Prime Insurance Company Prevails in Case Against the State of Mississippi

On February 1, 2023, Prime announced that the Mississippi District Court entered an order dismissing the ill-advised lawsuit against the firm. Prime Insurance Company, a leading provider of innovative liability solutions for specialty risks, prides itself on protecting, and fighting for, its clients. However, in 2018, Prime was in the unusual position of having to defend itself against the State of Mississippi.

The State of Mississippi lawsuit was initiated 13 years after Hurricane Katrina. After 1,800 deaths and $125 billion in damage, with massive government response, insurance companies scrambled to evaluate and pay claims to help homeowners and businesses recover from the immense calamity. Prime Insurance Company was among those firms.

Prime paid out some $10 million in claims to Mississippi insureds yet had received only about $2 million in premiums from those clients. Yet nearly 13 years after the disaster, after all claims were resolved to everyone’s satisfaction, plaintiff attorneys, hired by politicians and paid on contingency, descended on the insurance industry demanding that the companies pay even more—with a chunk of the money collected going into the pockets of the private attorneys.

The State of Mississippi, using contracted attorneys, filed lawsuits against 12 insurance companies who the State claimed breached their obligations to policyholders affected by the Hurricane. The state claimed Prime, and the other companies should pay millions of dollars to reimburse the state for federal funding used to help the homeowners after the hurricane. The AG argued that HUD disaster relief funds were used to pay victim costs that should have been paid by insurance companies. These claims for payment to the state were without precedent and beyond all applicable statutes of limitation.

The other 11 insurance companies, despite asserting their innocence, caved in, and entered settlements, costing them millions of dollars. However, Prime refused to capitulate to what amounted to legal plunder, rejecting settlement offers and engaging in a lengthy court battle.

The Mississippi attorney general at the time also gave free rein to the plaintiffs’ bar to sue the insurance companies on behalf of the state regarding the Katrina claims already settled and paid to policyholders a decade earlier. In addition, any money collected in these lawsuits would not go to hurricane victims but would be kept by the state and the plaintiff attorneys. The money would also not be returned to HUD, which granted substantial amounts of money to the state for disaster relief.

“The state initially demanded $6 million from Prime,” says Rick J. Lindsey, Chairman, CEO & President of Prime Holdings Insurance Services. “Our attorneys negotiated it down to $150,000. But I refused to pay even that amount. I believe fervently that settling such claims is bad for everyone—for homeowners, for governments and for insurance companies.”

In its case against the State of Mississippi, Prime asserted that the statute of limitations principle(s) was abused as were contingency fee arrangements, and proper procurement practices were ignored. After a hard-fought battle that lasted five years, the Mississippi District Court dismissed the lawsuit against Prime on February 1, 2023.

“We treated our policyholders and the State of Mississippi properly throughout the Hurricane Katrina disaster and its aftermath. We are proud to be vindicated for standing up for truth and right. Standing up to bullies is always the right thing to do,” said Lindsey.

Prime Insurance Company is *Rated A (Excellent) by AM Best. Prime provides specialty lines insurance solutions across all 50 states, US Virgin Islands and Guam. Prime has offices in Salt Lake City, Utah; Chicago, IL; Naples; FL and Exton, PA.

*For recent ratings please visit www.ambest.com

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