in Houston, Texas

State windstorm agency’s alleged bungling of Hurricane Ike claims detailed for legislators; insurance chairman Rep. John Smithee ponders dismantling TWIA

Wednesday, Mar 16, 2011, 11:13AM CST
By Mark Lisheron
Texas state Capitol

After listening to dozens of stories of people ignored, denied, shortchanged and defrauded, as more than one person alleged, the chairman of the House Insurance Committee wondered aloud if it wasn’t better just to shut down the Texas Windstorm Insurance Association.

Five hours of testimony, much of it provided by people bused in from all over the state, offered lurid substantiation to the claims of the chairman, Rep. John Smithee, who referred to the association at different points as a house of cards, an unworkable system and a fraternity - with apologies to some of the fraternity members Smithee knows.

What’s more, in spite of a complete board shakeup within the past year, the board recommending the general manager be fired, two top managers leaving, the Texas Department of Insurance taking over and a fraud investigation by the Travis County District Attorney’s Office, Smithee said he isn’t sure that anything has improved with the Windstorm Insurance Association.

“What we’re dealing with over there is a house of cards,” an exasperated Smithee said during the Tuesday hearing. “I’m really concerned about this whole deal. We’re dreaming to think we have any funds to pay claims for a major storm.”

John SmitheeSMITHEE
What also became clear, from the the expert witness and committee member statements, including those of Smithee, R- Amarillo, is that no one has an idea what the homeowners in 14 coastal counties would do if the quasi-government agency that is the sole windstorm insurance provider went away.

“I think the state made a significant mistake 40 years ago when it got into the windstorm insurance business,” Bill Peacock, director of the Texas Public Policy Foundation’s Center for Economic Freedom, testified. “You are never going to fix this system.”

Compounding the legislative frustration were the impassioned accounts of homeowners who told the committee they turned to lawsuits as a last resort when the association either ignored or denied their claims.

Rep. Larry Taylor, R-Friendswood, who has for months been looking into TWIA’s conduct, told a full house at the Capitol extension hearing room that in addition to at least $140 million in legal settlements so far, he had been told the association was no longer mediating claims and paying out whatever was being asked for by the attorneys for homeowners.

Taylor and Smithee have both introduced bills to reform TWIA, to curb what they say are unsustainable legal costs and to force the association to make public its management decisions and its salaries.

Larry TaylorTAYLOR
“I’ve been told that right now the mediation process is somewhat of a sham, that TWIA is paying out whatever a lawyer asks for,” Taylor said. “What I want to know, are we still giving away the store? I want to make sure the people who need to be paid are paid, but we don’t need to be paying any more than we are supposed to be paying.”

Steve Mostyn, whose Houston law firm got a substantial piece of the $140 million, organized hundreds of clients, chartered buses for them from Houston, Galveston and elsewhere and outfitted them in red T-shirts that read, “Don’t Help TWIA Commit FRAUD. Reform Them. Don’t Protect Them,” on the back.

Mostyn, whose dispute with Taylor over settlement records was decided by the Texas Attorney General’s office in favor of Taylor, hauled in a cardboard document box out of which he pulled an outline of what he said were 3,823 complaints about TWIA made to the Texas Department of Insurance.

In the slipshod or absence of appraisals, the underpayment or non-payment or outright denial of claims, TWIA carried out “the systematic defrauding of these homeowners,” Mostyn told the committee. “They fought us like nobody ever fought us. They were going to crush us, and they almost did.”

Mostyn objected to the proposals in Taylor and Smithee’s bills to use binding arbitration to settle cases rather than allowing homeowners a state constitutionally guaranteed right to a jury trial.

During the hearing, Taylor said he was willing to consider an alternative to binding arbitration. After the hearing, Smithee, too, said he was no fan of binding arbitration.

“But I know we can’t afford another round of litigation like we just had,” he said.

Steve Quibedeaux of Bridge City, said he had to wait until Hurricane Ike hit before TWIA finally paid him for Hurricane Rita damage.

Quibedeaux, who testified before the committee, said he came to think that TWIA wasn’t in the business of settling claims and making him whole, but in the business of beating him up over the terms. At first reluctantly and, finally, gratefully, Quibedeaux turned to Mostyn for help.

“I’d rather give my money to a lawyer,” Quibedeaux said, “than to have somebody steal it from me.”
 
