Senator Lott Floods the Zone
OpinionJournal - Potomac Watch
Mr. Lott's beachfront property in Pascagoula--one of three homes he owned--was swept away entirely by Hurricane Katrina's waters. Like many Gulf Coast residents, Mr. Lott was soon reminded by his insurer, State Farm, that his policy only covered wind damage--not flood damage. The senator surely knew that, which is why he'd also purchased federal flood insurance. According to his flood policy that was in effect when Katrina hit, he was covered up to $350,000 in flood damages, and he presumably collected in full. (Sen. Lott's office didn't return my call.)State Farm, however, refused to cough up, inspiring Mr. Lott to embark on a campaign ripped straight out of the Democratic playbook. First was to pay a call to the favorite mob squad of the left, the plaintiffs' bar. Quicker than you can say "tort reform," Dickie Scruggs, the legal kingpin who engineered Mississippi's tobacco shakedown, was representing Mr. Lott in a high-profile lawsuit against State Farm.
Mr. Lott probably didn't have to do much special pleading, since Mr. Scruggs is his brother-in-law, and had also suffered Katrina damage. Mr. Scruggs is also a pal of Mississippi Attorney General Jim Hood, who within a few weeks of Katrina had filed a lawsuit against insurers over their "unconscionable" decision to not pay for damage they didn't cover. By December of 2005, the Lott-Scruggs-Hood triangle was proving a gale force storm for insurers.For his part, Mr. Lott has been busy cranking up the pressure in Washington. Not that he didn't give fair warning. In July of last year, he placed a call to Chuck Chamness, the CEO of the National Association of Mutual Insurance Companies, to let the industry know what was coming. Mr. Chamness later sent a letter to Mr. Lott, summing up the call. The key passage: "Your comment that you will dedicate your next term of office to 'bringing down State Farm and the industry' through all means available to you, including legislation designed to harm the property/casualty insurance industry, was very unsettling, to say the least."
Mr. Lott has proven as good as his word. Since Katrina, he's slipped legislation into a Homeland Security bill requiring the inspector general of that agency to investigate insurers. He's put forward a bill requiring insurers to "state clearly" on their policies' "front page" what they don't cover. He's dropped another bill that would compel insurers to release more information about vehicles damaged by Katrina. Word is he's even been looking into the industry's tax rates.
But his big bomb came last week, when he introduced legislation that would end the insurance industry's exemption from certain federal antitrust regulations. Mr. Lott suggests this is to keep big insurance players from conspiring to do evil things, though the reality is that the exemption mainly benefits small insurers who use it to pool statistically reliable data. So in his wrath, Mr. Lott may end up kneecapping many of the hundreds of small insurers who offer some real competition to the so-called conspiring giants.
This shows at least three things: the damage big government can do to private industry, how vindictive malicious politicians can be with that power and that I was right to have never trusted Trent Lott.