Allstate Settles with MS
Insurance company reaches settlement with state's customers over outstanding property damage claims from 2005 hurricane.
June 25 2007: 6:23 PM EDT
NEW YORK (Reuters) -- Allstate on Monday reached a settlement with Mississippi customers whose homes and property were damaged by 2005's Hurricane Katrina, resolving one of the largest groups of outstanding claims in the two-year-old wrangle.
Terms of the settlement with the Scruggs Katrina Group, the legal team that negotiated the deal, were not disclosed.
Allstate spokesman Michael Siemienas said 99 percent of all of the insurer's claims from the hurricane in Mississippi are now resolved.
Katrina, the most costly storm in U.S. history, caused $40 billion in insured losses, including $3.6 billion to Allstate, the nation's largest publicly traded home insurer.
Home insurers have been battling with Scruggs, Mississippi Attorney General Jim Hood and other officials over claims from Katrina, which sent a 30-foot wall of water crashing into the Gulf Coast state.
Private insurers pay claims for wind damage, while water damage is generally covered by federal flood insurance. But U.S. and state authorities have been pressuring insurers to settle with the flooded-out homeowners.
In May, Allstate received two subpoenas, one from a grand jury in southern Mississippi on how it handled claims from Hurricane Katrina, and one from the Department of Homeland Security for documents on homeowner's claims from the storm.
Allstate said at the time that it was working with the U.S. attorney's office and remained "confident of our claims settlement practices."
Allstate (Charts, Fortune 500) is the third-largest home insurer in Mississippi after mutually-owned State Farm and a state company.
State Farm had originally agreed to settle with Scruggs and his clients earlier this year, but the settlement fell apart when a federal judge expressed reservations about it, and Scruggs withdrew the case.
Subsequently Mississippi Insurance Commissioner George Dale proposed a method for State Farm to pay disputed claims from the hurricane. The insurer said that under this plan it has already made offers totaling more than $10 million to policyholders.