They say you shouldn't argue with people who buy ink by the barrel, but Mississippi Attorney General Jim Hood proved that he can take a punch, and come back swinging, after being hammered by "The Wall Street Journal" in a Feb. 2 editorial, headlined "Robin Hoods."
In the Journal's view, Mr. Hood had "bludgeoned insurer State Farm into a gigantic settlement over hundreds of dubious claims." Indeed, the paper charged, the colorful attorney general "has been on a campaign to loot insurers from the first days after Katrina."
But Mr. Hood did not shy away from a fight. The Journal had suggested that this was a simple case of "populist" politicians, undeserving homeowners and greedy trial lawyers conspiring to abuse the legal system to force innocent insurers to pay claims that were clearly excluded as flood-related.
The problem is this dispute is not black or white like the words on an insurance policy. There are legitimate questions as to whether the damages were truly flood-related or at least partially wind-related–and whether insurers made a good-faith effort to determine causation.
In his Feb. 8 response–headlined "My Wrestling Match With Insurance Gators"–Mr. Hood wrote that "State Farm did not settle out of fear, but because an independent federal judge ruled that the law was not on its side."
He went on to explain that "State Farm originally ordered engineering reports on the damaged homes of its policyholders. In cases where only a slab was left, its engineers could not determine what had caused the loss. Yet State Farm totally denied these claims and illegally tried to place the burden on the policyholders to prove what caused the damage."
He added that "the federal judge simply applied Mississippi law and held that in an all-risk policy…the burden of proof was on the insurer to show exactly what percentage of the excluded peril caused the damage. Since State Farm could not meet the burden of proof, it decided to settle."
He added that he filed his suit against insurers and began a grand jury probe of Katrina claims-handling "not for political gain, as you allege. I would not have put myself and my family in the vortex of this storm simply for politics. I gained a couple of years worth of grey hair and my family's Christmas was dampened while I was locked in a death-roll with an alligator during several months of negotiations."
He explained that he "settled the case because I wanted to stabilize our insurance market and rebuilding efforts. However, unless Allstate, Nationwide, USAA, Farm Bureau and other companies settle in the next few weeks, then we will be given no choice but to continue our state court action to hold them accountable."
In his parting shot at the Journal, he wrote that "in the future, before you again act like the Sheriff of Nottingham, you might do well to at least check with Friar Tuck before blaming Robin Hood."
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