Some Insured by Texas Last Resort Insurers to Receive ChecksJuly 27, 2011
According to reports, a number of homeowners insured by The Texas Windstorm Insurance Association (TWIA) will receive additional payments for their Hurricane Ike claims. Sources say the two insurers agreed to settle cases brought by state regulators over delayed payments and disputes over damaged roofs and other claims following Hurricane Ike in 2008.
Reportedly, the companies settled without admitting violation of any state regulation. Per the settlement with the Texas Department of Insurance, both TWIA and Texas Fair Access to Insurance Requirement Plan (TFAIR) agreed to provide training for adjuster and claims examiners, improve technology for tracking of claims, and strictly comply with deadlines.
After Hurricane Ike, thousands of policy holders sued TWIA which led to several state investigations into the claims handling practices of the association. Sources say a majority of the lawsuits alleged TWIA acted in bad faith, breached the policy contract, and violated the Texas Deceptive Trade and Practices Act when it denied claims, did not meet the required statutory deadlines and delayed claims, and underpaid claims. For example, some suits alleged TWIA failed to send policy holders written acceptance or rejection notices within 15 days of receiving notice they need to assess a claim.
According to the Texas Department of Insurance, 600 complaints filed against TWIA by August of 2010 and 100 complaints filed against TFAIR by April of 2010 had merit. Sources say both insurers agreed to give premium credits of 18 percent as interest of claims that were not paid within deadlines required by the insurance code.
Further, sources say the insurers also agreed to view roof shingles unsealed by hurricane winds as damaged. The winds from Hurricane Ike lifted many roof shingles and broke the seals that kept them attached to each other and prevented water from leaking. Reportedly, the TWIA and TFAIR had previously not considered loose shingles as damages in assessing claims.
Reportedly, the settlement also requires the insurers to give homeowners premium credits for roof claims that were denied without proper cause. Sources say the insurers must also pay "overhead and profit" to policy holders unfairly denied payments. According to the agreement, these payments are made for damage that probably requires the use of general contractor, even if the homeowners oversee the work themselves.
Sources say both TWIA and TFAIR must also file reports with the Texas Department of Insurance documenting which policy holders receive the additional benefits so that files where no payments were made are documented for potential auditing. Sources say policy holders owed more than their premium will get credits for the amount of the premium and checks for the surplus.
However, sources say the settlement does not include claims that have been settled previously or remain in litigation. Reportedly, officials are not able to determine how many policy holders will be affected. Sources say TWIA has grown to insure nearly 244,000 homes and businesses as private insurers have reduced or eliminated windstorm coverage along the Gulf Coast.