Homeowners accuse Texas windstorm insurer of secretly reducing claims

A new lawsuit accuses the Texas Windstorm Insurance Association and several outside adjusting firms of orchestrating a racketeering scheme that allegedly reduced Hurricane Beryl insurance payouts.

The plaintiffs, who seek class-action status, allege that TWIA and the adjusting firms secretly altered damage estimates after inspections.

“Defendants devised and executed a scheme to obtain money and property -- namely, reduced claim payments that TWIA would otherwise have been obligated to pay -- by means of material false pretenses, representations, and omissions,” the lawsuit reads.

The complaint, filed in U.S. District Court for the Southern District of Texas, alleges that the defendants violated the federal Racketeer Influenced and Corrupt Organizations Act by using interstate electronic communications and mail to conceal revisions that lowered claim payments to policyholders following the July 2024 hurricane.

The plaintiffs — Ernestine Bell, Alicia Stuart and David Mohun — contend that field adjusters initially prepared estimates reflecting the damage to their homes, but those estimates were later electronically modified by other personnel, reducing covered repair costs before payments were calculated.

“It is TWIA's practice not to comment on active or potential litigation,” Aaron Taylor, spokesman for TWIA, told InsuranceNewsNet. “The association's claim adjusting procedures are compliant with applicable Texas and federal laws.”

Author of changes undisclosed

According to the lawsuit, the revised estimates continued to identify the original field adjuster as the author and did not disclose who made the subsequent changes or the extent of the reductions.

The practice was part of a coordinated claims-processing system rather than isolated disagreements over repair costs or coverage determinations, plaintiffs claimed.

"Hurricane Beryl damaged the homes of Plaintiffs," the complaint states, adding that claim records reveal "a fraudulent scheme to wrongfully reduce the amount of money owed" to plaintiffs by using materially revised estimates presented under the field inspector's name.

The plaintiffs seek to represent a class of policyholders whose Hurricane Beryl claims were allegedly handled using the same process.

Hurricane Beryl made landfall near Matagorda, Texas, on July 8, 2024, as a Category 1 hurricane with sustained winds of about 92 mph, causing widespread damage across the Texas coast.

The storm generated thousands of claims for TWIA, an insurer of last resort that provides windstorm and hail coverage to coastal property owners unable to obtain coverage in the private market.

The lawsuit says TWIA expanded its catastrophe response by relying on employees, temporary workers and outside adjusting firms to inspect losses and process claims.

Plaintiffs do not challenge TWIA's use of outside vendors, the complaint says.

“The wrongdoing occurred when substantial reductions were made after the inspection and the reduced estimate was then sent under the field adjuster's name without clearly identifying the person who actually changed it, the work that was removed, or the fact that the inspector's original estimate had been displaced,” the complaint states.

A recurring pattern alleged

The claims of Bell, Stuart and Mohun are examples of a recurring pattern, the complaint said.

Field adjuster Lee Olivares allegedly inspected each property and prepared estimates using Xactimate software before supervisory adjuster David DeVilbiss, working from Ohio, assumed electronic control of the estimates, reduced repair amounts and transmitted the revised versions back to TWIA in Texas, plaintiffs claim.

According to the lawsuit, TWIA approved and relied on the lower estimates to calculate benefits while continuing to identify Olivares as the estimator on documents sent to policyholders.

The plaintiffs allege TWIA's vendor contracts, audit logs, editing histories, training materials and other internal records will show the practice was standardized and repeated across numerous Hurricane Beryl claims.

The suit seeks damages and other relief under the federal RICO statute. The plaintiffs say they are not claiming violations of Texas insurance law and are not attempting to replace the state's insurance regulatory framework.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.