NU Online News Service, Aug. 25, 10:14 a.m. EDT
Louisiana's state-backed homeowners insurer has secured permission to appeal a $95 million judgment against it over Hurricane Katrina claims without having to post a bond in that amount.
Insurance Commissioner Jim Donelon announced yesterday that Judge Henry Sullivan of the 24th Judicial District Court in Gretna, La., had agreed to allow Louisiana Citizens Property Insurance Corp. to pay $6 million to a group of class-action attorneys while its appeal to the state's Supreme Court goes forward.
In March, Judge Sullivan ruled that Citizens owed the money to 18,573 policyholders with damage from the 2005 storm because there were delays in adjusting claims. At that time he had said the agency needed to post $95 million.
Mr. Donelon said that the agreement, proposed to the court by the Citizens board of directors on Friday, negates the immediate need for a $95 million Citizens emergency assessment on all property insurance policies in the state to cover the cost of the bond.
Citizens had until today to either post the bond or pay the $95 million judgment to policyholders in the lawsuit, who said the insurer did not adjust their Hurricane Katrina and Rita claims in accordance with the statutory deadline.
Mr. Donelon, in his announcement, said that either action "would have nearly depleted Citizens' cash on hand, leading to the suspension of paying claims and commissions as we approach the peak of this year's hurricane season, and necessitated a $95 million assessment to be paid by all property insurers doing business in the state."
Insurers, after paying the assessment, could recoup the money by charging their policyholders for it.
Citizens, the announcement said, will get the $6 million credited against any judgment or settlement eventually reached in the case, and would have had to pay that amount or more to purchase a commercial appeal bond.
Mr. Donelon said in an interview Friday that several insurers had offered Citizens reasonable conditions to secure a bond.
He said the insurer has had various legal authorities advise that it has good grounds for an appeal, and a similar action by policyholders against private insurers over missed deadlines for adjusting had been rejected by a federal court.
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