Another mess in Texas – lawsuit claims TWIA rigged process

The Texas Windstorm Insurance Association used prices lower than market rates to estimate materials and repair costs, unfairly limited costs on roof repairs and discouraged reopening closed claims, a League City home-owner alleges in a lawsuit that includes internal TWIA e-mails and documents.

“The game is rigged from the beginning,” said Steve Mostyn, the homeowner’s attorney who obtained hundreds of documents through the discovery process. “All the parts are designed for one purpose, which was to save money and underpay these claims every way they can, not by accident nor incompetence but a systematic effort.”

Rigged from the beginning – surely not!  ( h/t observant reader and the Houston Chronicle Lawsuit says windstorm insurer rigged process)

The lawsuit alleges the insurer told adjusters to base claims estimates on an internally developed price guide — with prices lower than market — instead of pricing software commonly used by the industry.

One adjusting firm reported the market rate for roof repairs was $230 to $255 per 100 square feet, but TWIA’s price was $182, the lawsuit claims. In internal documents filed with the lawsuit, the association portrays its prices as just a guideline.

The game, as Mostyn called it,  sounds familiar, does it not?  There’s more: Continue reading “Another mess in Texas – lawsuit claims TWIA rigged process”

The best little whorehouse in Texas may have a leak in the roof

I have been involved in a lot of disputed property insurance claims in many venues over the past twenty-five years where emotions run high, but the Texas Windstorm Insurance Association (TWIA) is the blue ribbon winner in Texas for policyholders that hate how they have been treated. And, it is not just limited to the customers of TWIA. A number of independent adjusters representing TWIA are ready and willing whistleblowers in lawsuits against TWIA regarding these practices. They are upset as well.

FireShot capture #062 - 'insurance_pdf (application_pdf Object)' - images_chron_com_content_news_pdfs_09_09_11_insurance_pdfChip Merlin, who blew the cover off roof damage in Texas last March, has been reporting more about TWIA’s handling of claims from Hurricane Ike. Sop caught up with Chip in the Houston Chronicle story reported in his recent post And the beat does go on, as in the beat down of the taxpayers and the NFIP by shady insurers.

Although you Don’t Mess with Texas, apparently there is no problem with TWIA making a mess out of Texas Continue reading “The best little whorehouse in Texas may have a leak in the roof”

Merlin: Court rules them that’s got your policy have good faith obligation to investigate all facts supporting coverage, not just those that do not!

Thanks, Sop! Perfect music for today’s post on Merlin’s blog: Property Insurers Have An Obligation To Investigate All Facts Supporting Coverage.

An attorney from another law firm asked me whether an insurer is obligated to investigate facts supporting coverage in a property insurance coverage dispute. It is common for colleagues to share information and help when they can. It seems that the more one shares, the more one receives –usually with compound interest.

Although SLABBED is more often on the receiving end, our standing “share and share alike” agreement with Chip paid compound interest today:

…an insurer cannot reasonably and in good faith deny payments to its insured without fully investigating the grounds for its denial…. Indeed, in Egan v. Mutual of Omaha Ins. Co… the Supreme Court emphasized that, in order to protect the interests of its insured, it was “essential that an insurer fully inquire into possible bases that might support the insured’s claim.”

Today’s “compound interest” also includes this comment from one of Merlin’s readers:

I often wondered why we spent so much time in elementary school diagramming sentences. Now as an adjuster I have a clue.

More about the “language of Katrina litigation” later.  Now, and with a big tip of the SLABBED hat, here’s Merlin:

Currently my favorite case on the topic of an insurer’s obligation to investigate fully for facts supporting coverage (rather than facts supporting only denial) is Jordan v. Allstate Ins. Co., 148 Cal. App. 4th 1062 (Cal. App. 2d Dist. 2007). Continue reading “Merlin: Court rules them that’s got your policy have good faith obligation to investigate all facts supporting coverage, not just those that do not!”

Oh, say can you see Ike’s wind came before the sea (edited)

Anyone who still doesn’t believe hurricane surge washes away what the wind destroys need look no further Galveston Island’s Beachtown after Hurricane Ike for evidence.

"After Ike" photograph of home in Galveston Island's Beachtown
"After Ike" photograph of home in Galveston Island's Beachtown

Hurricane Ike hit Galveston Island in the early morning hours of September 13th, 2008. The sheer size of the hurricane impacted a majority of the Texas Gulf Coast, in addition to the SW Gulf Coast of Louisiana.

At the East End of Galveston Island, the hurricane delivered its fiercest winds as well as a storm surge not experienced since the devastating hurricane of 1900. Beachtown found itself in the unenviable position of receiving the dirty side of the hurricane and Ike’s relentless punches delivered from the Northeast…

Galveston Island was inundated with hurricane debris, including boats lying in the streets and esplanades….a devastating blow to Galveston Island. There were clear signs of Ike’s presence at Beachtown, as many of the streets and lawns were covered by a layer of sand brought by the storm surge.

