AUSTIN - The Texas House Insurance Committee recently met to hear testimony on the impact of mass hail litigation – a surge driven by trial lawyers out for profit, a tort reform advocate argued during the assembly.
In 2012, two “biblical hailstorms,” as former Texas Trial Lawyers Association President Bryan Blevins put it at the meeting, ravaged Hidalgo County.
Several months later, a flood of lawsuits against insurers followed.
Since 2012, there has been an increase in hail claims involving an attorney or public adjuster, according to data presented by the Texas Department of Insurance, who was on hand for the Dec. 1 gathering.
TDI found some insurers, mostly smaller companies, have started to reduce coverage and raise deductibles, particularly in storm litigation hotbeds such South Texas and the Panhandle.
When called upon to testify, Lee Parsley, an attorney for Texans for Lawsuit Reform, told the committee the abuse of the current hailstorm litigation environment is the largest TLR has seen in years.
“We are seeing an enormous spike in lawsuits following hail and wind events in Texas … and we can find no explanation other than lawyer activity,” he said. “It is a tort tax. It is a hidden tax upon all of us when there is abuse … and it is a drag on our economy – that’s why TLR is involved.”
While testifying, Parsley said hail litigation is lawyer driven, accusing hail attorneys of “manufacturing lawsuits for their own business purposes and not for the protection of consumers.”
He presented data showing that from 2006 to 2011 hail lawsuits against Texas insurers numbered in the hundreds each year, but then doubled from 2011 to 2012, and doubled again from 2012 to 2013, and doubled once more from 2013 to 2014, with nearly 11,000 hail lawsuits filed in 2014 alone.
In the first six months of 2016, insurers paid $3.2 billion in hail losses. Previously, the most ever paid in a single year was 2015, when insurers paid $1.9 billion in losses, according to TDI.
“Since this wave started in 2012, we’ve had more than 34,000 (hail) suits filed all over the state of Texas,” Parsley said, adding that some counties that previously averaged only single digit property and casualty insurance suits every year have now jumped into the hundreds.
The cause, according to Parsley, can be attributed to trial lawyers who come in after storm strikes to advertise for claims, even canvassing door-to-door in search of clients in some cases.
“These are lawyers chasing storms,” Parsley said. “The game is to file as many lawsuits as you can and overwhelm the insurance companies, overwhelm the system and in every case overstate the damages by the largest number you can.”
Ultimately, Parsley says TLR wants legislation enacted that will deter lawyers from chasing storms while still maintaining the insured’s right to sue.
“We have to stop these lawyers from chasing storms, because it will cost us all money in the long run,” he said.
Blevins, who also testified, told the committee the data gathered by TDI doesn’t support a hail lawsuit crisis in the state.
Blevins also pointed to statistics showing hail suits typically net $30,000 in damages, while those who only make policy claims receive around $7,000.
He said if insurers had a system where they can keep insureds from hiring lawyers, than insurance companies would save 77 percent in paying claims.
The committee pointed out to Blevins that lawyers take roughly 40 percent of a $30,000 settlement, plus possibly thousands of additional dollars in expenses.
Blevins, who does not specialize in insurance litigation, is a managing partner at the Beaumont law firm Provost Umphrey.
Members on the Insurance Committee include: Rep. John Frullo, Rep. Sergio Muñoz, Jr., Rep. Greg Bonnen, Rep. Bobby Guerra, Rep. Morgan Meyer, Rep. Dennis Paul, Rep. Kenneth Sheets, Rep. Hubert Vo, and Rep. Paul Workman.