State Farm Trying to Improve its Image After Hurricane Katrina

Representatives of State Farm Insurance Co. are on a media tour in Mississippi to give a more positive image to the company as it and others in the industry fend off lawsuits filed in the aftermath of Hurricane Katrina.

Mike Fernandez, State Farm vice president of corporate communications, said the insurer has closed on 84,760 homeowner claims in Mississippi and paid out more than $1 billion. Nationwide, State Farm closed more than 295,000 Katrina homeowner claims, he said.

“Somehow that gets lost,” Fernandez told The Associated Press on Aug. 14.

The Bloomington, Ill., company makes up 30 percent of the Gulf Coast market and is one of the few major insurers that has been growing in the state “despite the atmosphere we’re in,” Fernandez said.

Mississippi Insurance Commissioner George Dale said State Farm’s public relations campaign should have begun last year after the storm nearly turned the Gulf Coast into a wasteland.

“They’ve done the poorest job of PR than any I’ve ever seen,” Dale said. “There are untold hundreds of people who have been paid by State Farm, but they’ve allowed the ones that didn’t get their claims paid to paint them with the same brush and they did nothing to try to offset that.”

The insurance industry was stung by criticism in the months after the storm. Hundreds of people claimed they didn’t receive enough compensation or that agents didn’t adequately explain the kind of damage the policies covered.

State Farm and other insurance companies are closely watching a groundbreaking case in Mississippi.

A federal judge ruled Aug. 15 on a Pascagoula couple’s lawsuit that challenges Columbus, Ohio-based Nationwide Mutual Insurance Co. for refusing to cover damage from Katrina’s storm surge. Nationwide claims its policies cover damage from wind but not from water, including wind-driven surge. Attorneys for the couple contend the policy terms are ambiguous and cannot be enforced. The judge upheld the flood exclusion in Nationwide’s policy.

State Farm has about 200 lawsuits pending against it, with 125 of those filed in Mississippi, Fernandez said. The lawsuits stem from class-action litigation, coverage issues and claims over agents’ performance, Fernandez said.

Fernandez said despite the lawsuits, “We are in this marketplace and we are in this marketplace to stay. This is a relationship business.

“We probably should have come visited with you and visited with others in the news media at some earlier time, but these folks were too busy doing their job.”

Dale doesn’t think an earlier public relations campaign on the part of State Farm or other insurance companies would have prevented the barrage of lawsuits against the industry.

He said the public should be aware that State Farm had adjusters who drove from north Alabama to Mississippi after the storm and slept in their cars when they weren’t processing claims.

Dale also said Farm Bureau Insurance Co. sent an 18-wheeler filled with gasoline to south Mississippi so its adjusters would have fuel in their cars to handle claims.

“Those type messages have never been told and finally one year later they’re telling the industry side of the story,” Dale said. “Some of the other insurance companies were waiting for me to carry their water and tell their story, but I wouldn’t do it.”

After Hurricane Camille hit the Gulf Coast in 1969, the insurance industry tried to improve its image by creating the Mississippi Insurance Council, Dale said. He said the council spent money on such programs as scholarships and arson rewards to law enforcement agencies.

“In the last three or four years, the council became somewhat inactive, but it probably should be reactivated,” Dale said.