John W. Polak

The Texas Windstorm Insurance Association is enacting a number of reforms this summer that officials say will protect homeowners by making the organization more efficient and financially stable.

Last week Gov. Rick Perry signed House Bill 3, which allows the quasi-governmental agency to limit the amount of damages homeowners can recover to a maximum of double the costs plus court fees and limit the number of lawsuits brought against the association, saving it court and lawyer fees.

Rep. Jon Smithee, R-Amarillo, authored the initial bill and said it was an important piece of legislation to pass during the special session because of the approaching hurricane season and the shortfall the association faces. It was originally proposed during the 82nd regular session and was one of Perry’s “must pass bills.”

The Atlantic hurricane season officially began June 1 and will last until Nov. 30, but the most severe storms usually come in September and later. However, hurricanes currently brewing in the gulf could hit land in coming weeks.

The association struggled to recover financially after hundreds of policy holders sued after Hurricane Ike in 2008. The association distributed approximately $1.9 billion in claims and court fees to Houston and Galveston area residents. Its officials said they could not match that amount if another serious hurricane hit Texas this season.

John W. Polak, the association’s new interim general manager, said he believes the agency is ready for another hurricane if it were to hit the coast, because the agency learned a lot after 2008. The reforms that occurred during the special session helped prepare the agency for the hurricane season and will benefit its policy holders, Polak said.

“Anytime you have a significant event, like in 2008, you learn from the experience, and there are things we learned that we could do better,” Polak said.

Most of the complaints from policyholders after the 2008 hurricane were that the insurers didn’t meet deadlines required by law and the organization had poor communication with its policy holders.

The agency has gone through a number of changes and currently has a larger staff, a more articulated catastrophe response plan and most importantly and a better communication plan than in the past, Polak said.

“People forget the typical ways you get in touch with people don’t work after a hurricane,” he said. “Home phone lines don’t work, cell phone towers are often out. As a result, we’ve established call centers so that we can do a better job with proactive communication and communication after an event.”

Polak said the association is currently working their way through the new legislation, and it will take effect by the end of September.

Adriana Escalante, a Plan II and international relations and global studies junior, had to evacuate her family’s house in Kemah, on Galveston Bay, for Hurricanes Rita in 2005 and Ike in 2008. Their roof was destroyed after Ike, and Escalante said it took years for everything to get back in order.

Although Escalante’s family was not insured by the Texas Windstorm Insurance Association at the time of the storm, she said the reforms would not help her town much because of how devastating hurricanes can be.

“It took a lot of time to for our community to recover after the hit,” Escalante said. “No matter what kind of reforms happen [with the association] it will take a very long time to build up a community again if another hurricane hits this summer.”

Printed on Thursday, July 28, 2011 as: New state legislation liability when processing windstorm claims