Texans know that hail storms are becoming a fact of life these days.
Our state’s unique weather patterns frequently put us in the path of these severe storms, and those small ice pellets cause big damage in communities across the state.
What many Texans might not know is that the prevalence of these hail storms in Texas is also creating a lucrative business for a new cottage industry looking to profit off the misfortune of hail storm victims.
There are some bad actors who are going door-to-door in many Texas communities hit by hail storms and encouraging homeowners to sue their insurance companies.
Some roofing contractors, public adjusters and plaintiff attorneys mislead storm victims and promise big payouts at no cost.
Unfortunately, homeowners who sign on the dotted line often do not realize that they are entering into a major lawsuit that could delay the process of settling their claim.
It could also ultimately increase their insurance costs. This issue especially hits home for me, as my family lives north of Fort Worth in Cooke County.
This scheme does not just hurt these individual homeowners; it can raise insurance premiums for entire neighborhoods.
Some insurance companies are even leaving parts of the state where lawsuit abuse is most rampant.
In Hidalgo County, one of the areas most targeted by fraudsters, about 10,000 homeowners lost property insurance coverage in 2012.
From 2013 to 2015, there were close to 400,000 hail claims made in Texas — more than twice the number of Colorado, the state with the second-highest number of hail claims during that same two-year period.
Some insurance companies have been sued on as much as 35 percent of claims after a hail storm. To put that in perspective, nationally, the industry is sued on less than 2 percent of claims.
And it is not just the insurance companies that are being targeted.
Homeowners are unknowingly filing personal lawsuits against individuals in the industry, like local insurance agents and independent adjusters.
Being sued personally can be devastating for these families and small business owners.
One independent adjuster testified in Austin before the Legislature that he had been sued 56 times in Texas since 2011.
Despite a rise in property insurance lawsuits, the number of consumer complaints against insurance companies filed with the Texas Insurance Commissioner has not increased.
This further shows how the frivolous hail lawsuits are not driven by consumer dissatisfaction, but rather by third parties looking to profit.
A process is already in place for resolving insurance disputes without litigation, but trial lawyers and public adjusters are increasingly pushing highly leveraged nuisance suits in order to line their own pockets.
Unfortunately, it’s the consumer who pays the price when property insurance becomes unavailable or unaffordable. Common sense reforms can curtail hail lawsuit abuse.
Texas lawmakers need to act during the 2017 legislative session to protect hail storm victims and restore the property insurance marketplace.
Property owners coping with hail damage have enough to deal with after the storm passes. Any knock on their doors should be an offer to help, not a trap.
David A. Sampson is the president and chief executive officer of the Property Casualty Insurers Association of America.