Insurer said to be near deal in hurricane suits

Louisiana’s state-run insurer is nearing a mass settlement with homeowners that would be the first deal of its kind in the state since hurricanes Rita and Katrina led to thousands of lawsuits, an attorney for the homeowners said Monday.

Citizens Property Insurance Corp., Louisiana’s insurer of last resort, has agreed “in principle” to settle out of court with 165 policyholders in Cameron Parish who sued over the company’s refusal to cover damage caused by Rita in September 2005, attorney Jennifer Jones said.

Jones would not specify the terms of the proposed multimillion-dollar agreement, but said an agreement could be announced by the end of this week.

Citizens Chief Executive Terry Lisotta declined to comment on the status of any settlement talks.

Homes of many of the 165 policyholders were reduced to slabs, mostly by Rita’s storm surge, Jones said.

Citizens, a quasi-state agency, writes policies for home and business owners who are unable to purchase coverage from private insurers. About 2,000 policyholders have sued Citizens over damage caused by Katrina and Rita, and Citizens still has about 5,000 open claims from the two storms, Lisotta said.

Cameron is about 200 miles west of New Orleans near the Texas state line.

Insurance companies have settled out of court with hundreds in Louisiana who sued after Katrina and Rita, but the state hasn’t had a mass settlement of lawsuits like one reached recently in Mississippi, where State Farm Insurance Cos. agreed last month to pay about $80 million to 640 policyholders who filed suit.

In Florida, meanwhile, insurance companies on Monday dropped a court challenge to a new state rule preventing them from immediately canceling some homeowners policies or raising rates.

The rule is a stopgap until a law takes effect June 1 that aims to lower property insurance rates by making it easier for companies to get cheaper backup coverage, among other things. Companies will have to lower rates in most cases, but officials worried they would increase premiums or cancel policies in the interim.