State Farm has agreed to pay thousands of Mississippi homeowners hit by Hurricane Katrina likely hundreds of millions of dollars in a landmark settlement that’s expected to reverberate across the storm-ravaged Gulf Coast. The company agreed to a deal under which it will reopen thousands of homeowners’ claims and is likely to pay as much as $500 million, Mississippi Attorney General Jim Hood announced Tuesday. There’s no cap on the payout. The insurer will have to pay at least $50 million under the deal negotiated with the Scruggs law firm, which represents the majority of Mississippi homeowners who sued State Farm.
In a related development, State Farm will settle more than 600 individual Mississippi homeowners’ Katrina claims for roughly $80 million, according to a person with direct knowledge of the negotiations who didn’t want to be named because the settlement is confidential.
The settlement applies only to Mississippi homeowners — not to the thousands in Louisiana who are suing State Farm and other insurers, arguing that wind and rain ravaged their homes. Homeowners’ policies cover wind and rain damage, but not flood damage, which is covered by federal flood insurance.
Homeowners could begin receiving insurance checks within a few weeks, after the class-action settlement is approved, as expected, by U.S. District Court Judge L.T. Senter Jr. As part of the agreement with State Farm in Mississippi, Hood agreed to drop a criminal probe against the insurer related to its claims-handling process.
Phil Supple, a spokesman for State Farm, the USA’s largest home insurer, said its goal has always been to "reach a just, speedy and efficient resolution to these matters." A settlement "is in the best interest of our policyholders," Supple added.
About 35,000 Mississippi homeowners are eligible to have their claims reopened. For about 1,000 Mississippi residents whose homes were reduced to slabs by Katrina, State Farm will offer at least 50% of the homeowner’s insurance on the property structure. The average house in Mississippi costs about $200,000, Hood estimates. Thousands more will receive lower amounts.
Homeowners who don’t want to settle with State Farm can still sue the insurer. But the deal "gives a new opportunity for thousands of people to recover their insured losses through a quick process," says Zach Scruggs, an attorney who, with his father, Richard Scruggs, negotiated with State Farm.
State Farm is fighting hundreds of other Katrina-related lawsuits along the Gulf Coast, including in Louisiana. Attorneys in those cases said they hoped the Mississippi development would cause State Farm and other insurers to settle quickly.
"State Farm knows where to find me," says Madro Bandaries, who represents dozens of Louisiana homeowners disputing State Farm’s payouts after Katrina. "They cannot, in my estimation, go to Mississippi and do one thing and then not go to Louisiana."
I am with HAC (Having Affordable Coverage) in Florida. I keep reading that you are having much the same problems we are seeing here in Florida. We are suffering from outrageous insurance premiums and people are have homes foreclosed and moving out of this state. I saw article CONFERENCE TO EXPLORE ESTABLISHMENT OF A MULTI-STATE CATASTROPHE PLAN TALLAHASSEE (2/14/2007) The National Association of Insurance Commissioners (NAIC) will hold a meeting tomorrow and Friday to explore the creation of a multi-state catastrophe plan. Representatives from states across the country are expected at the forum to be held in Atlanta, GA. Florida Insurance Commissioner Kevin McCarty will lead the meeting on Thursday. He will be joined by Florida's Chief Financial Officer Alex Sink. McCarty, who chairs the NAIC Property and Casualty Insurance Committee, has spearheaded efforts to create a national or regional catastrophe plan. He has testified numerous times before the U.S. Congress on the issue and has been working with the NAIC to explore the possibilities of such a plan. While Congress continues to debate the possibility of formulating a national catastrophe plan, McCarty believes that individual states could join in an interstate compact that would feature a common catastrophe reinsurance pool. Additionally he also believes the program should promote personal responsibility among policyholders, establish reasonable building codes, development plans, land use plans, and mitigation programs, and the program should maximize the risk-bearing capacity of the private markets. CFO Sink said she is looking forward to meeting with leaders from other states to look into creating a regional catastrophe fund. "Hurricanes will not wait for the federal government to get a national catastrophe fund up and running. Its up to the coastal states to work together to ensure our citizens have access to affordable hurricane insurance" she said."The world has witnessed the impact that a catastrophic natural disaster can have on an economy whether from tsunami, earthquake or hurricane," said McCarty. "Historically, economic security in the face of these disasters was secured through the private insurance markets. However, over the last decade, this historical paradigm seems to be changing." Numerous topics are expected to be discussed at the conference including: What is a catastrophe plan? What residual markets are currently in operation and how are they working? What steps can be taken to mitigate damage and how can they affect rates? What are interstate compacts and how do they function? Building codes and building code enforcement. Residential and commercial vulnerability and a wind tunnel presentation. How could rates for a multi-state cat fund be developed?The meeting will be held at the Hilton Atlanta Airport, 1031 Virginia Avenue, in Atlanta. Representatives from Florida, Virginia, Arkansas, Louisiana, Rhode Island, West Virginia, Alabama, Maryland, South Carolina, Kentucky, North Carolina, Tennessee, Georgia, California, Ohio, Oklahoma, Mississippi, and Nebraska are scheduled to attend the conference. Numerous insurance industry representatives are also expected to attend. To view a copy of the meeting agenda click here http://www.floir.com/pdf/agendamulti-statecatfundmtg.pdf.Has any group been started to fight the insurance companies? We have a grass roots group and we have joined a coalition as we know there is power in numbers. We have fought for national recognition to the huge problem here and seem to be getting somewhere. Good Morning America contacted our president this past week and we sent our "Book Of Tears" to them. this book has letters written by homeowners and former homeowners explaining what this insurance has done to them It is some sad reading. If you know of any group in the state of Mississippi that might be interested in joining the fight against the blood thirsty insurance companies please contact Ginny Stevans at 727-869-8455 or her cell 727-505-2362. Ginny is the president of HAC and my daughter. Please look at our website www.hacfl.org. There is power in numbers and we need HUGE numbers to fight for some kind of catastrophe coverage for states that need it.Thanks,Joy Timmons 3601 Pinehurst Dr. Holiday, FL34691727-845-7500cell 727-457-8900