TDI Weather Related Property Claims Report | Insurance

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TDI Weather Related Property Claims Report Texas Legislature 2017
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    TEXAS DEPARTMENT OF INSURANCE FINAL PRESENTATION TO THE TEXAS LEGISLATURE INTERIM CHARGES: THE COST OF WEATHER-RELATED PROPERTY CLAIMS AND RELATED LITIGATION FEBRUARY 1, 2017  F INAL P RESENTATION TO THE T EXAS L EGISLATURE  TDI Residential Property Hail Litigation Data Call Overview 1 | Page TEXAS DEPARTMENT OF INSURANCE On February 24, 2016, and March 14, 2016, Commissioner Mattax received requests from the Chairs of the Senate Business and Commerce Committee and the House Insurance Committee, respectively, to collect data on hailstorm claims litigation in Texas to assist the committees with their interim charges on the topic. Accordingly, in March 2016, the Texas Department of Insurance (TDI) developed a draft data call to gather information about the cost of weather-related residential property claims and the incidence of litigation of these claims. The data call was designed to collect information TDI did not already have from its residential property statistical plan. TDI published the draft data call on its website, inviting written comments and announcing an April 21, 2016, public meeting to discuss the data call, which was led by Commissioner Mattax. TDI received written comments from eight interested  parties, and six people commented at the April 21, 2016, meeting. TDI made several changes to the data call in response to comments and issued the data call on May 20, 2016. TDI gave insurers 90 days to complete the data call, with responses due on August 19, 2016. Insurers comprising about 140 separate insurance companies submitted responses to the data call. Data Call  –   Three Sections  Section I asked for a 5 percent random sample of all wind and hail claims for events in 2010-2015. All admitted companies except farm mutual insurers were required to report Section I data. TDI did not require farm mutual insurers to report because they are exempt from reporting data under TDI’s Statistical Plan for Residential Risks . Section II asked for a 100 percent sample of all wind and hail claims for nine specified events (only the top 15 companies with paid claims for the nine specified events were required to respond; it was optional for other companies including farm mutual insurers). Both Sections I and II requested     basic information about the policy;    significant dates in each claim’s history ;    insurer costs associated with the claim;    whether an attorney or public adjuster (PA) represents the claimant;    attorney, PA, and suit-related information; and    information on pre-suit settlement efforts. Section III required companies to complete an underwriting survey, which asked companies about actions such as nonrenewals, reductions in coverage, more restrictive underwriting guidelines, and rate changes, either statewide or in particular regions, in response to increased weather-related litigation (all admitted insurers except farm mutual insurers were required to respond to the survey).  F INAL P RESENTATION TO THE T EXAS L EGISLATURE  TDI Residential Property Hail Litigation Data Call Overview 2 | Page TEXAS DEPARTMENT OF INSURANCE Data Call Challenges    Some companies had to manually review claim files to provide the information. Some companies did not report information requiring manual review.    While TDI reviewed the data for reasonability, completeness, and consistency with other data sources, TDI did not audit or verify the data because this is outside the normal practices for data calls and would have required TDI to conduct on-site reviews of insurers’ book  s and records. TDI excluded companies with significant outstanding data questions from the preliminary results.    Complete Section I data for one top 10 insurer is not included in this analysis. In October, this insurer submitted data for four companies. The insurer submitted data for the remaining companies on December 14, 2016, but TDI was unable to resolve outstanding questions about these companies' Section I data in time for the final presentation. For this reason, their Section I data is not included. Data Call Summary    The data in this presentation is an update to the data TDI staff presented to the Senate Business and Commerce Committee on October 5, 2016, and the House Insurance Committee on December 1, 2016. The hail litigation data in this presentation contains updated exhibits that use more data, as well as new exhibits that are the result of additional analysis that TDI performed.    The hail litigation data in this presentation is provided in two parts. The first part provides data from approximately 65,000 randomly sampled claims from all windstorm and hail events in 2010-2015 that insurers reported under Section I of the data call. The second part provides data from approximately 83,000 claims for nine specific hail storms occurring from 2009-2015 that insurers reported in Section II of the data call. Please note that the Section II data includes data from a farm mutual insurer.    Although farm mutuals were not required to report the Section II data, they were allowed to voluntarily submit the data to TDI. One farm mutual chose to do so and their data is included in TDI’s Section II analysis.      To identify any regional differences in trends, the state was divided into 10 different geographic regions based generally on the rating territories TDI promulgated before the enactment of SB 14 (2003).    3 | Page TEXAS DEPARTMENT OF INSURANCE EXECUTIVE SUMMARY
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