May
24
Written by:
Mark Lavergne
5/24/2011 8:25 AM
The Senate last night passed the Texas Windstorm Insurance Association reform bill, HB 272. Several members brought floor amendments that in many cases were crucial for Senate sponsor John Carona (R-Dallas) to secure their votes. All amendments brought on the floor were vetted by Carona before floor deliberations, and all were acceptable to him.
A couple of amendments to the bill were agreed to by Texans for Lawsuit Reform and the Texas Trial Lawyers Association.
Ellis asked for an assurance that the bill would not get changed in conference, and that the TDI sunset bill would not become a vehicle for TWIA provisions that could not make it into HB 272. Carona assure he would not be a party to any such maneuvers.
Eddie Lucio (D-Brownsville) called the current version a “good document,” and expressed the hope that the House would simply concur in the Senate’s amendments.
But that is by no means a foregone conclusion.
House author John Smithee (R-Amarillo) said that his goal throughout the process has been to make TWIA more attractive to reinsurers and bond-buyers so that TWIA could purchase reinsurance and issue pre-event bonds. But in order to do that, Smithee said, TWIA would have to show substantial changes to its judicial process and take other cost-saving measures.
“I don’t know if this will go far enough or not,” he said.
The big question is, Can a bill be crafted that goes far enough and gets 21 votes on the Senate floor?
Arguably the biggest deal, struck between TLR and the TTLA, was brought in language worked on by Carona and Kirk Watson (D-Austin), who voted against the bill in committee but supported it as amended on the floor.
Watson amended the bill to allow recovery of up to two times the amount of actual damages. The trade-off: it also will require “clear and convincing evidence” that the association “knowingly or intentionally” engaged in an unfair competition or a deceptive practice under the Insurance Code.
Some provisions in current law allow for recovery of treble damages – or triple the amount of actual damages.
Watson said if in dealing with a claim TWIA acts in a way prohibited by the insurance code, the party would be entitled to more than their actual damages.
Carona said on the floor that TWIA had never awarded more than actual damages. Allowing the possibility of double damages in the bill gives attorneys more bargaining power on behalf of their clients, he said.
Under the bill, Carona said, following the alternative dispute resolution process, the claimant would be free to pursue a court trial outside the TWIA system and would not be bound by the findings of the mediation process.
“That was one of the most significant things that we heard from our colleagues here in the senate over and over again,” Carona said. “We don’t want the insureds and our constituents to lose the opportunity for a jury trial and we want to make certain that if they get a jury trial, they get to present the same evidence they would under any other circumstance, not a limited amount of evidence that may have been presented during previous procedures through the appeals process within TWIA.”
There is no binding arbitration in the bill. Claimants are free, 60 days after the claims dispute process begins, to go to court, Carona said.
Carona amended the bill to clarify that pre-event bonds can be issued before the storm season.
Watson also amended the bill so that if six or more claimants file a civil action, it must be presided over by a judge appointed by a multi-district litigation panel. But the judge appointed by the MDL panel must be an active judge in Travis County for suits filed in Travis County, or an active judge in the county in which the suit is filed if outside Travis County. TLR and TTLA also agreed to this.
Lucio amended the bill to require that there be coastal and inland representation on the legislative interim committee created by the bill to study alternative ways of insuring the Texas Coast.
Mike Jackson (R-La Porte) amended the bill to make sure TWIA does not “overextend itself” in issuing pre-event bonds, and give TDI rulemaking authority to provide discounts on certain surcharges.
Brian Birdwell (R-Granbury) created an advisory board charged with improving the claims handling process in Texas.
Leticia Van de Putte (D-San Antonio) said for her it was “very, very important” that the structure of TWIA be corrected. Under the new guidelines, TWIA should be better structured to handle Mother Nature, Carona said, but he cautioned that he was “still very concerned about the financial integrity of the program.”
Carona said in his view they would need to look at rate increases if TWIA is to become truly reliable.