Posted On: February 24, 2007, 11:06 am CST

Posted By: SAP ?

- Even in the absence of new evidence, State Farm Fire and Casualty Co. told a federal judge Thursday it expects to make additional payments to most policyholders who participate in a proposed class-action settlement.

State Farm filed a 22-page memorandum Thursday to address U.S. District Court Judge L.T. Senter Jr.'s concerns about the proposed settlement agreement in advance of a hearing scheduled for Wednesday. Policyholders and attorneys representing policyholders have signed up to participate in the hearing.

Senter has urged attorneys for both sides to work toward "a just, speedy and inexpensive resolution" to around 1,000 cases pending at the federal courthouse in Gulfport against State Farm and other insurers.

State Farm, the state's largest insurer, has weighed in with an agreement that could be a template for other companies. Preliminary approval hinges on whether the company and attorneys who negotiated the agreement on behalf of policyholders, the Scruggs Katrina Group, can answer Senter's concerns.

State Farm identified 36,000 policyholders eligible to participate in the settlement, 25,400 of whom have homeowner policies with the company. Policyholders who want to pursue lawsuits already filed against the company and those who have already settled their claims through state-sponsored mediation would not be eligible to participate.

"Nonetheless, State Farm anticipates that, even in the absence of new evidence submitted by the claimant, most class members will receive some additional payment under the class action settlement," company attorneys said in the memorandum filed Thursday.

State Farm said the settlement is structured so in most slab cases the total payment, including loss of use and contents coverage, should equal 50 percent of the policyholder's limits on structural coverage, minus any previous private or federal flood-insurance payments. Opposing attorneys have pointed out the total settlement can work out to less than 50 percent of limits on structures, depending on the circumstances.

The settlement guidelines call for lower percentages to be paid to those with less damage, but the company stressed those are guidelines only and each policyholder's claim is different.

"It is not possible to provide for minimums on all claims," State Farm's memorandum said, "nor are they really needed for those losses outside of the surge area or in cases where some part of the structure remains, because, in such cases, proof of cause of loss is more readily available."

Though State Farm believes it has property handled Katrina claims, paying $1.1 billion in damages for homes and businesses, the company has agreed it will not refuse to pay based on a policy clause that purports to say wind damage is not covered if water was the predominant cause of the loss. Policyholders who refuse initial settlement offers can proceed to arbitration.

State Farm said the company is willing to settle claims in order to avoid the uncertainty and expense of litigation, a sentiment the company hopes its policyholders share.



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