2/28/2011 3:33 PM
A letter today addressed from Insurance Commissioner Mike Geeslin to Texas Windstorm Insurance Association General Manager Jim Oliver places the state’s windstorm insurer under administrative oversight.
The letter reads: “This opinion is based, in part, upon information gathered by or submitted to staff of the Texas Department of Insurance (the “Department”), including that: (a) in multiple instances, an outside claims adjuster was paid for adjusting work that appears not to have been performed and that TWIA paid claims based on that outside adjuster’s recommendation; (b) TWIA management was aware of this and failed to report it in writing to the Department’s insurance fraud unit not later than the 30th day after the date of making the determination or reasonably suspecting that a fraudulent insurance act had been committed; and (c) TWIA has failed to adequately address issues identified through the recent financial examination and subsequent financial analysis indicating a lack of adequate controls over accounting, personnel, and material decisions affecting day-to-day operations, as well as communications with staff, the board of directors, and the Department.”
While under oversight, the Texas Department of Insurance’s director of Rehabilitation and Liquidation Oversight, Angel Garrett, will serve as the insurance commissioner’s representative.
Under the administrative oversight, TWIA management will have to:
- *submit all senior or executive level personnel decisions to the Commissioner’s Representative for prior review and approval;
- *submit expenditures for prior review and approval; and
- *develop a plan acceptable to the Commissioner’s Representative to ensure complete, accurate, and timely communications with its board of directors to ensure that the board of directors can meet its primary objectives.
The Texas Windstorm Insurance Association’s governing board met in open session today for about 15 minutes before going behind closed doors to discuss legal and personnel matters.
Mike Perkins, TWIA board’s legal counsel who spoke during the open session, called the administrative oversight “supervision lite.” The supervision is typically used for private sector providers and intended to return them to normal operations within a few months, by restoring TDI’s confidence in the company’s (in this case, TWIA’s) staff.
The oversight will not limit TWIA’s authority or responsibilities, Perkins said.
TWIA is currently in closed session and may possibly make an announcement regarding personnel matters when they return to open this afternoon or evening.
In addition, Danny Saenz, senior association commissioner at TDI’s financial program, sent a letter Feb. 23 to Oliver saying that a “limited scope examination” has been called for TWIA regarding the “employment, performance, and termination and/or resignation of Reggie Warren and Bill Knarr, as well as inappropriate, unprofessional, or unethical conduct that may have led to the resignation, termination or separation of any staff with the level, title, or responsibilities commensurate of “vice president.”” Warren was TWIA’s vice president of claims. More information on allegations regarding his conduct can be found here and in the Feb. 25 issue of LSR.
Here’s what the TDI asked for in its notice to TWIA:
- *the “complete personnel files” for Warren and Knarr including information on severance packages and benefits, and information on investigations;
- *a “narrative explaining any and all basses for each resignation, termination, termination and/or separation, related to management oversight issues, and a timeline of events” regarding the end of Knarr’s and Warren’s time at TWIA, and how the bases were discovered; and
- *“any and all information related to any and all investigations of any and all inappropriate, unprofessional, or unethical conduct that may have led to the resignation, termination and/or separation of any and all staff with the level, title, or responsibilities commensurate with “vice president.””