Three Texas homeowners filed a federal racketeering lawsuit last week alleging that the Texas Windstorm Insurance Association fraudulently reduced claim estimates for properties damaged by Hurricane Beryl.
The lawsuit, filed in the U.S. District Court, Southern District of Texas, alleges TWIA partnered with a vendor who made significant alterations to the origina
l claims estimate made by a field adjuster. TWIA then sent the estimate to the policyholder under the premise that the estimate was the original, the lawsuit says.
Plaintiffs allege that they lost tens of thousands of dollars due to the scheme. For one policyholder, the original field adjuster estimate was $91,000, but the altered estimate came out to $31,000, a reduction of 66%.
The plaintiffs are seeking a class action under the federal RICO (Racketeer Influenced and Corrupt Organizations) Act. The lawsuit does not rely on violations of Texas insurance law as the predicate acts for the RICO claim.
Hurricane Beryl made landfall on the Texas Gulf Coast on July 8, 2024, as a Category 1 hurricane. TWIA, the state-created insurer of last resort for wind and hail, has reported $336 million in Hurricane Beryl claims payments to about 34,000 policyholders.
Aaron Taylor, a TWIA spokesman, said the organization does not to comment on active or potential litigation.
“The Association’s claim adjusting procedures are compliant with applicable Texas and federal laws,” Taylor said.
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Lawsuit details
The lawsuit alleges a claims-production method where an out-of-state supervising adjuster would materially lower the estimate made by a field adjuster and then present the altered report as the field adjuster’s original report.
To handle the immense volume of claims that arose out of a major hurricane, TWIA used a common practice of hiring temporary personnel, outside contractors and approved vendors.
Leading Edge Claims Service, which now goes by Hansen, contracted with TWIA to furnish field-adjusting and claims-related services.
After the field adjuster prepared an estimate, an Ohio-based supervisor employed by Leading Edge assumed electronic control of the estimate and altered it to reflect a lower repair cost, the lawsuit alleges. The plaintiffs allege the supervisor wrongfully removed or reduced covered repairs.
