NEW YORK (Bloomberg) — Insurers sued for refusing to pay claims for homes damaged by floods after Hurricane Katrina may be in settlement talks with Mississippi Attorney General Jim Hood.Hood sued State Farm Mutual Automobile Insurance Co., the largest US home and auto insurer, Allstate Corp., the second-largest, and three other insurers last year. Yesterday, he said in a statement that he was "in discussions with several of these companies". He didn't say which companies were negotiating.

Hood's suit seeks to nullify the blocking of coverage for damage from hurricane-caused floods. More than a year after Katrina devastated the Gulf Coast, the suit threatened to increase insurers' costs beyond the $40.6 billion the Jersey City, New Jersey-based Insurance Services Office Inc. said the industry had in insured losses.