Texas Lawmaker: Windpool’s Ike Litigation Costs Still Rising

Article

Texas’ insurer of last resort for coastal property has paid out more than $1.2 billion in individual litigation costs related to Hurricane Ike, which struck in 2008, one state lawmaker says.

Information released by Rep. Larry Taylor (R – Friendswood) shows an additional $1.2 billion dollars has been spent by the Texas Windstorm Insurance Association (TWIA) on Hurricane Ike litigated claims since the previously reported class action settlement for slab claims.

Rep. Taylor requested the information from the Texas Department of Insurance (TDI) in preparation for an upcoming hearing of the TWIA Legislative Oversight Board on Nov. 1, 2012. Taylor is the co-chairman of the Oversight Board.

Although the additional $1.2 billion in litigation costs represents almost half of the total $2.5 billion in estimated losses for Hurricane Ike, it is for only 10 percent of the 93,000 total claims, according to Taylor’s announcement.

TWIA management on Oct. 26 announced a reduction in their expected contribution to the reserve fund by $100 million dollars due to ongoing lawsuits associated with Hurricane Ike, Taylor noted. This action means TWIA would deposit $25 million into the Association’s reserve fund to pay future catastrophic claims.

The records also reveal that TWIA paid out on average 7.2 percent of all policy limits on the initial claims by policyholders. But, after litigation, TWIA paid out an additional 43 percent of policy limits on average, according to Taylor.

This represents a combined average payout of 50 percent of policy limits on the 10 percent of claims that were litigated. In addition, TWIA has spent approximately $70 million dollars on defense costs since 2008, an additional $69 million on expense costs and $1.3 million on mediation related to Hurricane Ike settlements, Taylor’s announcement stated.

A summary of the Top 10 Plaintiff Law Firms handling TWIA litigation reveals a settlement payout of more than $600 million dollars. There are more than 300 plaintiff law firms with Hurricane Ike litigation claims in Texas, but a small cadre of 10 law firms has handled more than 74 percent of TWIA litigated claims. These firms are on track to handle more than 800 additional claims in the coming months.

Last session, the Texas Legislature passed legislation to reform the claims settlement process and litigation practices of TWIA. However, the legislation affects future events, not past events like Hurricane Ike.

TWIA Litigation Summary*

Description	Amount
Settlement Total as of Oct. 2012	$763,827,812
TWIA Claims Payments Prior to Litigation	$223,454,807
TWIA Mediation Costs	$1,291,518
TWIA Litigation Expenses **	$69,583,984
Reserves Set Aside for Pending Litigation	$70,960,273
TWIA Defense Costs	$69,952,572
Total Cost of Hurricane Ike Litigation	$1,199,070,967
* – These figures are in addition to the costs associated with the Global and Class Action Settlements.
** – TWIA Litigation Expenses consist of engineering firms, inspectors, adjusters, etc
SOURCE: Data provided by the Texas Department of Insurance.

Top 10 Plaintiff Firms Ranked by Settlement Payout*

Plaintiff Firm	Cases Pending	Cases Settled	Total	Settlement Payout
Mostyn**	463	2,704	3,167	$352,560,193
Buzbee	0	628	628	$55,664,375
Eiland**	196	191	387	$40,132,375
Clark Dean Burnett	2	525	527	$35,494,732
Weller Green Toups	170	398	568	$31,914,905
Merlin	1	343	344	$28,702,419
Speights	227	437	664	$28,289,108
Solis	5	519	524	$20,451,475
Arguello Hope	2	400	402	$17,955,549
Doyle Raizner	2	176	178	$15,342,177
* – These figures don’t include the costs associated with the Global and Class Action Settlements.
** – Mostyn & Eiland’s settlement payout amounts include $12,341,591, 185 cases pending, and 87 cases settled.
SOURCE: Data provided by the Texas Department of Insurance.