Property insurers in Louisiana should continue mediating outstanding claims of homeowners who sustained damages in Hurricane Katrina and pay the costs of the sessions, although they are not legally obligated to do so, state Insurance Commissioner Jim Donelon told the Senate Insurance Committee.
Donelon said on Sept. 26 that the two-year period to mediate claims for Hurricane Katrina has expired, and the deadline for claims from Hurricane Rita is Monday. Donelon said he will send the letter to all homeowners insurance companies in the state next week asking them to continue to negotiate claims in arbitration with homeowners and to pick up the roughly $350 cost of the sessions.
Donelon said he is optimistic that most insurers will go along with the requests. Donelon said the letter will be drafted in the next few days and be mailed out to insurers next week.
“Insurance companies love mediation,” which is cheaper than going to trial, Donelon said.
Over 12,241 cases have been submitted to mediation, and 74 percent have been settled in the process, which involves a supervised give-and-take on the part of insurance companies and the policy holders, Donelon spokeswoman Amy Whittington said.
Sen. Ed Murray, D-New Orleans, asked the Senate panel to meet to assess the mediation program in light of the deadlines that have passed or are looming. Under emergency powers given to Donelon that expired Dec. 31, the commissioner was empowered to direct the insurance companies to pay the costs of the mediation sessions when lawsuits have been filed or settlements have not been made.
Donelon said mediation reduces the insurers’ costs of litigation and averts the risk of going to trial where a judge or jury could award policyholders higher damages.
Warren Byrd, the Department of Insurance’s chief counsel, said that in some cases, lawyers do not even attend the sessions and the arbitration – presided over by an arbiter from the American Arbitration Association – can be between the policyholder and an adjuster.
“It saves time and gets matters resolved quickly,” Byrd said. “Time is money.”
Molly Quirk-Kirby, a spokeswoman for State Farm in Louisiana, the state’s largest homeowners insurer, said it is the company’s intention “to work within state law to resolve claims not yet closed.” She did not say whether State Farm would comply with Donelon’s request and pay the costs of the mediation sessions.
Information from The Times-Picayune, www.timespicayune.com
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