Insurance Industry-Backed Storm Damage Bill Passes Texas House

The passage in the Texas House of a bill limiting liability for property insurance companies sued by policyholders following weather related events has given the insurance industry, which lobbied strongly for the bill, reason to celebrate — at least for now.

House Bill 1774, Rep. Greg Bonnen, R-Galveston, was approved on May 5 by a 92-55 vote. The Associated Press reported that the bill cuts penalties for insurers sued for offering too little money after claims involving storms, including wind and hail damage. It also makes it harder for those suing to collect attorney’s fees in such cases.

The legislation sent to the Senate is also backed by tort reform advocacy groups, including Texans for Lawsuit Reform, which have long worked to limit jury awards against business and the medical professions in civil lawsuits.

A companion bill, SB 10, was introduced in the Senate earlier in the session.

In a statement released by the American Insurance Association (AIA), the insurer trade group’s Southwest region vice president, Fred C. Bosse, said the bill would curb lawsuit abuse related to hailstorm litigation. In order to allow an insurer to address any outstanding claim issues, the bill requires that the insurer be notified of a lawsuit before one can be filed.

“AIA applauds the Texas House’s passage of HB 1774, which seeks to end weather-related lawsuit abuse. This bill contains common sense reforms that will end abusive and unnecessary lawsuits. Hailstorm-related lawsuit abuse only hurts policyholders and is creating an insurance claims crisis in parts of Texas,” Bosse said.

Bosse added that the AIA would work with Texans for Lawsuit Reform and the business community to advocate for the bill’s passage in the Senate.

Not everyone is happy about the measure. Opponents say it tilts the power too far in favor of the insurance industry.

According to a press announcement from the consumer advocacy group, Texas Watch, HB 1774 “slashes penalties for property insurers that wrongly delay weather-related claims, pushes cases into federal courts where it takes twice as long to receive justice, and threatens access to justice by increasing costs, delay, and risk for those wronged by insurers. The bill has broad application beyond hail claims and would impact millions of Texas property owners if signed into law.”

The Texas Tribune reported that Rep. Ken King, R-Canadian, expressed skepticism about the measure’s true intent. In the beginning the House and Senate bills were aimed at addressing post-hailstorm litigation but were later revised to include all weather-related damages. According to the Tribune, King introduced an amendment that would have “limited the bill’s reach to litigation as a result of hail damage.”

A separate King amendment “would have restricted its impact to residential properties.” Both amendments failed.

The insurance industry lobbying group — Texas Coalition for Affordable Insurance Solutions (TCAIS), which represents major homeowners insurance companies in Texas — praised passage of bill, which it says “provides common sense reforms to curb hailstorm claims lawsuits and protect access to insurance coverage for all Texans.”

The insurance industry tried but failed during the 2015 legislative session to pass a similar bill. But this year the push for the legislation began with Gov. Greg Abbott, who said in his Jan. 31 state of the state address that lawsuits against insurers following hailstorms were “the newest form of lawsuit abuse.” He also said he wanted to see on his desk legislation “that limits abusive hailstorm litigation.”

Abbott said past tort reforms in the state are one of the reasons why Texas is an attractive place for business. But, he said, “our work is not done” without hailstorm litigation reform.

The trend of increased property litigation following hailstorms in Texas can be traced back to a couple of hailstorms that occurred in Hidalgo County in 2012. Following the 2012 storms, more than 6,700 lawsuits were filed in the county against property insurers. The county, which edges the border with Mexico inland from the Gulf Coast, has a population of around 816,000 and includes the city of McAllen.