Policyholders in Louisiana, Mississippi and Alabama may soon have a state-created claims mediation service to use for disputes with their carriers over Hurricane Katrina damage, officials said.
A Mississippi official estimated the program might be in place in a matter of weeks.
Louisiana Insurance Commissioner Robert Wooley said such a service will be set up as soon as the costs can be established, and that the insurance industry will fund the cost of the program.
Mr. Wooley said he hopes the program can be worked out with both Mississippi and Alabama to achieve economies of scale.
Claimants will always maintain the right to reject the mediator's finding in accordance with state law, Mr. Wooley explained.
"We will have people there to advise the homeowners that this is strictly voluntary, and that you can listen to what the offer is, and if you don't like the offer you still have the right to sue," he said.
The three state insurance commissioners heard presentations from different mediation services at the mini-Katrina summit in Atlanta shortly after the storms.
Mr. Wooley said that mediators who went to work in Florida in the aftermath of last year's four storms had over a 90 percent success rate.
As for what the main disputes will center on, Mr. Wooley said that "wind versus flood is what everyone keeps talking about. But he said that issue is the subject of a private lawsuit filed in the state asserting the right of flood victims to obtain homeowners coverage. Another private action along the same lines has been filed in Mississippi.
Mr. Wooley noted that legal action will involve an extended period of time. "That is why I keep telling everyone to get what you are legally entitled to from the system as it exists today, and if you win the lawsuit it will be extra."
He said the fact the major homeowners' insurance writers are keeping senior adjusters in the state has helped speed settlement of disputed claims.
In Mississippi Deputy Insurance Commissioner Lee Harrell said a mediation system could be up and running by the end of the month. Mr. Harrell said issues that could come up for a mediated settlement include disputed valuations of destroyed cars and property.
Mississippi Attorney General Jim Hood has filed a lawsuit seeking to void home insurance policy language dealing with water damage as ambiguous, contrary to public policy and unenforceable. Insurers argue that flood exclusion provisions are longstanding and well-supported by legal precedent.
A private lawsuit contends policyholders were misled about what sort of coverage they had for storm surge.
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