Mississippi Attorney General Jim Hood says his lawsuit against State Farm Insurance made the company pay $74 million it initially refused to give to policyholders affected by 2005’s Hurricane Katrina.
State Farm didn’t exactly agree Wednesday, responding to a press conference during which Hood announced he was dropping the lawsuit he filed against the company after Katrina.
Much has happened since then, including a federal judge rejecting a Jan. 2007 settlement reached by the two sides, a breach of contract suit by Hood, a major war of words between the two and State Farm establishing a claims revisiting process with the state’s Insurance Department.
“We find it perplexing Attorney General Hood is taking full credit for the resolution process he opposed and was the basis for his lawsuit against State Farm which he has now settled,” State Farm said in a statement.
“Nonetheless, we are pleased the Attorney General understands State Farm has met its obligations under the agreement made with his office in Jan. 2007. State Farm has been focused on resolving all pending matters related to Katrina and this is another step toward resolution.”
Hood alleged in June 2007 a bad faith breach of contract on State Farm’s part for refusing to reconstruct the rejected January settlement.
In the aftermath of Katrina, Hood said five insurance companies wrongfully represented the amount of water damage to some homes because flood damage, covered by the National Flood Insurance Program, is excluded from their policies.
The two sides appeared to have settled in Jan. 2007 when State Farm agreed to terms that could have cost them between $50 million-$500 million, Hood estimated.
However, U.S. District Judge L.T. Senter rejected parts of the settlement because he worried about the amount of control State Farm would possess during an arbitration process that started when a policyholder rejected the company’s initial claim — an automatic 50 percent of the structural value of the property according to the policy.
Because State Farm did not fix the rejected settlement to conform to the federal court’s guidelines, Hood says the company breached its contract with the state.
State Farm, meanwhile, began revisiting claims as part of a deal reached with Insurance Commissioner George Dale. That deal, State Farm said, mirrored the one originally reached with Hood.
It is through that process that State Farm has paid $74 million to policyholders.