Allstate Settles with MS

Allstate settles Mississippi Katrina claims
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.

Two Subpoenas

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.

From A Survivor

6/7 - long but worth the read. Prayers are all that are asked for.
Just wanted to give you all an update on Kelsey's best friend Rayven. She was the one who's leg was crushed by a golf cart the day before Mother's Day. Kelsey was with her when it happened. She has spent the past few weeks at a new hospital in Louisiana, West Jefferson. She underwent another surgery to close the wound on her leg. At this point, her family is looking for a miracle to save her foot. She is not getting the blood flow to the entire foot. She needs many, many continous prayers over the next few days.
She is so special to our family and that's why I am asking for everyone to please keep her in your prayers. Thanks and God Bless!!
[Update]
Thanks for all of your prayers J. We ventured over to West Jefferson today to see her and it was not a good day, at all. This afternoon I found Kelsey in her room crying because she misses her and hates the fact she is kinda far now. They are SO close.
Her (Rayven's) dad would tease me about paying me child support because she spends so much time with us. The news today is that they are going to continue Hyperbaric treatments for another week or so. Her little toes are still black and if they could get just another inch of blood higher in her foot they could just take the toes.
She is so strong because she said she knows Kelsey could have never survived something like this. I laughed because Kelsey said that very same thing a few weeks ago. They are like sisters.
I actually saw her cut on the inner thigh where they took the artery from, there must be 30 staples there. She also was cut on her right side to perform an angiagram (spelling ?) and also cut on her left side to re-route that artery. She had a very large open wound on the right leg where they had to go in and shave some of the muscle.
The compound fracture is healing nicely but she will probably have the pins another 6-8 weeks. Sometimes when I look at her I think she has as many battle scars as some of our soldiers and shes only 13, it breaks my heart.
Thanks for the favor!!!!!!!!!!!!!!!!! I will keep you posted. Tell everyone I said hello.
From "J":
"W" is a friend who used to be the school secretary in Pearlington. She is now secretary at the middle school. I've known her daughter Kelsey since before she started school. There's been a terrible accident that involved a friend of Kelsey's. I know prayer works...please remember them in your prayers. Having you as friends is such a blessing!

3/14 - and from another:
I don't imagine most people still realize what has happened here...I still think that New Orleans is still the focus. I say this because when I came home and was dealing with creditors trying to tell them we still didn't have Mail service...post office...etc.... That they were like why not? I would go thru my usual rant and they would be like oh Hurricane Katrina...yeah I did hear something about that...are you near New orleans? I would tell them an hour and half and they would basically blow me off like we didn't get anything because we were so far from New Orleans...which would further enrage me....Trying to educate everyone just wears me out!

3/7
Hello all!

I am here to make the rest of the country aware of one more Hell that hurricane victims are having to endure. I am not talking about getting the insurance to pay off, I am talking about finding AFORDABLE INSURANCE! I just got my renewel for this year from All State and they have dropped wind coverage and put us into the MS wind pool and raised our annual premium from $1,100 a year to $4,700! $4,700 breaks down to about $400.00 a month! How are people supposed to afford this?

Do I sell my car to buy homeowners insurance? Give up electricity and cable? My mortgage company says I must pay for homeowners insurance or they will charge me $300.00 a day! until I do!

Let me also put this out there for you to think about, I live almost an hour away from the water on the coast! We had no water, nor threat of water in our home. I carry flood insurance just because I want to be sure and not get left losing it all (not that this helped many on the coast). We got a new roof, due to major loss of shingles which was the average loss in our area or trees that had fallen on homes.

I complained to a friend and she told me of another pal of ours that lives on the coast and hers has gone to $6,200.

This is a major problem! Until now I wasn't effected greatly by the hurricane over 18 months ago except for mentally and emotionally watching all the others suffer! I tried in many ways to help those who needed food, clothing, furniture, appliances and whatever else we could help with.

My insurance company is cancelling wind coverage for any homeowner that didn't have car insurance with them prior to November 2005. Most other insurance companies are either not writing new coverage or not covering wind.

