This Sunday, I read two interesting and completely opposite things: 1.) the Official Order of The Texas Department of Insurance’s (“TDI”) ruling that TWIA and TFPA violated insureds’ rights under the law and 2.) Rep. Larry Taylor’s guest column in the Galveston Daily News.

These two things were so diametrically opposed it seems one of them must have come from an alternate reality.

TDI began investigating TWIA and its sister association, Texas Fair Plan Association (“TFPA”), almost a year ago on July 21, 2010. TDI’s investigation was based mostly on the work of our law firm and the blatant violations of the insurance code we uncovered through a lawsuit filed in Galveston County. The Order issued this past Friday, July 15th, found that TWIA and TFPA violated the prompt payment act and failed to pay its policyholders for lifted shingles and overhead and profit under the contract and Texas Insurance law.

The insurance companies still are not willing to admit any wrongdoing: “TWIA and TFPA disagree with TDI’s interpretations of [the Texas Insurance Code]… and deny any violation of the prompt pay statute… TWIA denies TDI’s allegation of non-compliance with deadlines…” BUT TDI is required and TWIA and TFPA agreed to go back and review *all* of the claims in which it may have broken the law.

Early on, TWIA and TFPA would not pay insureds for what it called “lifted shingles.” Now, TWIA and TFPA have admitted that lifted shingles are a “direct physical loss” under the policies and insureds should be paid for them if they were damaged in Hurricane Ike.

Finally, TWIA and TFPA have admitted that they should pay insureds when it’s likely that money will be needed to cover the the expense of overhead and profit charged by a general contractor.

It felt good to see the results of years of hard work pay off not just in individual justice for our clients, but also with action by the state agency, TDI.

However, at the same time, coming from an alternate universe was a guest column in Sunday’s Galveston Daily News by Rep. Larry Taylor. You may remember him as the lead proponent of the TWIA “reform” bill that took away policyholders’ rights to make TWIA do what it is supposed to – pay claims promptly and fairly. He is also one of the insurance agents selling TWIA, making a greater percentage off TWIA commissions than agent’s for other companies. KHOU ran a newstory on this. It’s something he could have fixed as a member of the TWIA Oversight Board, but never did. And even after the “reform” bill passed just weeks ago and signed by Gov. Perry, TWIA agents still make 16% commission off TWIA policies- the first 16 cents out of every premium dollar every year goes straight to the agent, even for a simple renewal.

But Rep. Taylor went on the record to praise the “reform” bill as something that “will benefit the public.” He says “TWIA’s sole purpose is to issue policies and pay claims promptly and fairly. When they don’t do that, you fire the people responsible. You don’t penalize other policyholders by increasing the premiums they pay to pay ‘the penalty.’” First of all, there is no relationship between settlement of Ike lawsuits and policy rates because the lawsuits were paid through a reinsurance policy that was a “use it or lose it” policy. Wilder still… the very day the “reform” bill passed limiting insured’s ability to bring a lawsuit, TWIA raised rates 5%!  But what good does that do for an individual homeowner or business who wasn’t paid promptly or fairly? If it had not been for policyholders’ efforts to get the money they deserved for the premiums they paid, none of us would ever have known that TWIA was doing wrong. Rep. Taylor, where were you in 2008? Where was your Oversight Board in 2009 during the Legislative Session? When did you call for resignations at TWIA? And how dare you blame policyholders for hiring lawyers when they never would have had to do that if TWIA had treated them right to begin with?! As a family who has a home in Galveston and attorneys who represent families, businesses and churches there, these two completely different realities cannot continue to co-exist if Galveston and the Texas Gulf Coast want to thrive. The true reality is that people and businesses on the Texas Coast deserve to be treated like the rest of the State, and not with second class rights.

Amber Mostyn