Altering Insurance: Texas Lawmakers take aim at Hailstorm Claim Litigation
Kimberly Reeves | Austin Business Journal
January 26, 2015
Texas lawmakers tend to tinker in one new area of insurance each session, and in 2015 the target appears to be how hailstorm damage claims are being resolved.
Hailstorm claims rarely seem to rise to the level of Hurricane Ike, but the insurance industry is agitated nonetheless over the slew of claims that ended up in court after major storms in Amarillo and McAllen. A new trend involves taking hailstorm claims to court, one that Sen. Larry Taylor, R-Friendswood, and other lawmakers are not too happy about.
The hailstorm that got the industry's attention occurred in McAllen on March 29, 2012. Mark Hanna of the Insurance Council of Texas said the storm resulted in $250 million in insured losses. Before the two-year statute of limitations was up, 40 percent of all claims were filed in Hidalgo County court for litigation.
That litigation doubled the cost of the storm, and that was enough to put it on the radar of key lawmakers who carry insurance bills each session. Taylor, an independent insurance agent who wrote the bill to reform the practices of the Texas Windstorm Insurance Association, describes it as the "Ike model," noting that by the time the 2008 claims from Hurricane Ike were resolved in court, the cost of damage had risen from $1.5 billion to $2.7 billion.
Taylor said the hailstorm issue isn't much different than the overhaul of the insurance code in 2003 after a $32 million jury verdict in a toxic mold claim. The bill for hailstorm reform has yet to be filed but is anticipated by industry.
"Property claims are not about pain and suffering and agony. We're talking about putting a wall back up, or a roof back on a house," Taylor said.
Hanna said the options being discussed to resolve the hailstorm issue could include one of the following: to put a limit on the timeline to file claims; to model the process for windstorm claims and force cases initially into into mediation; and, possibly as a last resort, to overhaul sections of the insurance.
Friday's weekly print and digital edition of Austin Business Journal will take a deeper look at the top insurance issues this session as well as ongoing concerns over the Texas Windstorm Insurance Association— plus a campaign by workers compensation provider Texas Mutual Insurance to cut its ties with the state.