Demise of Windstorm Association Overhaul Leads to Special Session in Texas

June 6, 2011

Texas lawmakers were unable to come to terms on an overhaul of the state-backed insurer for property along the Texas coast, so they’ll return to Austin in July to try again. Their failure to deal with school finance, however, means they had to reconvene on May 31 for a first special session.

The last day of the regular legislative session was May 30.

One obstacle to Texas Windstorm Insurance Association (TWIA) reform is whether policyholders whose claims are denied can win punitive damages if they challenge the decision and win.

The Senate plan would allow punitive damages. Lawyers lobbying for the bill want the rate at 18 percent per year, but Texas Gov. Rick Perry said he “won’t be party” to trial lawyers using the quasi-agency like an ATM.

“It’s all about the money,” said Republican Sen. John Carona, one of the lead negotiators on the measure.

TWIA, the primary insurer for wind and hail in 14 coastal counties, was overwhelmed with claims from Hurricane Ike in 2008.

Rep. John Smithee, R-Amarillo, introduced House Bill 272, which would change the rules on filing lawsuits against the agency in order to save it money. Smithee has said the Senate-added amendments to his bill are unacceptable.

Gov. Perry has made lawsuit reform a major issue, and Smithee said Perry told him he would call a special session on July 15 if the bill did not pass.

Under the proposed bill, an insured person could only claim an amount limited to the maximum amount of the policy, with no opportunity to win punitive damages against the association if the matter ends in a lawsuit.

Topics Catastrophe Natural Disasters Texas Windstorm

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