Insurance Insights

Texas Trial Lawyer Storm Chasing May Finally Get Its Due

Is it possible Texas property and casualty insurers might finally get some relief from unscrupulous Texas trial lawyer storm chasers? The Texas House Insurance Committee has recently made inroads into the trial lawyer hail chasing tradition. The original problem surfaced in 2012, when two massive hailstorms ravaged Hidalgo County.  Following these events, Texas trial lawyers swarmed insurance companies and inundated them with lawsuits. The result has been nothing short of a “tort tax” on the insurance industry.  The impact has been so great that smaller insurance companies have self-protected themselves by raising deductibles and reducing coverage, clearly putting them at a disadvantage to their large competitors.

The advocacy group, Texans for Lawsuit Reform, presented the following information to the Insurance Committee:

  • From 2006-2011 hail lawsuits against Texas insurers totaled in the hundreds;
  • From 2011 to 2012 that amount doubled;
  • From 2012 to 2013 that amount double once again;
  • From 2013 to 2014 the amount doubled again with almost 11,000 hail lawsuits filed in 2014 alone;
  • In the first six months of 2016, insurers paid $3.2 billion in hail losses, which compares to $1.9 million paid in 2015, the most ever paid in a single year prior to 2016;
  • Some Texas counties that previously averaged single digit P&C lawsuits every year are now experiencing hundreds of suits

Trial lawyers flock to these areas following such storms, and have been known to resort to soliciting potential clients on a door-to-door basis. The goal is to game the system by filing as many lawsuits as possible in order to overwhelm the insurance carriers, the insurance system and overstate the damages as much as possible.  To keep costs within reason, insurance carriers settle the claim rather than incur excessive and drawn out litigation.  The committee seems to have taken heed and has further observed that trial lawyers take an average 40% of all settlements, not counting the thousands of dollars in supporting expenses in litigating the claim.  The Texas Trial Lawyer Association has, and will, vigorously defend against tort reform.  This topic should clearly be one of great interest in the upcoming 85th Texas legislative session, and one your management and audit committees should be very interested in following.