***
Contact Mark Lisheron at 512-299-2318 or mark@texaswatchdog.org.

Keep up with all the latest news from Texas Watchdog. Fan our page on Facebook, follow us on Twitter and Scribd, and fan us on YouTube. Join our network on de.licio.us, and put our RSS feeds in your newsreader. We're also on MySpace, Digg, FriendFeed, NewsVine and tumblr.

Photo of Texas state Capitol by flickr user The Brit_2, used via a Creative Commons license.
Comments
john cobarruvias
Wednesday, 03/16/2011 - 07:30PM

Larry Taylor is the State Representative of the insurance industry. He will say anything. Do anything to protect his business interests.

Video
KTRK: On Big Screens for Billionaires, Comptroller Susan Combs Silent
Related Blogs and Media
Andrea Parquet-Taylor named KTVT CBS 11 news director Former KHOU 11 assistant news director Andrea Parquet-Taylor named Vice President, News Director for KTVT CBS 11 Andrea...
Update:2 months 6 days
Mike McGuff
VIDEO: KPRC 2 10pm newscast (1-24-99) ...
Update:2 months 6 days
Mike McGuff
Luke Bryan to sing National Anthem as part of Super Bowl LI on FOX ​ Country music superstar LUKE BRYAN will sing the National Anthem as part of Super Bowl LI pregame festivities at NRG Stadium in Houston...
Update:2 months 1 week
Mike McGuff
Key of “Key & Peele” to host NFL Honors Feb. 4 at Wortham Theater Annual Awards Show to Take Place at Wortham Theater Center in Houston on Eve of Super Bowl LI Keegan-Michael KeyPhoto Credit: Matt...
Update:2 months 1 week
Mike McGuff
KHOU 11 is first Houston TV station to use drone Drone 11 debuted on KHOU during this week's Houston flood coverage In today's world orange is the new black, energy drinks are the new...
Update:2 months 1 week
Mike McGuff
KTRK abc13 dominated January 2017 flood coverage CLICK TO ENLARGE The overnight results (provided to me by KTRK) from the January 18, 2017 flood event show abc13 winning the Live Same Day...
Update:2 months 1 week
Mike McGuff
CBS Radio Houston throws free concert with Jake Owen, The Last Bandoleros and more CBS RADIO Houston and BBVA Compass have teamed up to host “Live Bright Bash,” a free stadium party for city ambassadors and volunteers...
Update:2 months 1 week
Mike McGuff
Rucks Russell leaves KHOU 11 After a decade plus, KHOU 11 reporter Rucks Russell leaves TV for new chapter Reporter Rucks Russell has worked at KHOU 11 so long, that...
Update:2 months 1 week
Mike McGuff
New KPRC building moves channel 2 into 21st century MIKEMCGUFF.COM EXCLUSIVE: As the first new TV station to be built in Houston since the 1990s, KPRC is building for the future of TV and...
Update:2 months 1 week
Mike McGuff
PICS: FOX 26 KRIV debuts new set 2017 It's a new set for 2017 for FOX 26 KRIV. As I wrote last month, FOX 26 started construction at the end of 2016 and temporarily moved its...
Update:2 months 2 weeks
Mike McGuff
Tweets
Karen Townsend | 4 years 10 months
"Patrick F. Kennedy is a career foreign service officer" - http://t.co/GOrCe0IS
Peter Corbett ✈ | 4 years 10 months
I'm at McCarran International Airport (LAS) w/ @almacy http://t.co/KvmId07i
KERA Public Media | 4 years 10 months
TONIGHT at 7pm on KERA TV: Presidential Debate: Learn more at PBS NewsHour. http://t.co/Z9kYdun8
PBS MediaShift | 4 years 10 months
Tech Snafus Make Bill O'Reilly/Jon Stewart 'Rumble' More of a Stumble http://t.co/4OfeBlrG (@kegill | @pbsmediashift) #rumble2012
Will Sullivan | 4 years 10 months
Great addition, been burned too much by bad subs. "Google Play Announces Free Trials For In-App Subscription Services" http://t.co/TOLgRVak
TxDOT | 4 years 10 months
I-35W/North Tarrant Express #constantcontact http://t.co/QDzrQumu
keyetv | 4 years 10 months
Serial shotgun robbers suspects arrested. http://t.co/ka8T4U9B
Karen Townsend | 4 years 10 months
Aren't State Dept career people suppose to be non-partisan? Not the political appointees, the career people. #Libya
© 2017 TEXAS WATCHDOG and USELABS. All Rights Reserved. Terms of Use and Privacy Statement