Commissioner of Insurance George Dale announced Monday that State Farm will begin an accelerated process to reopen and readjust all Hurricane Katrina claims upon request in the Mississippi coastal counties.
According to Dale, State Farm has agreed to make millions of dollars available for additional payments to policyholders in Hancock, Harrison, and Jackson counties.
Back in March, Dale reached an agreement with State Farm to reopen "slab cases" on the coast and have them reviewed by a new team of claim representatives. This new agreement takes that a step further by expanding the review beyond "slab" claims.
More than 35,000 homeowner, renters and commercial claims, including those that are or were in mediation, could be affected. If the claim is already in litigation the insured's attorney will need to ask that the claim be readjusted.
As a starting point State Farm will use the settlement numbers under the proposed class action. But Dale said, based on the insurance commission's findings, he believes a lot of policyholders may be entitled to more than what was offered in the class action settlement.
"When I learned that the proposed class action settlement had stalled, I felt it presented an opportunity to negotiate with State Farm to bring closure for coastal policyholders. My department opened negotiations with State Farm immediately, working virtually around the clock, to come to this agreement. This plan presents a consumer-friendly way to resolve these disputes and quickly put substantial amounts of money into the hands of those waiting to rebuild their homes and lives on the coast. Combined with the recently passed Wind Pool legislation that was presented by my office, this is another big step toward a more stable insurance environment," said Commissioner Dale.
State Farm will work with MID to identify eligible claims, assess what claims payments have already been made or offered, and then follow mutually agreed upon guidelines to determine the amount of additional claim payments.
Participation by State Farm policyholders is totally voluntary. State Farm will review claims, make payment offers, and, if requested, rely upon the MID's established and successful Hurricane
Katrina Mediation Program to resolve differences on offer amounts. Representatives from the MID will monitor the claim review and payment offers.
"This is a no lose proposal for coastal policyholders. It's a free process and presents them with the opportunity to have their claim looked at again, by different eyes, under the supervision of the MID, with the strong probability of receiving additional payment," Commissioner Dale said.
Each State Farm policyholder in the lower three counties will receive written notification of their eligibility to participate in this re-examination. The company has indicated that it hopes to have all claims re-adjusted within 60 to 150 days following notification from the policyholder.
State Farm will also set up special toll-free number to answer any questions about this process or for policyholders to notify the company of their intent to participate.
Phil Supple, a spokesman for State Farm, said the company is committed to the spirit of the proposed Woullard class action settlement.
"Today, we have moved forward to pursue the basic goals of that settlement by beginning an immediate reevaluation and payment program on "slab" claims. Unnecessary court battles and political rhetoric in the difficult post-Katrina environment serve no one's interests. Now is the time to resolve these issues and we believe this expedited process will put dollars into the people's hands more quickly and advance the rebuilding of the Gulf."
Governor Haley Barbour called the announcement "great news."
In a statement released Monday, Barbour said, "Commissioner Dale's action should allow hundreds if not thousands of Mississippi homeowners to receive insurance payments from State Farm after these claims are readjusted. Everyone's goal should be to get as much money as possible into the hands of as many people as possible so they can continue to rebuild; this agreement is another way to do that."
Commissioner Dale said discussions are continuing with State Farm about reopening their Mississippi markets. He also said that the Mississippi Insurance Department is in serious discussions with other companies on expediting their claim handling practices as well.