Lawmakers: AP’s New Orleans Insurance Analysis Points to Need for Legislation and Outreach

An Associated Press analysis showing white homeowners in New Orleans were three times as likely as minorities to appeal insurance settlements after Hurricane Katrina points to a deep racial imbalance and the need for greater outreach, lawmakers said Oct. 25.

Using public record laws, the AP analyzed more than 3,000 insurance complaints filed with the Louisiana Department of Insurance in the year after Hurricane Katrina. It found that 75 percent had been filed by homeowners living in predominantly white neighborhoods.

Even though the storm disproportionately affected poor blacks, many residents of predominantly black neighborhoods said they were not aware they could seek state help, or else were skeptical about the help offered.

“You shouldn’t have to be an insurance company lawyer to figure out the facts and the options,” said Sen. Mary Landrieu, D-La., whose own family in New Orleans suffered extensive losses from the storm. “There is no excuse for anything but full disclosure, clear guidance and swift reimbursement of losses when coverage exists.”

If homeowners were dissatisfied with their insurance company, they could ask the Louisiana Department of Insurance to attempt to get them better deal. For free, they could fill in an online complaint or call the department’s 1-800 number and present their case to state regulators. If the department’s experts deemed the case valid, they would contact the insurer on the homeowner’s behalf, acting as a much-needed go-between.

State insurance officials said they took extreme measures to alert as many homeowners as possible to their options.

Outreach measures included television and radio ads broadcast locally, as well as newspaper advertisements. Many of the messages, however, never reached thousands of minority homeowners living in FEMA-funded hotel rooms in Houston, Atlanta and beyond.

“It’s a matter of outreach and of the extreme displacement of our families,” said Cynthia Willard-Lewis, a city council member whose district includes part of the predominantly black Lower Ninth Ward. “The No. 1 problem is the fact that homeowners were not here to hear the message.”

Former Texas Insurance Commissioner J. Robert Hunter said government outreach programs must be tailored to the disaster at hand.

“If I know that half my people are in Houston, I should do something over in Houston,” he said.

Hunter, administrator of the National Flood Insurance Program from 1971 to 1980, said the racial divide is a long-standing problem. Whites, he said, tend to be more plugged in to the system and less afraid of challenging an unfair settlement.

“It’s quite usual for a white person to know the system – and to know how to take the next step,” he said. “It’s been my experience that when you have a situation where a lot of people are getting hurt and you go out there, you find it’s the people who know the system that are mad and act out. The others are mad but don’t know what to do and are scared not to accept what’s offered to them. They’re much more apt to just take ‘No’ for an answer.”

Accepting what was offered and not fighting back was a recurrent theme in interviews with black homeowners in devastated neighborhoods like the Lower Ninth Ward, which was enveloped in a cascade of muddy water when the old, concrete levee protecting the area broke.

Numerous residents spoke of the frustration they felt in dealing with insurers – endless and fruitless phone calls, adjusters who failed to show up at appointed times and insurers who refused to acknowledge damage. Yet they also said they didn’t know they could appeal a bad decision with state regulators, or they did not see the point of trying.

It’s not surprising, said New Orleans’ Mayor Ray Nagin, who is himself black. “There is a great deal of skepticism out there – particularly in the African American community about where the help is. And is it real?”

Although Katrina’s waters destroyed white neighborhoods as well as black ones, one of the recurrent critiques of the bungled response to the storm is the racial divide it exposed. House Minority Leader Nancy Pelosi – who co-led a fact-finding delegation to New Orleans earlier this year – says the insurance data is further evidence of that divide.

“Last year, the government promised that no one would be left behind after the waters of Katrina receded. Sadly, that is not true for far too many storm survivors. All of those eligible to be reimbursed by insurance companies must be able to get all the information they need – including information on how to appeal their settlements. It’s unconscionable that so many people have not received their full insurance reimbursement,” the California Democrat said in a statement.

A spokeswoman for the Insurance Information Institute said insurers did the best they could to let homeowners know about their options. Loretta Worters, a vice president for the New York-based trade group, said the word might not have gotten out to all homeowners.

“Unfortunately, there were situations sometimes where people didn’t hear about it,” Worters said. “It was a difficult, unprecedented situation.”