NU Online News Service, Aug. 24, 12:57 p.m. EDT
Louisiana Citizens Property Insurance Corp. has reached a $23 million settlement in a class-action lawsuit over the reimbursement of contractor overhead and profit following Hurricanes Katrina and Rita.
"We think this was the best thing for everybody," said Citizens chief executive John Wortman.
Citizens had enough cash set aside to pay for the settlement. In fact, the money has already been transferred to the court, Mr. Wortman said. The state-run insurer of last resort does have the power to assess Louisiana property insurance holders to meet financial obligations.
The case, Stephanie Press v. Louisiana Citizens, dealt with the allegation Citizens did not pay for contractors' overhead and profit. When a repair job takes three or more tradesmen, a policyholder is allowed to hire a contractor to coordinate the repairs. Policyholders can also act as their own contractor. In each case the insurer is obligated to pay extra money–about 20 percent–to cover the cost of a contractor.
Citizens denies the allegation.
Mr. Wortman said he expects between 7,000 and 10,000 people to share the settlement, or what is left after attorneys take their 33 percent share.
According to a notice mailed recently, Citizens also agreed to pay up to $225,000 for administration of the settlement.
Citizens has three class-action lawsuits against it remaining. Two have to do with inspections and payments and one deals with policy fees collected, Mr. Wortman said.
Katrina and Rita generated 80,000 claims, of which 77,500 are closed. Losses incurred from the storms are about $1.5 billion.
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