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TDI Issues Draft of Hail Litigation Report

Posted By Chris Prewit, Wednesday, November 2, 2016

An interesting article by Bill Kidd appeared in the latest issue of The Insurance Record


There is growing involvement from attorneys and public adjusters in the litigation of Texas hail damage claims. The Texas Department of Insurance (TDI) staff revealed their initial findings to the Senate Business and Commerce Committee on October 5, 2016.  Lt. Governor Dan Patrick has directed the committee to monitor “the number of lawsuits related to property claims filed as a result of multiple hailstorms and weather-related events across Texas”.  The committee was directed to examine “negative consumer trends that may result in market disruption such as higher premiums and deductibles, less coverage, non-renewals, and inability to insure coverage due to insurance carrier withdrawal from the state”.  The committee was to then make recommendations on legislative action that is needed. TDI issued a data call on May 20, 2016 to collect information on hailstorm residential property claims litigation with response due August 19, 2016.  Approximately 140 separate insurance companies submitted responses. The data highlighted the following information. Before 2012, known attorney or public adjuster representation “was about 0.4% (one in 250 claims)”. “After 2011, known attorney or PA representation was about 4 to 4.5 % (one in 22 to 25 claims), or an increase of about 10 times or 900%. The data also revealed that the rate of lawsuits increased.  Before 2012, the lawsuit rate was about 1.5 to 2% but after 2011, the lawsuit rate increased by 1,400%. The TDI warned that “the results should be considered preliminary.” The TDI’s results are based on 40,000 randomly sampled windstorm and hail claims.

 

The data also indicated a majority of claims with attorney or PA involvement are in South Texas. “South Texas accounts for 4% of all sampled windstorm and hail claims and about 53% of claims with known attorney or PA involvement” TDI reported.  Seven insurers stated that they “intentionally reduced, limited, or stopped writing policies in Texas as a direct result of increased claims litigation from weather related perils.”  Two of those companies also opted not to renew policies.  Counties affected include Hidalgo, Maverick, Potter, Randall and Webb. One company increased its minimum wind deductible for new business policies statewide. “Twelve companies stated that they have increased rates for residential lines of insurance as a direct result of claims litigation” TDI Reported. TDI plans to finalize its analysis before the 2017 legislative session.

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