updated 3/8/2007 1:24:00 PM ET 2007-03-08T18:24:00

Louisiana’s state-run insurer has agreed to a mass settlement with more than 100 policyholders, a deal believed to be the first of its kind in the state since hurricanes Katrina and Rita spawned thousands of lawsuits, an attorney for the homeowners said Thursday.

Citizens Property Insurance Corp., Louisiana’s insurer of last resort, has agreed to pay about $6.6 million to 167 policyholders in Cameron Parish who sued Citizens for refusing to cover damage from Rita in September 2005, according to attorney Jennifer Jones.

Jones said 102 of her clients signed off on their share of the settlement on Wednesday. She expects at least 20 more policyholders to accept their portion of the deal on Thursday. Payments will be made within 30 days, she added.

“I know it doesn’t seem like a lot of money ... but I consider it to be a very fair offer in most cases,” Jones said, noting that some of the homeowners had policy limits as small as $10,000.

Citizens CEO Terry Lisotta confirmed that the company has made settlement offers to Jones’ clients but said he hasn’t received a final report on the terms.

“We’re working diligently to settle and resolve all claims. Not just hers. Everybody’s,” Lisotta said. “We’re stretching out to the finish line.”

Lisotta said a possible snag in the deal remains to be resolved. Citizens has balked at Jones’ push for the insurer to refund premiums that her clients have paid since Rita.

“The law says if you have coverage, you have to collect the premiums,” he said.

Jones said the negotiations over premium refunds are not a “deal-breaker” and are separate from the mass settlement of property claims.

All but a handful of the 167 policyholders included in the settlement are property owners whose homes were reduced to slabs by Rita. Jones said Citizens was intent on settling slab cases because they are among the most contentious of disputed claims.

“When there’s nothing left there, it’s difficult to prove whether the damage was from wind or water,” said Jones, who also is an assistant district attorney in Cameron, near the Texas border.

Citizens and other insurers say their homeowner policies cover damage from wind but not from rising water, including wind-driven storm surge. Rita’s storm surge extended for miles inland, damaging or destroying thousands of homes in southwestern Louisiana.

On Friday, Louisiana Attorney General Charles Foti is visiting Cameron for the first of several meetings with homeowners on the insurance industry’s handling of claims after Katrina and Rita. Foti said in a written statement that he is interested in looking at “possible discrepancies between engineering reports produced by insurers and those provided by homeowners.”

Insurance companies already have reached individual settlements with hundreds of homeowners in Louisiana who sued in the wake of Katrina and Rita, but Citizens’ agreement this week is believed to be the state’s first mass settlement of lawsuits.

In Mississippi, State Farm Insurance Cos. reached a mass settlement of lawsuits in January. The Bloomington, Ill.-based insurer agreed to pay about $80 million to settle out of court with up to 640 policyholders who sued the company over its refusal to cover damage from Katrina’s storm surge.

Jones said she is trying to negotiate a mass settlement with State Farm on behalf of about 150 policyholders in Cameron, but the talks have “bogged down” in recent weeks.

Citizens, a quasi-state agency, writes policies for home and business owners who are unable to purchase coverage from private companies. About 2,000 policyholders have sued Citizens over damage from Katrina and Rita.

Citizens has become the state’s third largest property insurer in the wake of the 2005 hurricanes, but some critics question whether the company can handle the increased workload. Citizens is overhauling its management amid revelations this week that the company has lost a year and a half’s worth of financial records due to computer glitches.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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