Editor’s Note: Mississippi in perspective

The insurance industry will be faced with irate policyholders and on-going court costs-the insurance companies involved, however, have deep pockets and aren’t about to back down without a fight.

After the federal court decision to pass the Mississippi flood vs. wind damage case back to state court, attorneys on both sides began lining up and preparing for what could become a long and hard-fought battle.

Richard ‘Dickie’ Scruggs must have reacted with glee when he heard that the lawsuit had been remanded back to a local court level.

Jim Hood, Mississippi Attorney General, praised the action and said that since the state is seeking injunctive relief, the case will be expedited.

The sad thing here is that both Scruggs and Hood claim they initiated and are carrying through with the case due to a “desire to serve the public.”

No way! The most efficient way to serve the public would be for them to carry out established procedures to mediate their claims.

The Insurance Commission recently issued a report on Mississippi claims showing 89 percent of the cases submitted had been successfully mediated. The procedure works and after mediation, the so-called “victims” will be able to go on with their lives.

On the other side of the coin, if Scruggs and Hood have their way, and if their lawsuit is heard this year, they won’t accomplish anything.

Insurance industry attorneys, I’m sure, have already begun to prepare to take the issue of which jurisdiction the case falls into, right back to the Appeals Court. Their position, and a logical one, will be that since the issue is wind vs. flood, and since flood insurance is a federal issue, battles over wind vs. flood are being tried in the wrong arena.

Judging from recent cases in which Scruggs was involved – most noteworthy, tobacco and asbestos – proceedings could drag out for years. The only ones set to benefit from them will be Scruggs and Hood.

The public, in the meantime, won’t buy their crusaders’ claims to sue instead of mediate, forever. After the cases drag on-and-on and are passed from court to court, their patience is going to run out-it will be Scruggs and Hood that will, in the end, pay the penalty.

When Hood heard the suit was coming back to state court, he immediately issued a statement saying the lawsuit “seeks to make the insurance industry honor their contracts to pay for losses caused by Katrina, particularly their attempt to exclude damage caused directly or indirectly by water, whether or not driven by wind.”

The issue here is not only damage done by Katrina, but how much water insurance policy contracts and other similar contracts hold in state courts. No wonder insurance companies have dug-in-their-heels. If Hood succeeds with this suit, the long-range effects could be to invalidate other insurance industry contracts AND, just as important, standard contracts common in a wide variety of other businesses.

In the meantime, the insurance industry will be faced with irate policyholders and on-going court costs. The insurance companies involved, however, have deep pockets and aren’t about to back down without a fight.

Everyone involved can expect testimony to drag out for years in both state and appeals courts. Neither policyholders nor insurance companies should expect a final decision for a LONG time.