Liberty Mutual Insurance Company has hired the mediator who oversaw the Sept. 11 Victim Compensation Fund to help settle insurance claims filed by homeowners after hurricanes Katrina and Rita.
The Boston insurer’s customers with unresolved claims can have them reviewed by an independent mediator under a program overseen by Kenneth R. Feinberg, who ran the $7 billion government compensation program for the victims of the 2001 terror attacks.
Liberty Mutual, which estimates it will have $658 million in losses from the hurricanes, has already resolved more than 80 percent of its Katrina claims, and more than 90 percent of Rita claims.
But disputes linger about Katrina’s damage, the most costly storm in U.S. history, with $40 billion in private insurance claims. There are disagreements about how much damage was caused by flooding and how much by wind. Flood damage is not covered under basic policies.
Liberty Mutual announced the program last Thursday. Executives said the program will be less costly and less time consuming than protracted lawsuits.
“Certainly avoiding litigation is good for both sides, but primarily it’s an alternative for customers to resolve their issues short of having to go the court,” said Thomas J. Wilson, the firm’s senior vice president of personal claims.
The Boston Globe and Boston Herald reported the news on Friday.
Feinberg told the Globe that it would take years to litigate the claims.
“If somehow we can set up an independent program that will help people more quickly resolve their disputes over coverage, I just think it’s a fabulous thing to do,” he said.
In addition to his work on the Sept. 11 commission, Feinberg has done similar work on more conventional mass litigation claims, including asbestos and the Vietnam-era herbicide Agent Orange.
The Sept. 11 program was designed to compensate families and protect the airline industry from crippling litigation. The fund finished processing applications in June.
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