The Watchdog has long suspected that some insurance companies deliberately delay paying policyholders whose homes are damaged by Texas storms. But how to prove it?
Thanks to a massive mistake made by a South Texas law firm, I can show you how insurance company attorneys can use this legal strategy to frustrate a landlord and get the insured to surrender.
In mid-May, the law firm Colvin, Saenz, Rodriguez & Kennamer LLP, which has offices in Brownsville and Edinburgh, publicly posted on its firm’s blog an article entitled “Delaying an insurance claim is there an effective legal strategy? »
The answer given is “Yes”.
“Absolutely stunning,” was the reaction of J. Robert Hunter, Texas’ first solo insurance commissioner, when I showed him the message. “We knew that many insurers operated this way, but I never saw the strategy accepted like this.”
Here are excerpts from the post as it appeared for 46 days until it was deleted this week.
Job in law firm
In the message that appears to be aimed at insurance companies, the author writes: “Companies that delay claims may enjoy a number of benefits. First, delaying a claim puts pressure on policyholders. These people may face mounting bills for property damage, legal fees, and medical bills.
“Most people can’t afford to continue fighting insurance companies for an extended period of time. This means that most claimants will be forced to settle for a favorable amount instead of continuing to negotiate with insurance companies for an extended period of time.
“In other words, delaying claims forces policyholders to accept lower settlement offers. Delaying claims can reduce costs in other ways. For example, when an insurance company faces a deluge of property damage claims, it may delay some to avoid massive one-time payments.
“This limits the financial stress on these organizations and allows them to invest funds from premiums paid to earn interest income and offset some of the costs. This is likely one of the main reasons for the continued Texas freeze-related delays.
The post ends with a warning that “you need to be very careful how you delay claims. … You could face a lawsuit in bad faith.
Before I share reactions to this post, I have to tell you that after The Watchdog contacted the company, the post was deleted.
Law firm partner Trey Colvin sent me a retraction stating that the post “did not reflect our values, beliefs or practices.”
“We strongly believe that all parties to insurance contracts must comply with the terms of the contracts and report, assess and evaluate all claims in a professional and timely manner. Not only do we expect this of our customers in the insurance industry, but we know from experience that our customers have the same expectations of themselves.
“The message has been removed from the site. We deeply regret that the content obtained from a third party has not been carefully checked and that the message could be interpreted by anyone as suggesting otherwise.
Colvin told me that a third-party vendor, MileMark Media, wrote the blog post. I contacted this company, which handles social media for lawyers, but got no response.
“Quiet Party Aloud”
Houston attorney James W. Willis, who alerted The Watchdog to the message, told me, “I see this behavior from insurance companies every day in my law office, so it doesn’t shock me. not.
He continued: “They said out loud the quiet part: that insurance companies cheat by taking advantage of consumers’ disparate bargaining power against a large corporation with unlimited resources. It is evil and depraved, even illegal.
Texas Department of Insurance spokesman Gardner Selby explained, “The department does not regulate attorneys and has no webpage commentary.”
State law dictates that when the documents for a claim are completed, an insurance company must, in general, pay a claim within 60 days. In the event of a breach, the law provides for a penalty of damages, interest, and attorneys’ fees in addition to the claim itself.
Texas Watch is a consumer advocacy group. Executive Director Ware Wendell told me, “Insurance claims must be paid in full. Too many insurance companies engage in unwarranted “delay, deny, defend” schemes to force policyholders to quit, pocketing illicit profits.
“The vulture culture within insurance companies must end. Only strict laws will compel carriers to do the right thing.
In 2017, the Texas legislature eased penalties for lateness.
“Cents on the Dollar”
On a human level, attorney Willis says some Texans whose homes were hit by the February 2021 Texas freeze still haven’t had their homes repaired. He said more than half of his clients face delay tactics from insurance companies.
Of course, in the legal world, blocking is an accepted tactic. But it’s not about one company suing another in a business case. This affects families who have not been able to return home.
“They can’t take it anymore,” Willis says of these customers. “That’s what insurance companies are trying to do. That’s what this blog says. Put them in a position where they will be forced to take pennies on the dollar.
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The Dallas Morning News Watchdog column is the 2019 winner of the National Society of Newspaper Columnists’ top column writing award. The contest judge called his winning works “models of suspenseful storytelling and public service.”
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