Insurance groups are hoping the State Farm class action agreement to settle hurricane damage claims for hundreds of Mississippians will put an end to anti-insurance rhetoric along the Gulf Coast.
“This settlement is a forward moving event that's in the best interests of State Farm's policyholders and rebuilding the Gulf,” said Nancy Grover, a spokesperson for the National Association of Mutual Insurance Companies, adding, “it doesn't further these efforts to engage in political posturing at this time.”
Mississippi Attorney General Jim Hood, who took part in negotiating a settlement that included plaintiffs' attorneys, said he thought the settlement came about because a Democratic Congress had been elected, and he expects Congress to pass a National Insurance Reform Bill.
The settlement, which could affect 35,000 claims and could cost the company more than $500 million, closed 639 open lawsuits and allows other policyholders to reopen claims in three coastal counties where homes were hit with storm surge waters. The company had said their claims were noncompensable under policy flood exclusion language.
Joseph Annotti, a spokesman for the Property Casualty Insurers Association of America, noted that State Farm made “a business decision that allowed the company to preserve the sanctity of the water damage exclusion in its contract, serve its policyholders, and move forward in the ongoing effort to rebuild the hurricane-ravaged economy of the Gulf Coast.”
He added that much of the rhetoric around the cases, which he called “persistent saber-rattling” by Mr. Hood, “only increases the level of contentiousness in the state and the region.”
In announcing the settlement, Mr. Hood said he was “confident” that the members of Congress who were affected by the storm and had filed lawsuits against State Farm–including Rep. Gene Taylor, D-Miss., and Sen. Trent Lott, R-Miss.–would “conduct a full congressional investigation with hearings and hopefully pass a National Insurance Reform bill.”
Both Sen. Lott and Rep. Taylor had sued State Farm over damage to their Gulf Coast homes, and their cases were among those settled.
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