03/21/2008 08:55:55 PM EST
An Interview with David Rossmiller on the Impact of Hurricane Katrina on Insurance Law and an Update on Recent Developments
After the shock of having their properties devastated by Hurricane Katrina, Gulf Coast residents were in for a another shock. The homeowner’s and commercial property insurance policies they depended on for recovery contained exclusions and limitations resulting in coverage denials and small payouts. Policyholders are challenging the insurers’ interpretations of their policies in court, some alleging fraud and bad faith. Governments are proposing new laws and regulations aimed at protecting policyholders and further regulating insurers.
As David Rossmiller, a partner with Dunn, Carney, Allen, Higgins & Tongue, observed, “Katrina teaches us what we already know, that insurance is a natural fall guy anytime it doesn’t pay a suffering human being.” He noted, “Lawyers tend to like to conduct litigation without outside interference; they do not often feel comfortable reaching out to the traditional media, new media like blogs and the community. . . . Any method of communication that is effective in communicating your side of the story is a method lawyers need to respect, understand and make use of.”
While it is too soon to know where all of this will lead to, there are key cases, Congressional bills and trends in state regulations that insurance practitioners should be aware of as the impact on insurance law could be nationwide. This commentary ─ featuring the observations of David Rossmiller, a partner with Dunn, Carney, Allen, Higgins & Tongue ─ surveys current developments on all these significant fronts.
Mr. Rossmiller also offers some observations on the wind vs. water debate that rages on in litigation spawned by Hurricane Katrina. Rossmiller states: “The wind versus water debate actually had several components. One was the false doctrine that damage from a force like a hurricane involves multiple causation of loss merely because two forces, one covered and one uncovered, cause damage to a structure. In reality, in Katrina, no one has been able to point me to a single example where specific damage to a particular portion of a house resulted from a combination of forces. Instead, where a house was damaged by wind and water, these forces caused separate property damage, and did not combine to cause precisely the same loss to property as that term is understood in insurance contracts. If they had, anti-concurrent cause language would have been implicated, but it was not, because separate damage was caused by separate single forces. The notion that anti-concurrent cause language was vital or even necessary to a determination of coverage for Katrina damage is entirely false. The great irony of Katrina litigation is that anti-concurrent cause language was relentlessly attacked by the media, policyholder lawyers, politicians and consumer groups, and the result of those attacks is that anti-concurrent cause language has been upheld on appeal by the Fifth Circuit and even arguably extended by those appellate decisions beyond where it was originally intended to go. These Fifth Circuit decisions are not without their own errors in understanding causation, and the ultimate result will be a resounding victory for insurers, who got more from the court than they should have expected.”
In addition to addressing the wind vs. water debate, this commentary discusses litigation that address key issues such as the upholding of flood exclusions and the anti-concurrent causation clauses. The commentary also outlines the legislative response to Hurricane Katrina, including The Flood Insurance Reform and Modernization Act of 2007, the Homeowners' Defense Act of 2007, the Insurance Industry Competition Act of 2007, and the Commission on Catastrophic Disaster Risk and Insurance Act of 2007, as well as trends in state regulations.