In the year after the enactment of a Texas law aimed at reducing the volume of lawsuits filed by property owners against insurance companies following natural catastrophes, the number of those types of disputes has dropped, according to the lobbying group Texans for Lawsuit Reform (TLR).
TLR, which backed the passage of House Bill 1774 by the Texas Legislature last year, noted in a blog on its website that the “the number of lawsuits filed each month dipped significantly” since Sept. 1, 2017, when the law went into effect.
The legislation, which was supported by the insurance industry and some Texas business groups, curtails the ability of policyholders to sue insurance companies over property claims following extreme weather events. It was crafted partly in response to the drastic increase in litigation filed against insurers following hail and wind events in Texas in the previous decade.
Among other things, HB 1774 requires notice before a suit can be filed in order to permit the insurer to address any outstanding claim issues. It also stipulates that attorneys’ fees may not be awarded if the court finds the insurer was entitled to but not provided with pre-suit notice.
In addition, the bill cuts penalties for insurers sued for offering too little money on storm claims, including wind and hail damage, while making it harder for those suing to collect attorneys’ fees.
TLR said that between Jan. 1, 2014, through June 30, 2018, 640 weather-related lawsuits were filed per month, according to data compiled by that group. Comparatively, an average of 62 new lawsuits were filed following severe weather events in the six years prior to 2012.
Because of perceived ambiguity in the law regarding the timing of filing notice of claims, some attorneys were advising clients to go ahead and file notice of a claim before Sept. 1, 2017, when HB 1774 became effective. TLR noted that in August 2017, 1,553 new weather-related lawsuits were filed in Texas.
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