Texas Governor Deems Hailstorm Litigation ‘Lawsuit Abuse’

In his state of the state address, Texas Gov. Greg Abbott gave a boost to the insurance industry’s effort to get legislation passed that would place limits on post-hailstorm litigation.

Calling lawsuits against insurers following hailstorms “the newest form of lawsuit abuse,” Abbott said in his Jan. 31 speech that he would like to see legislation “that limits abusive hailstorm litigation.” He said past tort reforms have helped make Texas an attractive place for business, but “our work is not done” without hailstorm litigation reform.

Property insurers want laws enacted to discourage public adjuster and attorney involvement in the claims process. They say increased involvement is causing significantly higher claim costs, which will lead to higher insurance prices and fewer options statewide.

Consumer advocates, however, caution against placing restrictions that would deny policyholders the right to hold insurers accountable for errors or perceived injustices in claims handling.

“Hailstorm reform litigation is by far the number one piece of legislation that the insurance industry in Texas is supporting. We warmly welcome Texas Governor Greg Abbott’s call in his state of the state speech to put a halt to this storm-chasing lawsuit abuse,” said Mark Hanna, manager of public relations and membership for the Insurance Texas Council of Texas, which represents property/casualty insurers.

Joe Woods, vice president of state government relations in Texas for the Property/Casualty Insurers Association of America (PCIAA), said the national trade group also welcomed the governor’s comments.

“The trial bar’s strategy seems to be to deny that there’s a litigation crisis going on at all, that it seems to be a problem in isolated areas of the state. We don’t think the data backs that up. Every time there’s a storm now we expect there will be a large number of lawsuits following. So we were glad to see the governor give some emphasis to the efforts this session to reform this lawsuit abuse,” Woods said.

The insurance committee of the Texas House of Representatives on Dec. 1, 2016, held a public hearing on the findings of research conducted by the Texas Department of Insurance at the request of state lawmakers into post-hail event insurance litigation.

Summarizing the preliminary findings of the data call at the December 2016 hearing, TDI Senior Actuary Brian Ryder said while the data show that beginning in 2012 the percentage of claims involving attorneys or public adjusters had increased in some areas, it did not seem to be a problem across the state. He also noted that property insurers in the state experienced an underwriting profit of 0.6 percent between 2012 and 2015. In addition, he said competition in the property insurance market in Texas has been steadily increasing statewide for 16 years.

At the hearing, Joe Matetich, with the Office of Public Insurance Counsel (OPIC), told lawmakers that the preliminary data show that “statewide hail litigation crisis does not currently exist in Texas,” and that there “does not appear to be an insurance market problem” in the state.

Ware Wendell, executive director of Texas Watch, in a statement following the governor’s address, said: “Insurance lobbyists are again coming for Texans’ legal rights. Texans don’t want more special privileges for special interests. They want full accountability when insurers deny, delay, and underpay their valid claims. Rather than weakening existing protections, lawmakers should ensure that policyholders’ valid claims are paid in full and on time.”

On Feb. 1, TDI released its final report on the results of the 2016 litigation data call. The report affirms that insurance companies “have been able to consistently make an underwriting profit for homeowners insurance in Texas in 2012-2015.” It also shows that during that period, the “frequency of hail claims has been below the 16-year average. A period of 16 years was selected because 2000 is the first full calendar year where TDI is able to distinguish hail from windstorm claims.”

However, the report notes, hail claim costs over the last four years are 10 percent above the 16-year average.

An insurance industry-backed bill introduced during the 2015 legislative session to stem limit litigation related to property insurance claims died in the House.