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VOL. 123 | NO. 155 | Friday, August 8, 2008

Miss. AG Settles Lawsuit Against State Farm

By MICHAEL KUNZELMAN | Associated Press Writer

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Mississippi Attorney General Jim Hood said Wednesday that his office has settled its dispute with State Farm Insurance Cos. over how the insurer handled Hurricane Katrina damage claims in Mississippi.

State Farm has complied with a January 2007 agreement with the state by reopening some claims and agreeing to pay more than $74 million more to Gulf Coast policy holders whose homes were damaged or destroyed by Katrina's storm surge, Hood said in a news release.

Hood said the insurer also has agreed to notify nearly 150 more State Farm policy holders who haven't sued or settled their claims that they can still have their cases reevaluated.

Hood had sued State Farm, alleging the company failed to honor the January 2007 agreement, which called for Hood to end a criminal investigation into how Katrina claims were handled and for the insurer to pay millions more to policy holders.

State Farm spokesman Fraser Engerman said settling the attorney general's lawsuit is another milestone in the company's efforts to resolve "all pending matters related to Katrina."

Hood's January 2007 deal with State Farm was part of a broader settlement with private attorneys for policy holders that called for the company to reopen and possibly pay thousands of claims.

When a federal judge refused to sign off on that pact, State Farm later entered into a separate agreement with George Dale, who was then Mississippi's insurance commissioner. Hood has said the agreement with Dale didn't satisfy his deal with State Farm because it didn't require arbitration.

Hood claims the original terms of his agreement would have required State Farm to pay out much more in claims - up to $400 million. He said his deal called for a panel of arbiters to oversee the claims re-evaluation process.

"Nevertheless, the additional $74 million paid by State Farm pursuant to the Mississippi Department of Insurance re-evaluation program apparently meets the minimum payments required under our original state court settlement agreement," Hood said.

The $74 million reflects the amount paid from claims reopened under State Farm's agreement with the state insurance department, not the total the insurer has paid out in Hurricane Katrina claims in the state.

Engerman said State Farm finds it "perplexing that he (Hood) would take full credit for a program he opposed and was the foundation for the lawsuit he filed against us and has now just settled. However, we are pleased the attorney general understands State Farm has met its obligations under the agreement his office made" in January 2007.

State Farm filed its own lawsuit against Hood, claiming he violated his bargain to end the criminal probe. But the sides reached a confidential settlement in that lawsuit in February.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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