courthousenews.com

Three insurance companies forced Houston to mischaracterize massive losses from Hurricane Ike as uninsured, so that city residents, not the insurers, would be left to foot the enormous bill, a property-loss consultant says.
Plaintiff MLA Claims contracted with Houston to help the city in its claims for damages from Hurricane Ike.

But when MLA prepared a claim for the maximum amount of insured damage, Houston’s insurers demanded that the city “make the ‘smart move’” and “mischaracterize its insured losses as uninsured so certain portions of those losses would be covered by FEMA or by the taxpayers of the City of Houston, rather than defendants,” according to the complaint.

The defendant insurers “threatened the city that if plaintiff was permitted to carry out its job … defendants would punish the city. Defendants threatened that not only would they cancel the city’s insurance but they also would never insure the city again. Defendants threatened … that a lack of insurance would prevent the city from obtaining financing in the future and cause it to lose its bond rating and to default on its outstanding bonds,” the complaint states.
“Ultimately, the city bowed to defendants’ threats - and adopted defendants’ game plan for ‘straightening things out,’” MLA says.

That game plan entailed preventing MLA from negotiating directly with the insurers to achieve a maximum claim settlement, and directing MLA “to cease direct communication with insurance representatives,” according to the complaint.complaint.

This is insane. Using the threat of not insuring people in order to force a city to pass costs to taxpayers.