I ask those of you on the coast of MS, who is writing affordable homeowners insurance? Prior to Katrina it was considered highest risk in the 3 coastal counties, now it is the 6, where we are. I am one county north or Jackson County.

Why would people on the coast that are average folks of average means want to rebuild? It is really really sad!

If anyone has any ideas or comments please post them! If there is any movement on this to help people with lowering insurance costs please advise!

Thank you!

Commercial Rebuilding Gone

Dave Moynan's voice grew into a deeper, depressed state as he rattled off some of the obstacles to rebuilding his arts business on the Mississippi Gulf Coast.

Foot traffic from shoppers in Old Towne Bay St. Louis, a historic district, is a fraction of what it was before Hurricane Katrina struck in August 2005.

Loans are due, Moynan said. And an unthinkable insurance rate hike has loomed over the art dealer and his neighbors for almost a year.

They've heard the political promises to shrink the average 268 percent commercial rate hike from the state-created insurer of high-risk properties, the Mississippi Windstorm Underwriting Association. But approval to use federal or state money has not come.

Moynan's coverage for wind damage will rise from $5,350 to $14,860 by the end of the year without a government subsidy. His yearly insurance costs will rise from $14,000 to $23,000.

"We keep getting told, 'Wait. It will get better,' " said Moynan, who owns Maggie May's, an art gallery.

"How long?"

Gov. Haley Barbour asked the U.S. Department of Housing and Urban Development to lower rates by using $30 million of the more than $5 billion pumped into the state after Katrina. A required public comment period ends March 5.

Meanwhile, state representatives passed House Bill 243 throwing $30 million into the windstorm association, known as the wind pool. The proposal sits in the Senate as leaders haggle over whether to use federal money alone or a total of $60 million to lower rates.

Senate Appropriations Committee Chairman Jack Gordon, D-Okolona, said he will look at House Bill 243, but coastal lawmakers may not like the way he's leaning.

"I'd rather have the federal money than use the state money," Gordon said. "Then, we'd have the money for education."

House Speaker Pro Tem J.P. Compretta, D-Bay St. Louis, would prefer to see the wind pool get $60 million. When he drives home from Jackson each weekend, affordable insurance is the hottest topic in town.

"It's stopping building," said Compretta, who authored House Bill 243. "Everything's stopped in its tracks because of this insurance issue."

Small businesses are the backbone of the economy, he said, but owners are either waiting to rebuild or leaving town. "We should have already had (the bill) on the governor's desk," Compretta said.

Most insurance companies have stopped covering wind since the hurricane, driving more customers into the wind pool. The wind pool covers wind damage for structures in the six southernmost counties.

As the pool grows, so does the need for reinsurance, the primary driver of rates, which is coverage from other firms for protection against losses caused by catastrophes, such as Hurricane Katrina.

Reinsurance costs for 2005 were $8.8 million. The cost for 2006 is still in negotiations but could top $70 million, wind pool attorney Greg Copeland said.

To lower rates significantly, any assistance is welcome, he said. "If they pass (the House bill), we will hold rates down lower and longer," Copeland said of combining funds.

Barbour, a Republican, has said he wants to try the route to federal funds first.

A similar $50 million request was approved by HUD last year to bring residential rate hikes in the wind pool to 90 percent from the almost 400 percent proposed.

The Mississippi Development Authority has not received public comments on the commercial rate plan, disaster recovery director Donna Sanford said. Once the comment period ends, she said MDA will push for the money to be released by the end of the month.

The funds could bring the rate increase to 142 percent, according to MDA documents. However, the eventual rate is unknown because insurance formulas vary daily.

"You're really almost pulling rates out of the air," Insurance Commissioner George Dale said. "You would like a way to reduce cost of commercial rates now. It's not going to be an overnight thing you infuse."

Copeland said once the money is released, it could be another four to six weeks before new rates are set.

Some business owners said they never would have rebuilt if they had known the wait would be this long.

