this is what they found after the 
storm, by the way: a couple of their kids' trophies, a couple of 
bricks, maybe a toy or two laying around where the foundation used to 
be.
  Next door to the Benvenuttis we have Mike and Eileen Chapoton. Mike 
is the head of the trust department of the Whitney Bank, a very, very 
large regional bank, a job of incredible responsibility. Again, a good 
businessman who thought he had done all the things you are supposed to 
do with all the people you are supposed to do it with to protect his 
home in case something bad should happen. Mike purchased $236,000 worth 
of insurance through State Farm, and 16 months after the storm, he has 
been paid nothing.

[[Page H497]]

  Mr. Speaker, what State Farm says is, well, you weren't there when it 
happened, so we don't know how it happened. So unless you can prove to 
me that it wasn't a flood, we are not going to give you a dime.
  Now, this leads to a couple of things. Why should a person have to 
stay in their home during a hurricane to get some fairness. I thought 
we put satellites in the sky. I thought we put buoys at sea, I thought 
we had the hurricane hunters fly planes into hurricanes to give us the 
warning to get the heck out of there. To encourage people to stay 
behind is only to encourage people to die. And yet the only people in 
south Mississippi who really got fairness from the insurance companies 
were the ones who stayed behind and miraculously lived, because they 
were an eye witness.
  So we need all-perils insurance throughout our country.
  The second thing. The insurance industry that told the Chapotons and 
the Haddens and the Benvenuttis now have the privilege of calling each 
other up; State Farm could call Nationwide, and say, you know what, I 
am not going to pay; don't you pay. And it is perfectly legal because 
they are exempt from the antitrust laws. That needs to change.
  Lastly, because there is zero Federal regulation of the insurance 
industry, at this time there is absolutely nothing that I or any other 
Member of Congress can do about this. It is my hope that in the coming 
weeks we will fix all three of those problems.

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