In Texas, Insurance Companies Say They’re Victims Of Storm-Chasing Lawyers

Insurance companies say there are too many lawsuits over claims, but one skeptical senator asks, don’t insurance companies make money by denying claims?

By Dave FehlingOctober 10, 2016 9:40 am,

From Houston Public Media:

Some people in the insurance industry say ever since Hurricane Ike in 2008, they’ve become victims of abusive lawsuits.

“The lawsuits that we receive — I’ve been served over 400 times since Hurricane Ike — they’re boilerplate. They’re all the same, the allegations are the same,” said Tim Maloney, an insurance adjuster from North Texas testifying to a Texas Senate committee looking into how the industry handles claims for storm damage.

Insurance companies said lawyers learned from Ike how to swoop into neighborhoods following a bad storm and convince homeowners they’d been under-paid for wind or hail damage.

“The only reason I can see for that is because the law is so favorable here, that almost every (lawsuit) claim is profitable,” testified Greg Farnik, a lawyer with an insurance company in Dallas.

“This is a statewide problem,” Paul Solomon told senators.

Solomon is a lawyer for State Farm, a company that last year agreed to refund millions of dollars in premium over-charges to Texas homeowners. Sen. Kirk Watson, a Democrat from Austin, referred to the settlement in questioning Solomon and said the insurance industry should be careful about complaining that it’s a victim of Texas laws.

“So before you declare the entire name of the game, let’s be clear that the way you make money is by collecting premiums and not paying. The perfect deal would be to collect premiums and never pay a claim, right? (Solomon) I disagree, because if we did that we wouldn’t be in business. People wouldn’t want to use us. (Watson) Well, pay as few and as little as you can is the name of the game at State Farm, (Solomon) I would disagree with that also, I think that’s a mischaracterization of what we do.“

Under questioning by senators, Solomon said many of the storm damage lawsuits seek about $65,000 and eventually settle for $15,000 to $20,000. He said in the rare cases when the lawsuits actually went to trial, the insurance company was found to owe nothing in about half the cases.

The senators on the Committee on Business & Commerce will consider recommending curbs on so-called frivolous litigation when the full legislature meets this January.