Bills dealing with hail-related lawsuits are likely to be introduced during the next session of the Texas Legislature. File photo
Lawyers acting for those claiming damages following hail in 2015 may have earned close to $100 million in fees, and the sharp spike in claims following a series of severe storms in heavily populated this year could lead to a massive increase in hail damage payouts and fees.
Attorneys acting for plaintiffs against insurance companies normally take between a quarter and a third of the amount awarded.
The average payout for those who hire lawyers is $31,000, compared to $7,000 given out by the insurance companies without any litigation, according to the Texas Trial Lawyers Association.
Insurance industry groups in Texas estimate that counties hit by hail report that some 7 percent of the claims end up in litigation, compared to 1 percent for other insurance claims.
One of the most authoritative sources for information on hail-related claims is the National Insurance Crime Bureau, which collates information from thousands of insurance company partners across the country. It reports that Texas has the highest number of hail-related claims in the country, 138,539 in 2015. The total amount paid out following hail damage was approximately $1.2 billion.
Those figures add up. The 7 percent would have shared $300 million in payouts, with the attorneys pocketing anywhere between $75 million and $100 million. The remaining 93 percent of claimants would have shared just over $900 million.
The April 2016 hailstorm that swept through San Antonio produced almost $1.4 billion in estimated insured losses, the Insurance Council of Texas reported. Some estimates suggest the total could be as high as $6 billion this year, largely because of a series of severe storms in heavily populated areas.
If the 7 percent figure is accurate, and the average payout for those hiring lawyers is $31,000, then attorneys could enjoy a payout of some $375 million.
Advocates arguing for reform to tackle alleged abuses by so-called “storm-chasing” lawyers want legislation stripping attorneys of any fees if they are found to have solicited clients door to door. The move would deter lawyers who will know they risk losing their fees if they aggressively knock on doors for clients in the wake of storms, particularly after heavy hail, according to Texans for Lawsuit Reform.
Bills dealing with hail-related lawsuits are likely to be introduced during the next session of the Texas Legislature, which begins Jan. 8. A bill introduced in 2015 that included limiting payouts and other measures failed to pass.
The House Insurance Committee held a hearing this month that was addressed by trial lawyers and reform advocates, including Lee Parsley, general counsel for Texans for Lawsuit Reform.
“The fix is to rein in the ability to collect lawyers’ fees from door to door solicitation of clients,” Parsley told Texas Business Daily. “That already violates the statutes, but district attorneys do not prosecute.”
Parsley said that the legislation should state that if it can be shown in court that clients were solicited, then the fees cannot be collected.
The number of lawsuits linked to hail storms has increased in recent years across the state, but there are various and differing estimates on the extent of the spike. The Texas Department of Insurance is compiling a report on the cost of weather-related claims and the extent of litigation.