[JURIST] Louisiana Attorney General Charles C. Foti [official website] filed suit in state court Wednesday against the state's six largest insurance companies, including Allstate and State Farm, alleging the companies conspired to fix payouts for damages related to Hurricane Katrina [JURIST news archive] in violation of the Louisiana Monopolization Act. According to Foti's statement, as reported by the Times-Picayune:
This alleged scheme gave insurers an unjust advantage over policyholders, which they used before, during and after one of the greatest disasters this country has ever suffered, by reaping huge profits from the misfortunes of persons whom they pledged to protect from the risk of loss. I believe this unjust advantage resulted in the unjust enrichment of themselves to the detriment of the state, policyholders and commerce in Louisiana. But to be clear, these abuses were not new to the recent hurricanes.The suit also names two companies that distribute claims-adjusting software, as well as McKinsey & Co. [firm website], an international consulting firm. The suit alleges in part that, beginning in the 1980s, McKinsey advised several of the nation's largest insurers on how to reduce the value of insurance claims paid, and that the success of this method caused other insurance companies to copy those methods, resulting in a scheme to lower prices. AP has more. From New Orleans, the Times-Picayune has local coverage.
3:26 PM ET - A press release on the lawsuit is now available from Foti's office.