Louisiana’s state-run insurer is nearing a mass settlement with policyholders that would be the first deal of its kind in the state since hurricanes Katrina and Rita spawned thousands of lawsuits, an attorney for the homeowners said Feb. 19.
Citizens Property Insurance Corp., Louisiana’s insurer of last resort, has agreed “in principle” to settle out of court with 165 policyholders in Cameron Parish who sued Citizens for refusing to cover damage from Hurricane Rita in September 2005, attorney Jennifer Jones said.
Jones, who would not specify the terms of the proposed multimillion dollar agreement, said an agreement could be announced by the end of this week.
“I think our deal, in essence, has been made. We’re just finalizing the numbers,” said Jones, who also is an assistant district attorney in Cameron, near the Texas border.
Citizens CEO Terry Lisotta declined to comment on the status of any settlement talks, but said, “We’re constantly trying to settle cases.”
Jones said she also is trying to negotiate a separate settlement with State Farm Insurance Cos. on behalf of about 150 policyholders in Cameron, but recent settlement offers by the company were “too low.”
Another meeting between Jones and State Farm attorneys is planned for March 2, according to Jones and company spokesman Phil Supple.
“I can’t say if another offer will be on the table, but we will be resuming face-to-face conversations,” Supple said.
Insurance companies already have reached individual settlements with hundreds of homeowners in Louisiana who sued in the wake of Katrina and Rita, but the state hasn’t had a mass settlement of lawsuits like one reached recently in Mississippi.
State Farm agreed in January to pay about $80 million to 640 policyholders in Mississippi who sued the Bloomington, Ill.-based insurer. State Farm also agreed to pay at least $50 million to up to 35,000 Mississippi homeowners whose claims were denied but didn’t sue the company, but a federal judge has refused to sign off on this part of the deal.
Like many of the homeowners who have sued their insurers in Mississippi, most of the 165 policyholders on the verge of settling with Citizens had homes that were reduced to slabs, according to Jones.
Cameron is about 200 miles west of New Orleans, where levees and flood walls failed after Katrina and flooded about 80 percent of the city. The thorny legal issue of whether insurers are liable for water damage from the levee breaches isn’t a factor in Cameron, where Rita’s storm surge was responsible for much of the damage.
“We don’t have the complications of the levee breaches involved. Almost all are slab claims,” Jones said. “It’s a good place for (Citizens) to start.”
Insurance Commissioner Jim Donelon said a settlement in Cameron could serve as a model for similar deals in other parts of the state.
“These people are dealing with the uncertainty of not knowing whether they will get anything,” he said of the Cameron plaintiffs. “This will give closure to those claimants, and they can get on with their lives.”
Jones said a recent landmark ruling in one of the Mississippi cases may have paved the way for a settlement between Citizens and her clients, who sued the insurer in state court.
In the first federal jury trial for a Katrina insurance case in Mississippi, U.S. District Judge L.T. Senter Jr. took part of the case out of jurors’ hands and ruled that State Farm is liable for $223,292 in damage to a home that was reduced to a slab.
Senter ruled that State Farm had the burden of proving how much damage is caused by flooding and is therefore excluded by their policies, a burden he said the company didn’t meet in the slab case.
Jones said Senter’s ruling only strengthened her position in negotiating a settlement with Citizens.
“It really got the thing in motion,” she said.
Citizens, a quasi-state agency, writes policies for home and business owners who are unable to purchase coverage from private companies. About 2,000 policyholders have sued Citizens over damage from Katrina and Rita, and Citizens still has about 5,000 open claims from the two storms, according to Lisotta.
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