Renee and Drew Boxx lost their house in Katrina and bought a new one in Bay St. Louis. They and their four children hoped to live there and reopen their two businesses, a boutique and a cabinet-making shop. Insurance quotes for the older house hit $22,000 when including the stores.

"We don't have that kind of money," she said. "Old Towne hasn't come back yet."

So they moved her Funky Rose and his BoxxWorks Cabinets to a strip mall on U.S. 90. They hope to open in mid-March. Removing the businesses dropped their insurance on the house to $6,000. Their plan is to stick it out a year.

"What we were asked to do is come back and rebuild," Renee Boxx said. "We truly never thought it would be this much money to insure this building. We feel trapped."

High insurance rates not only stifle stores and restaurants, the expense also restricts apartment development, said Sen. Billy Hewes, R-Gulfport.

"It may take both pots of money," Hewes said. "Commercial development on the Coast has ground to a halt."

BY THE NUMBERS

Customers have flocked to the Mississippi Windstorm Underwriting Association, which insures property other companies refuse on the Gulf Coast. Rapid growth has driven insurance rates higher.

Before Hurricane Katrina:

15,252 policyholders

$1.87 billion total insured value

After Katrina:

32,847 policyholders

$5.6 billion total insured value

That includes 2,267 commercial policies with a total insured value of $1.5 billion.
Source: Mississippi Windstorm Underwriting Association

1/4% Will Max FEMA Help

From WBAL in Baltimore
http://www.msnbc.msn.com/id/17424223/
excerpt
"The government has not worked out a way so people can rebuild their homes. It's taking way too long," he said.
Maryland Sen. Ben Cardin said less than 1 percent of the uninsured have received federal recovery money. He estimated that administrative costs average $30,000 per grant applicant.

From the Washington Post through Janet

Dec. 3, 2006 at 3:51PM Fewer than 4,700 families will reach a $26,200 cap on disaster assistance following hurricanes Katrina and Rita, the U.S. government says.
The figure amounts to fewer than one-fourth of 1 percent of the 2.6million households that applied for disaster aid. The aid program is set to expire in March, when an 18-month statutory cutoff takes effect, the Federal Emergency Management Agency says.
The figures are surprising, anti-poverty advocates say, given the storms' scope, the incomplete reconstruction of New Orleans and the demographic profile of evacuees, who were generally poorer and less well-insured than other Americans, The Washington Post reports.
The National Low Income Housing Coalition, a housing-advocacy group, is pushing to extend the 18-month federal limit on aid, lift the $26,200 cap and expand a Department of Housing and Urban Development disaster program, as advocates for the poor want.
FEMA Director R. David Paulison defended FEMA's efforts.
"We felt like we did a good job," he said, adding FEMA helped morepeople than it ever has despite overwhelmed systems, huge work volumes and pressure to fight victim fraud.

Insurance Hearing Precedent

12/28 Judge moves AG's Katrina suit to state court
Insurers wanted it in federal court
THE ASSOCIATED PRESS
GULFPORT - A federal judge agreed Tuesday to transfer Attorney General Jim Hood's lawsuit against insurance companies over Hurricane Katrina damage from federal to state court.
U.S. District Judge L.T. Senter Jr. ruled Hood's lawsuit belongs in state court because interpreting the terms of private insurance policies is traditionally a function of state law.
Senter rejected arguments by insurers that Hood's suit should be heard in federal court because the companies write flood insurance policies that are funded and administered by the federal government.

