Liberty Mutual hires 9/11 mediator to resolve Gulf Coast insurance claims

Famed mediator Kenneth Feinberg, who oversaw the federal September 11 Victims Compensation Fund, will work with Boston insurer Liberty Mutual Group to resolve complex insurance claims filed by Gulf Coast residents over damage caused by hurricanes Katrina and Rita.

Liberty Mutual Group, which estimates it will suffer $658 million in losses caused by the hurricanes, has already resolved more than 80 percent of it Katrina claims and 90 percent of its Rita claims. But Liberty Mutual customers in Alabama, Louisiana, Mississippi, and Texas with unresolved claims will have the option of having their cases reviewed by an independent mediator or arbitrator through a program overseen by Feinberg. Total economic losses from Hurricane Katrina are expected to top $100 billion, according to the Hurricane Insurance Information Center, making it the most costly natural disaster in US history. Preliminary estimates of insurance losses related to the hurricane are more than $34 billion.

Liberty Mutual executives said the voluntary program will be a less costly, less time-consuming and less contentious alternative to resolving the outstanding claims through civil litigation. Homeowners will still have the option of suing over unresolved claims, but a news release issued yesterday by Liberty Mutual makes clear that the company hopes few customers will take that route.

"Homeowners from Beaumont to Biloxi and Metairie to Mobile who exercise their right to sue will line up awaiting their day in court," the release said. "And the line will undoubtedly be long: maybe years long."

As administrator of the September 11 fund, Feinberg had the task of putting a price tag on each of the lives lost in the 9/11 attacks, and received wide acclaim for his role.