Ryan Kocian | Courthouse News Service | May 19, 2015
An insurance bill pending in the Texas Legislature would “gut the laws” so thoroughly that a citizens’ group calls it the “Insurance Immunity Act.”
Senate Bill 1628 , by Sen. Larry Taylor, R-Friendswood, has passed in the Senate but has not yet been voted on by the House.
The bill language says it seeks to address an “explosion in property insurance litigation” in Texas, especially hail claims. It claims that this has “created a property insurance crisis for consumers that must be addressed for the benefit of consumers.”
“The property insurance crisis, if left unchecked, will severely affect the availability and affordability of property insurance consumers.”
And it claims that many consumers are unable to qualify for home loans due to the increased cost of property insurance.
The bill claims it will fight “unscrupulous” adjusters, roofers, contractors, and lawyers who inflate damage estimates, and will prevent “rampant solicitation of fraudulent or non-meritorious claims and the filing of fraudulent, inflated, or otherwise non-meritorious claims.”
However, bill opponents, such as citizen advocacy group Texas Watch, call SB 1628 an “Insurance Immunity Act,” that will “gut the laws” that protect consumers from unfair and deceptive insurers.
According to the Courthouse News database, 975 hailstorm-related lawsuits have been filed in Texas this year, virtually all of them against insurance companies, for failing to pay claims.
SB 1628 will change parts of Chapters 541 & 542 of the Texas Insurance Code that were designed to prevent abuse by big insurers, Texas Watch says.
In an analysis on its website , Texas Watch claims the bill “incentivizes low and slow pay by insurers,” “criminaliz(es) innocent mistakes by consumers while immunizing industry misconduct,” “severely restricts the time that claimants have to file a claim,” and “effectively immunizes industry employees, agents, representatives, and adjusters from the consequences of their misconduct.”
Alex Winslow of Texas Watch calls the bill “a piece of industry-written legislation that would undo 40 years’ worth of consumer protections designed to make insurance companies play fair.”
According to Texas Watch’s analysis, SB 1628 would allow insurers to dismiss claims “on mere technicalities” if the claims do not meet the new notice procedures.
The bill would impose a two-year deadline on property damage claims though some structural damage is not immediately detectable, the group says.
In rebuttal, state Sen. Taylor said in a statement that the bill “will eliminate catastrophic weather lawsuit abuse while assuring homeowners’ right to receive fair and timely claims payments from insurers.”
He said the bill preserves all penalties to which policyholders are entitled under the insurance code.
Taylor claims that Texas Watch “consistently distorts the truth” and “has long tried to deceive the public by portraying themselves as a pro-consumer group.”
He said the seven-member board of Texas Watch is mainly composed of “personal injury trial lawyers and their allies.”
“Storm-chasing trial lawyers prowl storm devastated communities and manipulate the law for attorney fees,” Taylor said. “This unethical behavior makes millions of dollars off the backs of unaware consumers who see their deductibles and premiums rise after a weather catastrophe hits.”
Taylor said his bill will stop frivolous lawsuits and improve homeowners’ rights. “Don’t be fooled by Texas Watch and their trial lawyer fiction,” he said.
The Texas Department of Insurance told Courthouse News it cannot comment on pending legislation.
If approved, SB 1628 will take effect on Sept. 1 of this year.