LA. Judge Rules Differently than MS

Judge refuses to kill lawsuit against insurers
THE ASSOCIATED PRESS
NEW ORLEANS - A federal judge refused to throw out a lawsuit for damages from Hurricane Katrina's floods, saying the language excluding water damage from some policies is ambiguous.
The 85-page ruling by U.S. District Judge Stanwood Duval Jr. covered several cases that had been consolidated because they were similar. He immediately sent the decision to the 5th U.S. Circuit Court of Appeals for review.
There is no timetable for that review, plaintiffs' attorney Joseph Bruno said. Still, he was optimistic.
"Right now, we're on the verge of an opportunity to get a recovery for people who have lost everything and who didn't have flood insurance or didn't have enough flood insurance," he said.
Under Louisiana law and precedent, Duval ruled, insurance companies must prove that a clause excluding coverage applies _ and, without such an exclusion, provisions are generally construed in favor of coverage.
"The law says that when you write an exclusion, it has to be strictly construed. If it's ambiguous, it doesn't apply," Bruno said.
He said Duval found that language used by most insurance companies doesn't differentiate between a flood caused by an act of God, such as excessive rainfall, and a flood caused by an act of man, which would include the levee breaches.
Allstate Insurance Co., one of the companies named in the suit, plans to appeal Duval's decision to the 5th Circuit, said Mike Siemienas, a spokesman for Allstate Insurance Co.
"Allstate disagrees with the judge's conclusion that its policy exclusions do not apply to water damage resulting from the flooding in the New Orleans area," he said.
Although the ruling covers several cases, Duval has not decided to certify it as a class-action suit yet. A decision on whether to do that probably won't come until the appellate court rules on Duval's decision, Bruno said.
If the suit becomes a class action, it could grow exponentially, he said, because it could include everyone whose home sustained storm-related water damage.
Duval was appointed to the federal bench by President Clinton in 1994.
Duval's ruling contrasts sharply with an August decision by a federal judge in Gulfport, Miss., who ruled that a couple could not collect from their insurer because their policy doesn't cover damages from floodwaters or storm surges.
"Almost all the damage ... is attributable to incursion of water," U.S. District Judge L.T. Senter Jr. wrote in the Mississippi suit.
Senter did say that the policy the couple's insurer used to deny coverage was ambiguous because it covers wind damage but not damage caused by wind and water.
"The reading of the policy would mean that an insured whose dwelling lost its roof in high winds and at the same time suffered an incursion of even an inch of water could recover nothing," he wrote.
At the time, Louisiana Insurance Commissioner said the decision probably would not affect Louisiana litigation because Senter sits in a different district.
But Allan Kanner, chairman of the Louisiana Trial Lawyers Association, said insurance companies probably would use it in litigation.
And, since Mississippi also is part of the 5th Circuit, any appellate court ruling in the Mississippi case would apply to Louisiana.

New insurance trial rejected
THE ASSOCIATED PRESS
GULFPORT - A federal judge says he won't order a new trial for a Pascagoula couple whose lawsuit against their insurance company was the first case to be tried here after Hurricane Katrina spawned hundreds of similar lawsuits.
U.S. District Judge L.T. Senter Jr. last week refused to change his ruling in August that Nationwide Mutual Insurance Co.'s policies do not cover damage from a hurricane's storm surge, or wind-driven water.
Senter, who heard the landmark case without a jury, also said he sees no reason to order a new trial for Paul and Julie Leonard, who sued Nationwide after the company paid them only $1,661 for more than $130,000 worth of damage to their home.
Zach Scruggs, one of the Leonards' attorneys, said he might appeal Senter's decision.
Attorney Richard "Dickie" Scruggs had asked Senter to reconsider his ruling, which also held that insurers must pay for any damage from hurricane-force winds.
The Leonards' lawyers argued that Nationwide's policies are ambiguous and therefore can't be enforced because "storm surge," or wind-driven water, isn't specifically excluded from coverage.
Senter rejected that argument, however. The judge said the flood exclusion in the company's policies applies to rising water from a hurricane.
"Substantially identical policy exclusions were considered and applied during litigation following Hurricane Camille, and none of the courts who considered this language found it to be ambiguous or otherwise unenforceable," Senter wrote, referring to the major storm that hit the Gulf Coast in 1969.
In August, Senter ordered Nationwide to pay the Leonards about $1,228 more than what the Columbus, Ohio-based company already had paid them for wind damage. That money, which Nationwide paid on Monday, will be held by the court pending the outcome of any appeal.