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Sep 19, 2003
CONTACT: Doug Heller - 310-392-0522 x309
Consumer Group Warns Against Insurance Industry Profiteering in Wake of Hurricane Isabel
Group Cites Secret Hurricane Andrew Memo Re: Insurance Industry "Opportunities" As a Result of StormConsumers and regulators should guard against insurance industry attempts to use Hurricane Isabel as an excuse for massive and unnecessary rate increases. Insurers have a history of pushing for inappropriate rate hikes and bailouts soon after disasters, according to consumer advocates with the Foundation for Taxpayer and Consumer Rights (FTCR).
The group pointed to a secret 1992 memo written by an executive with AIG, one of the nation's largest insurers, just days before Hurricane Andrew struck. In the memo, which FTCR obtained, AIG's J.W. Greenberg wrote:
This storm will cause extensive damage in southern Florida …Begin by calling your underwriters together and explaining the significance of the hurricane. This is an opportunity to get price increases now. We must be the first and it begins by establishing the psychology within our own people.
"The Insurance industry treats society's pain as an opportunity for its own commercial gain," said FTCR executive directory Jamie Court, author of Corporateering: How Corporate Power Steals Your Personal Freedom… And What You Can Do About It. "Regulators must not allow the industry to corporateer by using the hurricane as an excuse to charge too much for insurance."
Regulators and lawmakers should also ensure that insurance companies do not drop customers who file hurricane --related claims, said FTCR. Some insurers in recent years have refused to renew policies of customers simply because they have filed two claims in the past. FTCR said that insurers should be barred from counting Hurricane Isabel claims against consumers.
"Victims of Isabel must not fear that if they use their insurance policy they will face a dramatic rate increase or even lose the policy," said FTCR's senior consumer advocate Doug Heller. "Consumers pay premiums for years to ensure that they are covered in case of a disaster like Hurricane Isabel. The insurance industry is all about being prepared for this situation, so there is no justification for companies turning around and raising prices on victims of the storm."
Jamie Court and Doug Heller are available for further comment. The AIG memo is available upon request.
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