State Farm seen near deal on Katrina claims

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While a settlement deal with State Farm hasn't been completed, people with knowledge of the talks said both sides were nearing an agreement that could be worth hundreds of millions of dollars to tens of thousands of State Farm policyholders in Mississippi. The Mississippi settlement would not involve any claims filed by State Farm policyholders in Louisiana or Alabama.

State Farm agreed "in principle" to pay an undisclosed amount of money to more than 600 policyholders, including Republican Sen. Trent Lott, who sued State Farm after the storm, according to the people with knowledge of the negotiations. All the policyholders are represented by a legal team led by high-profile attorney Richard "Dickie" Scruggs.

An agreement also could benefit thousands of other Mississippi State Farm policyholders who haven't sued State Farm.

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A "class action resolution" component of the proposed deal calls for the company to review the claims filed by roughly 35,000 policyholders who live in Mississippi's three coastal counties but didn't file lawsuits against State Farm for refusing to cover storm damage.

After reviewing those claims, the company would be required to make new offers, and any disputes would be heard by an arbitrator whose decision would be binding.

State Farm would pay a minimum of $50 million (euro38.44 million) to these policyholders after their claims are reviewed, but the company could end up paying hundreds of millions of dollars more than that because there wouldn't be a cap on the amount, the people with knowledge of the talks said.

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