Windstorm lawsuit call for $600 million from insurance companies

Updated 6:58

By Matthew Waller
Scripps Newspapers

AUSTIN — A new lawsuit aims to force the Texas Windstorm Insurance Association get $600 million from insurance companies, money that the suit says has been wrongfully levied against policyholders.

Attorney Mark Kincaid said he filed the suit Monday morning in Travis County on behalf of Corpus Christi resident Ramiro Gamboa, and Gamboa is also seeking up to $100,000 in damages.

The lawsuit may be among the first of its kind.

“Plaintiff Ramiro Gamboa seeks relief because TWIA and its board of directors have failed to properly assess the excess loss resulting from Hurricane Ike, in the amount of approximately $600 million, and have shifted that cost onto policyholders instead of the member insurance companies,” the lawsuit states.

The windstorm association did not respond Monday to calls with requests for comment.

Texas legislators created the association in 1971 as a way to provide windstorm and hail coverage for those who can’t get it from the voluntary market. The association functions as an insurer of last resort for more than 267,000 residential and commercial property owners. About 90 percent of the properties are residential.

The windstorm insurance association covers a small portion of Harris County and 14 coastal counties, including Nueces County.

After Hurricane Ike in 2008, the windstorm association had the option to assess up to $830 million but left $400 million on the table. Assessments are what the department of insurance can charge insurance companies.

Since then, the windstorm association has “shifted over $600 million of the excess loss from the member insurers and onto the insured policyholders,” the lawsuit argues.

The lawsuit points to a letter from coastal lawmakers who “noted that TWIA had spent approximately $316 million dollars in 2009, 2010, 2011 and 2012 premiums to resolve 2008 Hurricane Ike claims, and had set aside an additional $330 million from premiums to pay for the remaining claims.”

The suit was filed in Travis County because it is the windstorm association’s principal of business, the suit states.

Gamboa is a longtime civic leader in Corpus Christi and holds a leadership role with LULAC. He has run for offices such as a place on the Del Mar College board of regents and a City Council seat.

“It’s been going on for a long time,” Gamboa said of the conflict. “I call it discriminatory to people in South Texas … I’m just a watchdog, and this thing needs to come to a head.”

Kincaid in 1994 served as public insurance counsel, which advocates on behalf of consumers.

Kincaid said that a recent board meeting where a split vote doomed an attempt to consider further assessments is what helped precipitate the lawsuit.

Recently, the windstorm association has been considering how to implement premium surcharges in the event of a catastrophic storm.

Kincaid said the assessments could help protect policyholders from such surcharges on everything from real estate to car insurance.

“Every dollar they get from insurance assessments is a dollar they don’t get from the policyholder,” Kincaid said.

The suit could take a number of months to resolve, Kincaid said.

State Rep. Todd Hunter, R-Corpus Christi, and state Rep. Abel Herrero, D-Robstown, applauded the efforts.

“I’m glad someone is pursuing this avenue,” Herrero said, although he lamented that it may take a judicial decision to get the assessments.

Herrero pointed out that he and other lawmakers had sent a letter asking for the assessments, but nothing has happened.

Hunter said he didn’t know of any other suits that are suing to get the assessments.

“To me, the coastal communities have tried to get the Texas Department of Insurance and the Texas Windstorm Insurance Agency to do the right thing, which is to complete the assessment that is owed to the coastal communities,” Hunter said. “Now the public has to go to the courts to get help. … I wish the plaintiff well.”

Matthew Waller covers state news for Scripps Newspapers and works in Austin. Contact him at mwaller@gosanangelo.com or follow him on Twitter @waller_matthew.

Reprinted with permission from the Corpus Christi Caller-Times.