Property Casualty Association of America issued the following announcement on March 27.
A recent report produced by Milliman, Inc. has revealed that subrogation litigation being brought by the Mississippi Attorney General more than 12 years following Hurricane Katrina could end up costing homeowners up to $55 million annually. Even moderate estimates indicate Mississippi homeowners may pay over $8 million more annually for insurance as a result of the prospective impact of such litigation. Public documents indicate that plaintiffs’ attorneys collect up to 25 percent of each settlement.
As cited in the report, Mississippi Homeowners Insurance: Potential Impacts from Subrogation Litigation related to Hurricane Katrina, property insurers paid $13.8 billion in covered losses on 515,000 Katrina claims. The federal government also stepped in to help homeowners who did not have enough insurance coverage to rebuild. According to the Mississippi Development Authority, more than $2.1 billion of grant assistance was awarded to help 29,000 Mississippi homeowners.
But now, more than a dozen years later, the Mississippi attorney general’s office is working with outside plaintiffs’ attorneys to extend Katrina litigation and file lawsuits against insurance companies. These lawsuits are being filed without even notifying the homeowners who initiated the claims in the first place.
Rather than benefiting consumers, the new report shows that the typical coastal county policyholder could see premium increases between $10 and $487 per annual policy, with a central estimate of $74 per policy, due to the anticipated impact of future litigation. Based on estimated current coastal premiums, these values correspond to potential rate increases of 0.5 percent, 25 percent, and 3.8 percent, respectively.
“Turning back the clock and reopening settlements from 12 years ago might pad lawyers’ pockets, but it would also disrupt the insurance marketplace and harm consumers and the economy,” said APCIA Southeast Region vice president Ron Jackson.
APCIA will continue to work with the Mississippi legislature to close the legal loopholes and make sure insurance consumers are protected.
Click here to read the full study.
Original source can be found here.