Homeowner Complaints at Record Low despite rising Lawsuits
Despite a half million hail claims resulting in a record $4 billion in insured losses last year, homeowner complaints to the Texas Department of Insurance (TDI) were the lowest number ever recorded. Record low numbers of complaints, however, has not meant a similar decrease in the number of lawsuits being filed after severe storms. In fact, just the opposite has happened with lawsuits over homeowner claims increasing dramatically in many counties across the state. (See charts below)
“One wonders what is going on when you have no complaints at TDI for an entire year, but a thousand lawsuits are filed,” said Mark Hanna, a spokesperson for the Insurance Council of Texas. “This was the case in Laredo and Webb County last year and this lawsuit abuse has been spreading like a virus throughout Texas. For the past three years, homeowners in Laredo and Webb County have filed more than 4,000 lawsuits from hail claims but reported only 3 complaints to TDI.”
"We have been in business in Texas for well over 100 years and have handled hail claims essentially the same way all this time with few complaints or disputes,” said Greg Farnik, Litigation Counsel for the Republic Group affiliates in Texas. “Even more surprising is that with the majority of our policyholders who filed litigation, we were never notified of a dispute before the lawsuit was filed. That is certainly an indication to us that attorneys rather than homeowners are driving the large increase in hail claim litigation across the state. A number of homeowners who we insure have told our adjusters they were solicited at their home to sign documents to have someone assist them with an insurance claim.”
Other south Texas counties like Cameron and Hidalgo were also deluged with lawsuits, yet hardly any complaints. Cameron County which includes Brownsville, Raymondville and Harlingen, recorded more than one thousand hail-related lawsuits over the past three years, but only 5 complaints. Hidalgo, which has been the epicenter of the hail litigation explosion starting with its 2012 hailstorm, has had the largest number of lawsuits filed.
Between 2014 and 2016, Hidalgo County recorded more than 10,000 hail-related lawsuits with a total of just 10 complaints to TDI. Many of the lawsuits filed during this period came from previous hailstorms.
Members of the Texas Legislature will be considering legislation this session designed to bring the activity of these lawyers and this lawsuit abuse to a halt. A recent TDI report to lawmakers showed a 1400 percent increase in lawsuits following hailstorms. The massive increase in lawsuits has already had an effect on consumers in some areas of the state because of changes in available coverages and some companies no longer writing in the areas hardest hit by the litigation explosion.
“This legislation does not restrict a consumer’s right to sue their company if the company has improperly handled their claim, but will help put a stop to opportunistic lawsuits filed by lawyers who are taking advantage of consumers and delaying resolution of claims,” Hanna said.
The Texas Department of Insurance encourages all homeowners and automobile owners to contact their Consumer Protection division if they have a complaint with their insurance company over a claim. Every year, TDI returns millions of dollars back to consumers through their complaint process (See video - https://www.youtube.com/watch?v=6877vfE7uxo&feature=youtu.be).
Texas Complaints vs Lawsuits 2014-2016
*Number of complaints from each county came from the Texas Department of Insurance (TDI).
**Number of lawsuits from each county came from the Texans for Lawsuit Reform (TLR).