Allstate Agrees to Mass Settlement of Mississippi Katrina Claims

June 28, 2007

Allstate Insurance Co. has agreed to a mass settlement of claims by a group of Mississippi policyholders who sued the insurer over damage to their homes from Hurricane Katrina, a company spokesman and a lawyer for the homeowners said.

Terms of the agreement were not disclosed, and both sides refused to specify how many policyholders could participate in the settlement.

However, a lawyer from the Scruggs Katrina Group, the legal team that negotiated the settlement with Allstate, said last month that it represents about 280 Allstate policyholders who sued the company.

Allstate spokesman Michael Siemienas said, "We are pleased that these customers are now a part of the 99 percent of Allstate customers in Mississippi whose claims are settled and moving on with their lives.''

Hundreds of Mississippi homeowners have sued Northbrook, Ill.-based Allstate and other insurers for refusing to cover damage from Katrina's storm surge. The companies say their policies cover damage from wind but not rising water.

The Scruggs Katrina Group also has brokered similar mass settlements with several other insurers, including State Farm Fire & Casualty Co., Nationwide Mutual Insurance Co. and Metropolitan Property and Casualty Insurance Co.

Zach Scruggs, a member of the legal team, said the Allstate agreement will be presented to their clients individually so that each can decide whether to participate in the settlement.

The Allstate agreement leaves the Scruggs Katrina Group with about 280 cases against State Farm, more than 40 against United Services Automobile Association and more than 60 against Mississippi Farm Bureau Insurance Co.

Hundreds of other Allstate policyholders also have settled disputed claims through a mediation program run by the state's insurance department. Mississippi Insurance Commissioner George Dale said about 650 of the 800 Allstate policyholders who have participated in the program have reached settlements.

"I'm delighted that more and more of the claims are being settled,'' he said.