Trying out a different name after Sop’s shocking discovery yesterday.
- Firm loses appeal over Katrina debris (Clarion Ledger)
- State not as broke as the rest of America (Sun Herald)
- FEMA loan forgiveness is in the works for Louisiana and Mississippi (Times Picayune)
- White Shrimp Season opens offshore (Sun Herald)
- We’re still very wet and more rain is on the way. (Sun Herald)
and, then, there’s the latest from Louisiana Citizen’s Insurance and the State’s never-met-an-insurer-that-wasn’t- right commission reported by Rebecca Mowbray for the Times Picayune in Citizens passes on settlement in Katrina class action litigation.
The board of Louisiana Citizens Property Insurance Corp. is engaged in a high-stakes gamble as it seeks to deal with two overlapping class-action lawsuits over the state-sponsored insurer’s handling of claims from the 2005 hurricanes.
If Citizens prevails, it says it will dispense with both suits for $35 million. If it loses, taxpayers could be on the hook for possibly hundreds of millions of dollars…
All of this could come back to haunt the people of the state. If Citizens does not have the cash to cover its expenses, it has the power to levy special assessments on all owners of insured property in the state. After Katrina, the state shifted that obligation onto all taxpayers by letting property owners take a tax credit for the special assessment.
Donelon said that no one on the board — which includes lawmakers and a designee of State Treasurer John Kennedy — had any appetite for the deal, despite the recommendation from their attorneys that they take it.
In Donelon’s view, Citizens did not pass up a $50 million deal only to get stuck with a $92.8 million judgment in court. He said the insurer believed it had dispensed with the matter entirely in the original $35 million settlement in Orleans Parish, of which only $18 million was ultimately needed. As he figures it, accepting the Jefferson settlement would have inflated Citizens’ total obligation to $69 million.
“No one was arguing its approval in executive session, ” Donelon said. “I am still convinced that it’s in the best interests of the people of Louisiana to enter into the $35 million settlement.”
If Citizens were to pay the global $69 million settlement and then get hit with a hurricane this year, Donelon said the insurer would have to levy the special assessment. That is a risk he said he does not want to take.
Fred Herman, an attorney representing the plaintiffs in Jefferson Parish, maintains that the settlement Citizens brokered with the competing attorneys in Orleans Parish does not apply to his clients. He was incredulous that Citizens is embarking on such a gamble against the advice of its own attorneys.
“He’s the insurance commissioner, ” Herman said. “I am at a loss for words to believe that someone would rather gamble on hurricane season and the court system upholding a much higher judgment than to fix the exposure and deal with it in a rational way. I don’t understand that.”
Me, too, Mr. Herman, me, too.