The stalling insurance negotiations between Farmland and a coalition of eight insurers has drawn attention from the state government.

Tuesday, April 16, 2002

The stalling insurance negotiations between Farmland and a coalition of eight insurers has drawn attention from the state government.

The Minnesota Department of Commerce has started reviewing Farmland’s insurance policy to find out if there are any problems regarding the insurers’ move to delay the settlement.

&uot;This is a process before the agency initiates a formal investigation,&uot; said Department of Commerce Communications Director Bruce Gordon. &uot;If we recognized any violations in light of the Minnesota insurance law, we would formally file.&uot;

Gordon said the agency has gotten involved in the case based upon a claim by Farmland.

Farmland officials met with representatives of the department and updated them on the status of the settlement negotiation. The agency asked for a copy of the insurance policy and other evidence to see what legal provisions are included in the contract.

Farmland would not comment on the details of its allegations. But it is obvious that the company is insisting that the insurers are willfully delaying the payment of insurance proceeds.

The dispute is over the evaluation of the damage caused by the fire at Farmland’s Albert Lea plant on July 8 last year.

While Farmland claims the plant should be deemed a total loss and has been asking for more than $80 million, the insurers argue that the buildings can be restored and have been offering only about $30 million.

Minnesota statutes provide a standard for a fire-insurance policies with which insurance firms are required to comply, and penalties for a violation. It also includes a provision for an arbitration procedure in case parties disagree with each other over the cash value of a loss.

But at this moment, it is uncertain how far the state regulatory authority would intervene in the dispute.

Farmland has announced that it hopes to begin construction on a new Albert Lea plant next fall. But the company’s final decision is still contingent on the full payment of the insurance proceeds.

Rep. Dan Dorman, R-Albert Lea, who has been helping Farmland contact the state government, believes the agency will examine the right of Farmland as an insured party to receive a timely payment.