Breaking news is big news, and last week’s announcement of a resolution between State Farm, Attorney General Jim Hood and the Scruggs Katrina Group qualifies as exceptionally big news for Mississippi policyholders locked in a battle with the Illinois-based insurer over Hurricane Katrina-related claims settlements.
Trent Lott — Pascagoula resident, U.S. Senator and Katrina victim — was one of the first to voice his opinion. In a statement released by his office, Lott said, “This is a victory for the State of Mississippi and, more importantly, for the individual Mississippians who’ll finally be receiving a fair settlement to embark on rebuilding their homes and lives. The insurance problem has perhaps been the major impediment to rebuilding Mississippi and making it whole again. This decision removes a large part of that uncertainty, and it will greatly accelerate Mississippi’s recovery.”
Since losing his own Coast home to the historic storm’s devastating power, the senator has become a very focused critic of the insurance industry and a tireless advocate for the thousands of Mississippians whose lives have been in turmoil since August 2005.
Pressure pays off?
In a late afternoon press release from State Farm January 23rd, the company announced its decision to take part in the court-supervised process to reconsider and resolve claims that is also part of an agreement reached through the settlement of a class-action lawsuit against the insurer by families who believe their damage claims were not adequately resolved. A criminal investigation of the company’s practices by the Attorney General’s Office has ended, as well.
In a statement posted online at www.scruggskatrinagroup.com, attorney Dickie Scruggs said, “This settlement holds the promise to put hundreds of millions of dollars directly into the hands of State Farm policyholders to begin rebuilding their lives, homes and communities.
“No case in my 30-year legal career has been more personal or tougher to resolve than the insurance litigation resulting from Hurricane Katrina. The proposal we presented is the product of an enormous effort by public officials and private lawyers. No other state has accomplished anything like this after a large natural disaster and I am extremely proud to be a part of this settlement agreement.”
According to the company, the process applies to State Farm policyholders, including homeowners, renters and owners of business properties, in Hancock, Harrison and Jackson counties who experienced property damage as a result of Katrina. These policyholders will have an opportunity to have their cases reconsidered and receive speedy payment for losses under the court-supervised program.
If, after filing a settlement form and receiving an offer from State Farm under this resolution process, policyholders are not satisfied and reject the offer, they can request arbitration, which unlike mediation is binding and is not subject to appeal for both State Farm and the policyholder. Homeowners will have the opportunity to decide if they wish to participate in this class settlement.
“Our goal has always been to resolve these matters quickly, fairly and efficiently,” said Jeffrey W. Jackson, vice president-corporate general counsel for State Farm. “This settlement offers policyholders who resided in the areas most impacted by the unprecedented storm an opportunity to have their claims reviewed, share any additional information, and, if they choose, have their cases resolved through binding arbitration.”
George Dale, Mississippi’s long-time insurance commissioner who is planning a reelection bid this year, stated, “This is a big step in the right direction. I’m pleased that this agreement will quickly put money into the hands of those along the Gulf Coast without lengthy litigation.”
After notification from the company, affected State Farm policyholders will have 60 days to register for participation. The goal is to have participants paid before the end of the year.
And the future?
Managing risk is a tricky business. For now, the settlement money should accelerate the recovery process on the Coast. However, the long-range effects of this deal with State Farm on the overall Mississippi insurance market and its thousands of individual and business policyholders remain unclear.
And the risks remain.
Contact MBJ editor Jim Laird at email@example.com.