Class-Action Status Granted to Drought Insurance Suits

Lawyers met privately Tuesday to plan strategy on behalf of farmers in 10 states who accuse Chubb Group of Insurance Cos. of reneging on its duties to pay drought insurance claims.

U.S. District Judge Carl B. Rubin of Cincinnati issued an order Monday granting class-action status to lawsuits against Chubb, allowing eligible farmers nationwide to join a group legal action against the Warren, N.J.-based company. Farmers may still pursue independent litigation.

Rubin’s action expanded his decision last week to grant the class-action status to three Ohio claims against Chubb.

The Ohio Department of Insurance also is conducting hearings to investigate how Chubb policies were marketed within the state.

Some of the farmers’ lawsuits also name as a defendant Good Weather Agriculture, a California-based agent for Chubb, said Stanley M. Chesley, a Cincinnati lawyer who organized Tuesday’s strategy session.

The farmers say Chubb sold them drought insurance on their crops, but has reneged on its duties to pay their claims as a result of the ongoing drought damage. Chubb has offered to repay farmers twice the amounts they paid in premiums, but state insurance regulators have termed the offer insufficient.

Chubb has maintained its innocence. In recent weeks, the company has taken out full-page newspaper advertisements nationwide to say that it has a longstanding reputation for business integrity.

The company says it initially intended to underwrite $30 million in drought insurance, but a last-minute flurry of applications resulted in potential liabilities of more than $400 million.

Chubb spokeswoman Mary Lu Korkuch did not return a telephone message Tuesday seeking further comment.

Chesley, who helped obtain the judge’s class-action declaration, said an estimated 8,800 farmers in 10 states could have claims against the company. He said the farmers involved are in Ohio, Indiana, Kentucky, Tennessee, Michigan, Illinois, Missouri, Minnesota, Iowa and Wisconsin.

Chesley said he hopes the case can go to trial in three to four months if a settlement is not worked out. “Our only interest is full and fair compensation for the plaintiffs,” he said.

Last week, some Minnesota farmers suggested that they might pursue their own suits against Chubb. But Janet Abaray, a lawyer on Chesley’s staff, said last week that she persuaded lawyers for the Minnesota farmers to support the class-action lawsuit.