Days after a $545 million settlement was announced that would resolve a long-standing nationwide class action against Farmers Group Inc. for alleged overcharges, the plaintiffs may have hit a snag: a lack of consensus as to whether the arrangement is a good deal for class members.

The disagreement centers on whether the defendants, including Farmers parent company Zurich Financial Service Group, could indirectly retain any of the $455 million payout that goes uncollected. Attorneys involved on Friday could not agree on whether the settlement mechanism ultimately puts money back in the insurance company's coffers.

One leading consumer advocate, who worked on the sidelines of the case, said he will object to the proposed settlement because the deal as it stands would fail to compensate policyholders. Rather, the arrangement would let the insurer "benefit from its own misdeeds," said Harvey Rosenfield, founder of the Santa Monica-based Consumer Watchdog.

Rosenfield, who worked on an amicus brief related to the lawsuit when it was up on appeal several years ago, said the problem is the settlement gives the insurer control of unclaimed funds.

The proposed deal requires plaintiffs to fill out formal claims for their money, which could average $35 per person. There are an estimated 13 million affected policyholders nationwide. Any unclaimed money would go to the insurance exchanges, which are owned by Farmers policyholders but go toward the administration of insurance rather than directly to consumers. Rosenfield said statistics show the majority of claims go unanswered when the amount per person is so meager.

"The exchanges are controlled by the management company, which is why they were able to extort these massive fees from the consumers in the first place," Rosenfield said.

Plaintiffs' lead counsel, Thomas V. Girardi of Girardi & Keese, could not be reached for comment, but his co-counsel, Philip K. Maxwell of Austin, Texas, disputed Rosenfield's assertions about where the unclaimed funds would end up.

"This is not a case where the money goes back to … the defendant," Maxwell said. "This is a very good settlement for the class."

Farmers also agreed to pay plaintiffs' lawyers $90 million for their work on the lawsuit, which was filed in Los Angeles County Superior Court in August 2003. The proposed settlement is subject to the approval of Judge William F. Highberger. A formal agreement is still in the works, Maxwell said.

The plaintiffs allege that Farmers, which managed three insurance cooperatives, overcharged holders of home and automobile insurance policies. Farmers' role was to set premiums, underwrite risks and process billing and paperwork, but not to handle claims. Fogel v. Farmers Group Inc., BC300142

A Farmers spokesman said it would honor its obligations under the settlement.

"We intend to make every effort to ensure that subscriber class members are adequately noticed so that they can exercise their opportunities under the proposed settlement to receive a benefit," said Mark Toohey, a spokesman for Farmers Insurance.

Other ways of making the unclaimed money indirectly benefit victims could be funding an independent consumer protection agency or to give a watchdog group an endowment for a few years, according to Harry Snyder, a consumer class action expert.

Snyder said the left over cash could go toward lowering premiums for affected policyholders.

"That's the bottom line," he said. "If that happens, the judge may have a justification for approving it, but if not, then I think it's questionable."