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Texas lawmakers grill TWIA on severance packages, pickup trucks, pricey meals

Tuesday, Feb 22, 2011, 07:10PM CST
By Mary Tuma

Two former employees of a state windstorm agency had to be given severance packages to ensure they would cooperate and give testimony in legal matters involving the agency, even though there was cause for termination, the head of the Texas Windstorm Insurance Association told lawmakers Tuesday.

The top lieutenants at TWIA were dismissed late last year because of "management issues," TWIA General Manager Jim Oliver said at a meeting of the state House insurance committee. The packages together were worth $160,000 in cash with one employee also receiving a 2010 Ford pickup truck, Texas Watchdog reported last week.

The severance agreements were signed last month. Reggie Warren received more than $114,000 and the truck, which he had been using at the agency, the agreement says. Bill Knarr, the former catastrophe office manager, received more than $47,000.

“Why would you take these assets of TWIA and pay one of them almost a year’s salary?” committee chairman Rep. John Smithee asked.

Oliver defended the packages as standard procedure and said the truck was a payment, just in a different form than cash.

"A severance package of this nature is very common for cooperation, for noncompete,” Oliver said. “It's not anything out of the ordinary.”

The grilling over the severance packages came as part of a wide-ranging discussion, including talk of options for restructuring TWIA and the high-end meals agency officials enjoyed during mediation of a multimillion-dollar Hurricane Ike case last year. TWIA, an insurer of last resort along the Gulf Coast, has come under close scrutiny since the 2008 storm for the way it handled cases, its payments to lawyers and oversight and financial issues.

Oliver said he could not elaborate on why the two were dismissed because it was a personnel matter. But he did say the resignations were unrelated to allegations by a plaintiff’s attorney that Warren had been offered improper gifts from adjusters, and that he had arranged for his brother to receive a pickup truck from his employer, which did claims adjusting work for TWIA.

Smithee seemed exasperated at times.

“I don't understand what it is with these trucks,” the Amarillo Republican said. “Everybody's getting a truck out of this thing.”

But Oliver said in this case, TWIA did not give away a truck. TWIA paid the company, Brush Country, a per diem for Warren’s brother’s use of a vehicle, he said.

Oliver said the gifts allegations were also not true.

"We investigated it very thoroughly, and the statements are entirely false," Oliver said. "Mr. Warren did not accept any trips. He did not accept any bribes.”

But Warren did receive a bonus in early December, Oliver revealed under questioning, just weeks before he left the agency. Lawmakers asked Oliver to compile more information about the agency’s bonuses.

Contacted previously, Warren and Knarr have declined comment and referred questions to TWIA. The agreements they signed bar them from discussing the severance package with others or speaking ill of TWIA.

During Tuesday’s hearing, lawmakers discussed the $60,000 in fees -- TWIA paid $35,000, records show -- paid to state Rep. Todd Hunter, the mediator of the Hurricane Ike case, as well as the agency's hiring of a PR firm, and questioned Oliver about whether the agency was being as transparent as it should be.

Parties to the mediation hung out at the Four Seasons and pondered dinners at Ruth's Chris Steak House, III Forks and McCormick & Schmick's, records show.

Asked about the expense of such gatherings, Oliver said that the Four Seasons came up merely because it was close to the law offices of Fulbright & Jaworski, where talks occurred. He said he used a TWIA expense account to cover his and other agency representatives’ expenses.

Oliver said a PR firm hired by TWIA in 2009 had helped educate the public, including securing advertisements, crafting brochures and helping with an education program for 4th-graders. Oliver said the agency had discovered that often the public does not know which type of coverage to buy, and that Elizabeth Christian & Associates Public Relations in Austin had helped explain the options.

The firm has been paid more than $250,000 since July 2009, records show.

"It wasn't hired to make us look pretty," Oliver said. "It was simply done to help educate the public."

He also defended how his agency initially shut out a Texas Watchdog reporter from a January board meeting that was held via conference call, declining to give out the call-in information. At the time, the agency said it could not give the reporter the call-in number because it had not been posted on the meeting notice. TWIA later relented.

“We were just being fair, is all we were doing,” Oliver told the committee. “He  took offense, because he didn't want to drive from Houston over to Austin.”

Lawmakers questioned whether the board was exercising enough oversight of TWIA.

“What does the board actually do?” Rep. Kelly Hancock, R-North Richland Hills, said.

The committee discussed options for restructuring TWIA, including bringing the agency into receivership under the Department of Insurance or outsourcing some aspects of claims management. Another option discussed would make private insurers the middle man between TWIA and its customers; the homeowner would buy insurance from a private company, who would pass on the wind portion of the coverage to TWIA.

“Because TWIA is not an insurance company but not a state agency – because it is a hybrid, it may be time we’ve reached a point to decide once and for all what we want it to look like,” Insurance Commissioner Mike Geeslin said.
Contact Mary Tuma at 713-980-9777 or

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