NPR and the PBS series Frontline has spent several years mining documentation to investigate the National Flood Insurance Program. What exactly is this? Basically, it's the system designed to address natural disasters and administrate insurance claims. Here is the stunner (not so surprising to some): Thousands of displaced residents still haven't received proper insurance payments for their homes following Hurricane Sandy. Meanwhile, the insurance companies that administer the claims have made a staggering $240 million to $406 million in profit annually over the past four years.
Doug Quinn lived in New Jersey. He paid premiums for $250,000 in flood insurance. Yet, following Sandy, he received on $90,000 of insurance proceeds. The result, he couldn't rebuild. He now pays a mortgage and insurance for an empty lot.
The end result of the above-noted investigation is essentially that the public is funding flood insurance, but the money goes into a pot / fund, rather than remaining with the insurers (which merely serve as middlemen for FEMA). When a disaster strikes, the insurance companies randomly decide what a homeowner receives. Once the pot of money runs out, the general public then foots the bill for the remaining cost of the natural disaster. The insurance companies make millions in profits regardless; they have zero risk / exposure.
The National Flood Insurance Program's design is fatally defective in the sense that it has always run a deficit. There simply isn't enough money collected by the system to cover the really large natural disasters. However, one key component of the lack of funding is that the system pays the insurers way too much compensation.
So what reminder does this serve for other types of claims, whether it be a personal injury claim or workers' compensation claim?
I have many years of experience as both prior defense counsel for insurance carriers and now representing injured people. I have seen both sides of claims / lawsuits. There is absolutely no doubt that any insurance company will cheat you out of every single dollar possible. There is no law to prevent an insurance company (or its agents) from lying to you. I see examples of adjusters lying to injured parties every single day. Expecting an insurance company to treat you fairly is the equivalent of sticking your head in the sand and just expecting everything will be okay. Simply put, it's stupid, and you will regret it.
Whether we're discussing the flood insurance system, the workers' compensation system, current personal injury laws, etc., there is generally a common theme: Insurance companies have lobbied heavily at state / federal legislatures to rig the laws in their favor. The reason these gross injustices exist is because insurance companies spend millions of dollars paying politicians to make laws allowing them to do these improper things. Insurance companies spend this money because it's so profitable on the back end. Anyone suffering any type of personal injury is facing an uphill battle; to attempt that fight without competent legal counsel is a horrible idea.
Finally, this story does serve as a reminder that proper investigation and vigilance can make a difference. Our government agencies must be held accountable to avoid / fix these crazy outcomes. We need these investigations to force reforms. Attorneys, such as myself, must continue to fight for the rights of injured parties despite difficult odds.