However,most compelling was the condition in which the residences and other structures lay… largely unscathed. Signs of hurricane Ike’s impact were limited to the breakaway sections of the structures. The buildings’ structures performed outstandingly. The habitable floors remained undamaged despite the horrific forces of Ike.

FEMA and the City of Galveston require the enclosed portion of structures located below Base Flood Elevation (as is the case for coastal communities and beachfront homes) be designed to break-away with the impact of a hurricane force, leaving the main structure intact. Ground Floor breakaway materials, such as louver panel assemblies and garage doors, separated as designed.

Continue reading “Oh, say can you see Ike’s wind came before the sea (edited)”

SLABBED Daily: May 2 (weekend edition)

Unlike retiring Justice Stouter, who uses neither a typewritter or a computer, but otherwise copes with  modernity; I use both but have spend most of the morning trying to figure out how to link music to the blog.

It is not that Souter can’t cope with modernity. When the Supreme Court considered a copyright case involving the latest file-sharing methods in 2005, Souter’s opinion for a unanimous court showed a deep understanding of peer-to-peer Internet applications. It has won praise from both the legal and the high-tech communities.

No one, however, will be praising my understanding of the directions for adding music to the blog, particularly Sop.  Chalk up the addition of the “weekend edition” to the title, however, to CYA  – a combination of not much in the way of news and the time I lost fooling around with the sound connection.

Meanwhile, the SLABBED Daily quietly continues with Floodwall builders can’t be sued for Katrina failure on 17th Street Canal.

The 5th U.S. Circuit Court of Appeals refused to revive a lawsuit seeking $400 billion from contractors who built a 17th Street Canal floodwall that failed during Hurricane Katrina.

The court ruled Thursday that state law protects the six construction and engineering companies from suits because more than five years passed between the time that the Army Corps of Engineers accepted their work as complete and the wall’s failure during Katrina. The floodwall that failed was completed in 1992, 13 years before the storm.

All of the coastal states would be well served to look at state laws that leave consumers without the recourse they would have under federal law.  Here’s the 5th Circuit’s ruling, compliments of the TP.

The risk in looking at state law, however, is that the result will make things worse.  Texas provides a current example.   Some, as you will see, are pushing for $300 million to $500 Continue reading “SLABBED Daily: May 2 (weekend edition)”

Merlin blows cover off roof damage in Texas

My wish is that somebody is going to read this Blog, call or write TWIA, and let them know that they need to write all their policyholders to alert them that the memo is wrong. However, my guess is that they will hire an attorney, and try to defend or explain the memo. (Chip Merlin)

I must admit to having similar thoughts about posts on SLABBED when I see a case lost for lack of information readily available to a non-lawyer researching the issue.  Frankly, I hold out virtually no hope of any insurer ever admitting to and correcting an error.  The field appears to be dominated by leaders who view themselves as Mr. Always Right.  Eager to shake the label “bureaucrat”, leadership of publicly funded windpools and other “last resort” options quickly forget such programs exist because of a related failure in the insurance industry and eagerly become “one of the boys” – a lapse that IMO is resulting in an overpopulation of these Mr. Rights commiting every possible wrong.

Merlin’s wish would be my command if I had such power; but, alas, I have only the power to join him in wishing  for a good outcome from his effort and, in the absence of a magic wand,  cross-post  The TWIA Roof Damage Memo: Checking Basic References to Resolve Adjustment Questions that contains a link to his equally excellent Internal Texas Windstorm Roofing Claims Memo Explains Damage is Not Covered.

The post from this morning, Internal Texas Windstorm Roofing Claims Memo Explains Damage is Not Covered, raised a number of interesting methods to research this coverage issue. Many risk managers and public adjusters will simply call me to get a quick opinion regarding many day to day coverage issues. I thought it might be interesting to see what adjusters may have in their basic training materials to answer the questions raised in the memo. I have no idea if the TWIA claims executives looked at any reference materials. I hope they authored the claims memo in ignorance, because the opposite poses a different set of problems. Continue reading “Merlin blows cover off roof damage in Texas”

Merlin’s blog cookin’ with news of Ike claims handling – SLABBED brings desert

Chip Merlin has been cooking on all burners and dishing out news of Ike claims handling faster than I could digest and link  Dig into this big spread – we were all invited – and then I’ll put out a little desert.

