IBA South: Texas insurers lobby for stricter litigation barriers

State lawmakers asked to limit lawyer incentives to discourage case filings

Insurance News

By Allie Sanchez

Insurers are up in arms with some Texas homeowners who file lawsuits for underpaid claims.

Texas insurance firms faced a flood of lawsuits after catastrophes hit Texas neighborhoods in 2012 with the trend continuing until 2014, when more than 10,000 homeowners sued their carriers over denied or underpaid claims.

Local media outlet click2Houston reported that firms believe that the spike in legal action against them is a racket, which is jacking up premium prices in the area as carriers try to recover their court related costs.

“The lawyers of this state have figured out how to use the insurance code to sue insurance companies,” the report quoted Lee Parsley, an attorney with Texans for Lawsuit Reform, as saying in his testimony before the Texas Senate Business and Commerce Committee last October.

However, consumer groups countered that insurers still hike their rates even when lawsuits against them are minimal.

“Year after year after year, premiums are increased,” Brian Blevins of the Texas Trial Lawyers Association said in the same report. “When deductibles go up and coverage is static, premiums should go down and they’re (going) up.”

Insurers are hitting back by lobbying for measures that will remove incentives for lawyers when they file lawsuits against carriers. Specifically, they want to limit the dollars awarded to lawyers to a specific amount instead of the current law which allows attorneys to collect exponentially larger fees compared to the damages their clients get. 


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