An American Insurance Association representative, Julie Pulliam, called the ruling “just the latest development in what we expect to be a long, drawn-out legal dispute.” She blamed the attorney general for giving the uninsured “false hope that there is going to be a payoff for them fairly quickly. We don't believe there will be a payoff, and we don't believe it will be quick,” adding that the case will likely go to the state's Supreme Court.

Defendants in the case–State Farm, Nationwide, USAA, Allstate and the Mississippi Farm Bureau–sought to remove the case to federal court on the basis that the outcome would affect flood risk coverage provided by the federal government through the National Flood Insurance Plan.

David Reddick, senior state affairs manager for the National Association of Mutual Insurance Companies, criticized the District Court judge for failing to take into consideration the impact of the case “on the uniformity of federal flood insurance plan coverages in states susceptible to hurricanes and their resulting damage.”

While the defendants sought federal jurisdiction because of the NFIP issue, another motive might have been the fact that federal courts have proven to be a generally more favorable venue for industry defendants–but that could change as tort reform measures have resulted in Mississippi no longer seeming to offer a haven for plaintiff attorneys.

“The key will be whether Mississippi falls back into the habit of rushing to the courthouse regarding any and all disputes post-Katrina, or whether the tort reform laws now on the books are successful in keeping frivolous lawsuits out of the courts,” according to the AIA's Ms. Pulliam.

NAMIC's Mr. Reddick said the case will in all likelihood revert to Hinds County Chancery Court, where it was first filed in the aftermath of Katrina, whose whipping winds created a storm surge that destroyed a great deal of Mississippi's coastal areas.

Mr. Hood said he will move for as swift an action as possible.

An estimated 40 percent of homeowners who suffered severe property damage from Hurricanes Rita and Katrina did not have flood coverage, which since 1968 has been offered by the federal government. Standard homeowner insurance policies exclude flood exposures.

The suit does not challenge the flood exclusion as such, but asserts that wind-driven storm surge losses should not be excluded like those from traditional floods–or even the flooding in New Orleans resulting from a breach in the levees.

The insurance industry has vigorously contested the suit, asserting, in the words of Insurance Information Institute Chief Economist Robert Hartwig, that “the flood exclusions are very broad and cover rising waters, regardless of the cause or circumstances.”