If you want to find a bunch of irate policyholders with plenty of stories to tell, hang out with Tina Nicholson and Javier Delgado in our Houston office. Commercial and residential policyholders have had enough frustration trying to do it themselves and are seeking legal counsel to fight the delays and denials from their insurance carriers. Anger at the insurance company and the adjusters working their claim is the prevalent emotion. Continue reading “Merlin’s blog cookin’ with news of Ike claims handling – SLABBED brings desert”

Merlin: The parable of Hurricane Ike insurance claims!

and the moral of this story is…

My good buddy, Tom Grail, told me the parable of Hurricane Ike Insurance Claims. To appreciate this, one must first understand that the total loss structures in Galveston and Bolivar receive uniform estimates of wind damage from the Texas Windstorm Insurance Association (TWIA). The amount of damage caused by wind for nearly every structure is approximately 11%. The reports are virtually identical for every total loss structure, despite differences in the age of the structure and quality of construction.

The parable is a story of two men, Larry and Moe, who were on the peninsula when Ike hit. Larry was struck by a flying 2X4 launched by the wind, then, when the surge came, he grasped a floating timber and made it to safety. He was treated for his injuries, estimated at 11% of his being.

Moe was not so lucky. He was killed instantly by a flying TV set. The storm surge subsequently swept his body away.

The medical examiner compared Moe’s corpse to Larry. After taking several months to consider the situation, the examiner declared that Moe was only 11% killed by wind, because that’s what happened to Larry. He opined that 89% of Moe’s death must have been due to flooding.

Merlin goes on to add: Continue reading “Merlin: The parable of Hurricane Ike insurance claims!”

Speaking of lobbying – NFIP pays insurance company legal fees in flood claims disputes!

We are pleased to transmit to you the Federal Insurance Administration’s (“FIA”) new Guide for Write Your Own Counsel. This Guide provides important information on the policies and procedures to be followed by Write Your Own Companies (“WYO Companies”) and their counsel in litigation involving the National Flood Insurance Program (“NFIP”)…

Since the inception of the WYO Program in October 1983, defense of lawsuits based on the SFIP has generally been handled smoothly and effectively. We stand ready to continue to offer support to WYO Companies in all litigation matters concerning the NFIP in our ongoing spirit of partnership.

Can you believe it? I can not – but google search results for “NFIP litigation” offered a copy.

This Guide for Write Your Own Counsel (“Guide”) has been developed by the Federal Insurance Administration (“FIA”) and the Federal Emergency Management Agency (“FEMA”) Office of General Counsel (“OGC”) to assist Write Your Own (“WYO”) Companies and their counsel defending National Flood Insurance Program (“NFIP”) litigation.

So much for thinking it is the deep pockets of the insurance industry that put most NFIP policyholder-plaintiffs at a financial disadvantage in litigation – those deep pockets are in Uncle Sam’s pants!

The FIA and WYO Company share a unique and common interest in the defense of cases related to the NFIP. Among other factors that give rise to this shared interest are the fiduciary responsibilities of the Company, the statutory and regulatory basis for the NFIP, the Federal government’s administrative and oversight responsibilities for the program, the need to share privileged information, and the fact that Federal funds are at risk. Accordingly, through the Arrangement, the FIA and the WYO Company have entered into a joint defense agreement to implement FEMA’s oversight responsibilities for the purpose of any litigation related to or arising under the NFIP to enable the free flow of information between the FIA, FEMA OGC, the WYO Company, and its legal counsel.

“Unique” is not exactly what I’d call the the government’s “common interest” with the insurer defendants in Katrina litigation.  I wonder if Judge Senter had a better word in mind in the “opinion” he would not “venture” in his December 12, 2008 Order in Gagne v State Farm. Continue reading “Speaking of lobbying – NFIP pays insurance company legal fees in flood claims disputes!”

Hurricane damage claims score before start of today’s Bills v Patriots game

A windstorm playing in today’s game between the Buffalo Bills and New England Patriots provides data on wind damage at various speeds without any associated hurricane bias.

Winds gusting up to 75 mph tore a strip off the Bills’ practice fieldhouse and tilted both goal posts inside Ralph Wilson Stadium prior to Buffalo’s game against the New England Patriots on Sunday.

Though the blustery conditions aren’t expected to delay the start of the 1 p.m. game, work crews used ropes and a forklift to re-secure and re-center the goal posts, which shook heavily in the wind.

Very strong gusts occurred at about 8:30 a.m., when they tore a strip 2 feet wide and more than 50 feet long off the metal roof of the 12-story fieldhouse across the parking lot from the stadium. There was damage reported inside the facility, but no one was injured. Pregame events inside the fieldhouse were canceled.

The winds also tore off part of a goal post on the Bills’ outdoor practice field next to the fieldhouse…

(emphasis added)

Advocates for putting the Saffir-Simpson Scale to rest will, no doubt, find more reliable data from windstorm damage reports – mindful, of course, that scientifically speaking, windstorms are wind-only winter-weather events.

A recent article in the Houston Chronicle noted support by some scientists to replace the Saffir-Simpson Hurricane Scale with other more accurate measures of hurricane destructiveness. It is about time. Continue reading “Hurricane damage claims score before start of today’s Bills v Patriots game”