Just a quick rule of thumb that I tend to go by; when representatives for FIRE industries (Finance, Insurance, and Real Estate), try to tell me that something they are doing is for my benefit, I assume they mean it in the same manner that punching them in the face to keep their sinful mouths from lying would also be for their benefit. That’s how I feel when looking at this steaming, festering, pile of pig slop straight from the wind and hail beaten plains surrounding Amarillo, Texas. Senate bill 1628, which passed 21-10 last week and is being debated in the Texas House of Representatives, is a measure geared toward protecting insurers against fraud, especially surrounding hailstorm damage in the panhandle. Panhandle is the correct word for it, because upon further review, the bill is another attempt to swindle consumers out of justice in the name of “lower premiums for everybody.”
Among other provisions in the bill, it will allow individual insurance employees and contractors to be dismissed from lawsuits if the insurer assumes the liability. This is quite significant because it allows out-of-state insurers to push cases with disputes over $75,000 into federal court. According to insurance attorney, Mark Kincaid, who represented the Texas Trial Lawyers Association in fighting the bill, “It takes about twice as long to get to trial in federal court as it does in state court, and delay causes people with financial need to give up and settle cheaper.” The bill also creates additional pre-suit notification requirements for plaintiffs as well as exempt insurance companies from penalties for paying claims late that are under dispute. Kincaid does agree that measures to cut down on “illegitimate case running” by public insurance adjusters to be the one beneficial provision of the bill; however he says that the other elements to the sweeping legislation will make it harder to dispute legitimate claims in order to prevent fraudulent ones.
Bill author, Sen. Larry Taylor (R-Friendswood) believes that insurance companies are being victimized by excessive litigation, especially in the panhandle area where severe weather events are common. The measures are an attempt, according to Taylor, to reduce fraudulent lawsuits. Defending his bill, Taylor says, “At the end of the day, when we look back at it, this is going to benefit consumers. We have to do something to slow down the lawyers who are filing thousands of hail damages cases.” Massive hailstorms in the area, especially near Hidalgo Country between 2012 and 2013, have led to several thousands of claims, many leading to disputes between insurers and policyholders. Many of these disputes reach the courtroom, with over 10,000 cases alone after hailstorms in the panhandle in 2012. In the insurance industry, the rate of claims that go to litigation generally range around 2 percent, yet some insurers litigation rates were around 20 percent during this time. Kincaid notes that the case running portion is the only part of the heavily amended bill that even addresses hailstorm claims.
Hail declined to comment on the allegations of fraud, but Dallas Morning News columnist, Jim Mitchell, put the bill into perspective:
“Your dog runs through your screen door and you expect your insurance company to pay for the door. That is an abuse of insurance. Bad apple roofers, adjusters and lawyers gin up excessive litigation. That also is an abuse of insurance.But when there is a truly catastrophic event, a hail-damaged roof, for instance, homeowners must have an avenue of recourse if they feel that their insurer is shortchanging them.”
As the owner of an Amarillo roofing company, Greg Norton knows the difficulty of dealing with insurers after the hailstorms, “We’re still seeing the damage of 15 – 20% residential, however in the commercial side of it, we’re seeing an extremely high number of claims remaining unpaid, denied or in the argument phase and numerous of those are now going to lawsuits, and this is what the insurance carriers beef is — that we’re suing them.” So, an old story is coming to light again. Insurance companies don’t want to be held to their assurances, so it’s everybody else’s fault. Maybe some cases are fraudulent, but having been a 10-year Florida resident, I have seen this excuse all too often. As Mitchell correctly notes, “Texas remains a profitable state for insurers despite the state’s location in the eye of Mother Nature’s hurricanes, tornadoes and hailstorms. In other words, we don’t have an insurance crisis in Texas because insurers still see this as a highly profitable market with pro-insurance regulations and healthy profit margins.” The only real disaster is the use of an unfortunate natural catastrophe to give insurance companies even more leverage against the people they
ABC7 News – Steven Graves
Dallas Morning News – Jim Mitchell
Texas Lawyer – Angela Morris