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Katrina Class Action Filed Against Insurance Giant AIG

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Case ID: 4470 | Insurance | 10/10/2005

Toni Swain Orrill, a New Orleans resident whose house was severely damaged in Hurricane Katrina, filed a class action suit against American International Group (AIG) and its subsidiary, Audubon. The suit charges that the company has failed to help its policyholders who are in desperate need of assistance after the hurricane.

AIG and Audubon were the underwriters and service providers of Louisiana Citizens Fair Plan (FAIR), which provides homeowners' policies of last resort to those who cannot get insurance elsewhere, including many poor people in New Orleans and the surrounding area. The class action suit is on behalf of Louisiana's FAIR plan policyholders -- about 400,000 people. The suit alleges that AIG has completely failed to provide any way for its policyholders whose homes have been damaged to initiate a claim or even reach its offices to find out how to do that, or to provide temporary disaster relief provided under their policies.

Orrill's husband, Ray, an attorney, said, "My wife has called and emailed the insurance company over 60 times, and could never get through. It is outrageous that she, and so many others whose homes were severely damaged in the storm, cannot even get through to their insurers, much less get relief from them. Someone had to take a stand." Ray Orrill said that another insurer, Allstate, provided his wife with a FAIR claim form as a courtesy, after failing to get any response from AIG. She submitted it to AIG almost thirty days ago and has not received a response.

Americans for Insurance Reform (AIR) learned of Toni Swain Orrill's situation when she called the hotline it set up to assist Katrina victims when they encountered obstacles to receiving assistance from their insurers. According to AIR co- founder and spokesperson Joanne Doroshow, "This is the worst case that we have seen of a complete failure of an insurance company to respond to the immediate and dire situation of its Katrina policyholders. Many FAIR policyholders were struggling economically before the storm hit, and some are now reaching the point of severe impoverishment due to AIG's failure to help them. Many have still not received the temporary living expenses they are entitled to under their policies."

Over a month after Katrina, AIR's hotline is still receiving calls from people who cannot reach AIG insurance adjusters. One woman whose home was devastated reports she's been completely unable to reach any AIG representative to request temporary funds or a visit from an adjuster. Another caller said she's been passed around from number to number and AIG has been largely unresponsive to her.


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