Local residents complain about red tape in hearings with windstorm association

David Yates Jan. 7, 2009, 1:36pm

After the 120-mile-an-hour winds of Hurricane Rita caused widespread damage in Southeast Texas three years ago, many insurance companies stopped writing policies that include windstorm coverage.

That forced thousands of Texans to seek coverage from the Texas Windstorm Insurance Association, the insurer of last resort.

On Jan. 7, TWIA officials and an Austin judge tried to sort out complaints from several Southeast Texans who said the insurance pool's bureaucracy left them uncovered when Hurricane Ike struck the area in September.

The hearings took place at the Jefferson County Courthouse inside the 58th District Court room, and centered on Golden Triangle residents who were denied coverage for Ike because their insurance agents failed to follow TWIA regulations.

TWIA requires policy holders to purchase and renew their policy through a licensed insurance agent. Once the purchase is made, the agent is required to send the payment to TWIA via certified mail or another approved method.

According to the association's Web site, a TWIA windstorm policy does not go into effect until the organization receives the payment from the insurance agent.

Austin-based Judge Sarah Ramos, who presided over the hearings, told the Record that she has been traveling up and down the coast mediating TWIA Ike claims.

Ramos said in nearly all the cases, the plaintiff's paid the agent for a TWIA policy but the agent neglected to mail off the customer's money.

Such was the case of area resident Moye Burnett, who paid a renewal to a Texas Farm Bureau agent on Sept. 3, a day before her policy was set to expire.

According to Burnett's testimony during the hearing, her agent did not mail off her payment until Sept. 5, the day after her policy expired, leaving her uninsured when the storm hit.

TWIA Underwriters Vice President Randy Wipf testified that had Burnett's agent mailed her payment on Sept. 3 or even Sept. 4 she would have been covered for Hurricane Ike.

TWIA regulations prohibit customers from mailing in payments themselves, forcing them to go through agents who mishandle their policies, Wipf testified.

In response to Wipf's testimony, Burnett said she admitted her agent was negligent but also added TWIA was negligent also because if she "could have paid (TWIA) direct, this wouldn't have been a problem."

Burnett further testified that her insurance agent has denied any wrong doing and has refused to help her.

In the case of another petitioner, Deborah Elkins, her insurance agent mailed off her policy renewal payment in time but neglected to send it via certified mail.

And because TWIA does not write policies while hurricanes are off the coast, her property was uninsured during Ike and was not protected until two days after the storm passed.

Elkins also testified that TWIA is at least partially negligent for making its customers go through an insurance agent, instead of allowing policy holders to mail in their payments directly.

The State Office of Administrative Hearings � the entity governing the hearings � is an independent agency created to manage contested cases and conduct hearings on those contested cases for other state agencies, according to its Web site.

After the hearings, SOAH will submit its recommendations to the Texas Insurance Commissioner, who will then decide if the case has merit.

TWIA's purpose is to provide Texas citizens adequate wind and hail coverage when it is not available in the insurance marketplace; and pay insured's claims when losses occur, the agency's Web site states.

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