A bill has been filed in the Texas Senate that seeks to curb what the authors of the legislation say is a skyrocketing number of lawsuits filed against insurers for bogus or inflated hailstorm claims.
Senate Bill 10, filed by Senate Business and Commerce Committee Chair Kelly Hancock, of North Richland Hills, is intended to combat this trend.
Supporters of the bill say increased litigation after hailstorms has led to insurers decreasing and even declining to insure homes against hailstorms in the areas with the most lawsuits.
At a legislative hearing in December 2016, Texas Department of Insurance Senior Actuary Brian Ryder summarized the preliminary findings of a TDI data call on post-storm litigation. Ryder said the data show that starting in 2012 the percentage of claims involving attorneys or public adjusters has increased in some areas. On average, that involvement has led to higher payments in such cases and longer settlement times.
However, at the same Dec. 1, 2016, hearing, opponents of legislation to limit policyholder lawsuits argued that while the data show there may be a problem in some areas of the state, the trend is by no means statewide.
Joe Matetich, with the Office of Public Insurance County (OPIC), told lawmakers that TDI’s preliminary data shows 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.
Both Matetich and Bryan Blevins, with the Texas Trial Lawyers Association, asserted that if the experience of Hidalgo County in 2012 was removed from the analysis, the data would show that between 2012 and 2015 claims payouts actually came in below the 15-year average.
Texas Gov. Greg Abbott weighed in on the subject in his 2017 state of the state address. 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 on his desk legislation “that limits abusive hailstorm litigation.”
In announcing his bill, Hancock said that barratry, the practice of inciting clients to sue companies, is at the heart of the problem.
“Essentially they’re stormchasers who partner with unethical roofers and public adjusters and recruit homeowners to file unnecessary lawsuits instead of moving through the standard insurance claims process,” he said .
Another factor contributing to the surge in hailstorm litigation is that insurers can be sued separately under two different sections of state law, potentially doubling the number of suits and damages paid by a losing insurer, according to Hancock.
Hancock’s bill would bar attorneys from collecting fees if an insurance company can prove barratry, and clarifies that a suit can only be filed through one of the two related sections of the state code.
It also gives an insurance company 60 days’ notice before a lawsuit progresses so that they can have a chance to remedy the issue with the home owner before they get to court and prohibits filing suit against a claims adjuster personally.
Hancock was joined at the press conference by Lt. Governor Dan Patrick, who directed the Business and Commerce Committee to study this issue last year. Patrick also assigned the bill one of his specially reserved low bill numbers to reflect the priority he places on the issue.