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Agency settles 1,200 Ike suits for $135 million

The Texas Windstorm Insurance Association has settled lawsuits
alleging it intentionally underpaid thousands of property owners almost
five years after Hurricane Ike razed Gulf Coast homes and just days
after the Legislature ended without passing measures to reform the
agency.

                       

Steve Mostyn, lead attorney
for the civil suits against the state-backed insurance provider,
announced Tuesday the resolution of about 1,200 individual cases for a
payout nearing $135 million.

                    

"By settling the vast
majority of homeowners' claims against TWIA, we are proud to be part of
bringing hundreds of millions of dollars owed to our clients back to the
coast," Mostyn said in a press release.

                       

In an interview, he said he
expects the handful of remaining cases, primarily cities and school
districts, to be resolved within a month.

                       

The group of settlements is
the largest to date in multiyear legal battles with the troubled agency,
which was created as a last resort for people who cannot afford wind
insurance on the private market.

                       

Details of the settled cases
vary, but most suits stemmed from claims the state agency deliberately
underpaid claims, ignored property owners' attempts to right them and
did not reimburse policyholders in a timely manner.

                       

"In discovery we found out
why they would not go back to re-evaluate claims: People at the top
decided not to pay them in the first place," Mostyn said, referencing
thousands of emails obtained in the cases.

                       

"We are basically refusing
to pay a claim without conducting a reasonable investigation," an
employee wrote in one email. "This is a class action lawsuit in the
making."

                       

The settlement does not
include the agency admitting to wrongdoing. The association did not
respond to requests for comment Tuesday.

                                   

To date, the
agency has paid more than $500 million in settlements connected to the
2008 storm. The litigation costs, along with damage to its reputation,
make it difficult to sell bonds and have threatened to sink the agency
even after being put under the direct oversight of the Texas Department
of Insurance.

                       

Failure in Legislature

                       

Legislative efforts to keep the windstorm association solvent and reform its policies again failed this session.

                       

Friendswood Republican Sen. Larry Taylor, who led the efforts, blamed Mostyn.

                       

Needing just one more vote
in the final days of the session, Taylor said he agreed to remove a
provision opposed by the Texas Trial Lawyers Association.

                       

Mostyn, the group's president, continued to oppose it, which Taylor said killed the bill.

                       

Mostyn said he only opposed the one provision and supports reforming the agency's management.

                       

"The reform bill didn't go
through because the industry opposed the bill," he said. "If Larry
Taylor gets a parking ticket, he blames me."

                       

Taylor admitted some
industry members opposed the bill, but said that was not the sticking
point, He pointed to Mostyn's record as a top political donor in the
state who is not afraid to flex his influence and questioned the timing
of the settlement announcement: the day after the Legislature ends and
just as the Texas Department of Insurance executive who agreed to the
deal walks out the door.

                       

Another chance?

                       

Legislators did not confirm
Commissioner Eleanor Kitzman this session, so Gov. Rick Perry appointed
Julia Rathgeber, Lt. Gov. David Dewhurst's deputy chief of staff, to
replace her.

                       

"I'm concerned about the
speed in which they were settled," Taylor said, adding his staff is
looking over department documents about the settlements and plans to
work with Rathgeber to sort it out.

                       

He said the funds lost to
potentially illegitimate claims will hurt the viability of the agency
moving forward, even if it has no direct effect on legislative reforms.

                       

Taylor said he has secured
Perry's approval to add a version of his reform bill to the agenda for
the upcoming 30-day special session if he can prove he has the votes.

                       

"I'm hopeful, but it's an uphill battle," he said.

                       

 

 

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