“Everyone talks about the weather, but nobody does anything about it,” said Mark Twain (or Charles Dudley Warner). The Texas Legislature has now undertaken the task to do something about it, but there is no agreement as to how that can be accomplished. So far, the debate has produced only wind.
The Texas Windstorm Insurance Association (TWIA) is a quasi-governmental agency that provides hurricane insurance to Texas coastal residents who cannot otherwise procure it in the private insurance marketplace, TWIA, originally intended to be the insurer of last resort, has evolved into being the only available provider for many.
Critics of TWIA say that it regularly mishandles claims, leaving insureds no recourse but to bring lawsuits to collect benefits. Others say TWIA can afford to pay claims for actual damages, but cannot afford burdensome penalties and treble damages that current law permits. For itself, TWIA says that it has cleaned up its act.
Yesterday, the senate passed a bill that would reform TWIA. The senate bill would amend the windstorm statute to eliminate existing remedies for treble damages and an 18% penalty for a wrongful delay or denial of a claim, but would allow a remedy for double damages and consequential damages.
The House has also passed a TWIA reform bill that would eliminate all extra-contractual remedies.
Talking about the differing approaches of the reform bills, Senator Carona and Representative Smithee agree on one thing: the other chamber’s bill is not acceptable. Smithee says TWIA cannot further shoulder the burden of extra-contractual remedies. “If that’s really what he wants to do, then we have a fundamental disagreement that is probably not reconcilable,” Smithee said. Carona defended the fairness of the senate bill, saying that he would defend it against any attempted changes by the house. Said Carona: “My summer plans are flexible…I am prepared for one hell of a fight.” Only a few days are left in this first special session.
The house bill enjoys support from Governor Perry and Texans for Lawsuit Reform. The senate bill is supported by consumer groups and the Texas Trial Lawyers Association.
Undoubtedly, the stakes are high. The 2011 hurricane season began on June 1 and will end November 30. NOAA predicts above normal hurricane and storm activity this year, warning there is a 70% chance of up to six major hurricanes, 10 “regular” hurricanes, and 18 named storms. There is a 48% chance of a least one landfall in Texas.
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Chamberlain♦McHaney, with offices in Austin and San Antonio, handles all types of civil litigation throughout the state. The firm is A-V (highest peer review) rated by Martindale-Hubbell (Bar Registry of Preeminent Lawyers) and is listed in A.M. Best’s Directory of Recommended Attorneys. For information regarding our areas of practice and a list of representative clients, please visit: www.chmc-law.com.
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We will cover this and other important developments at our full day, full accredited 16th Annual Ultimate Claims Handling Seminar on October 7, 2011 at CityPlace Conference Center in Dallas, Texas. Mark your calendars now and save the date.