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corporate upper class / consumer rights
Delayed resolution of automobile insurance claims in Texas continues to be an expensive and time consuming problem for policyholders.
Claims delays leave Texas consumers footing the bill by having to pay for repairs out of their own pockets. Weeks can stretch into months when fighting to have legitimate claims paid by insurers.
According to Texas Watch, an Austin based consumer advocacy group, the top ranking complaint by policyholders every year is delayed handling of claims. In a 2003 study based on Texas Department of Insurance records, Texas Watch examined trends in auto insurance complaints from 1996 to 2000. There were over 14,000 complaints filed against Texas auto insurers in 2000. Of those, almost 2,000 justified complaints were received by the TDI about claims delays.
Marc Whitehead, a Houston insurance attorney and former University of Houston Law Center professor, says that reasons for the insurance claims delays can vary.
“Once the case actually is filed with the court system, and I’ll use Harris County as an example in our particular case, if you file in district court for example, a district court at any one time has about 1500 cases on file,” Whitehead says.
The use of automated systems and in-house attorneys are some of the reasons for many insurance companies’ failure or inability to pay policyholders. In some cases, this causes delay for several months.
According to the Texas Watch Report, fewer consumers found reasons to complain about excessive auto insurance rates and customer service between 1999 and 2000. However, more consumers were compelled to complain about delays in claims handling. Texas Watch says their data suggests that while insurance companies may have practiced better claims handling overall last year, they are delaying substantially more claims.
Delays in claims handling accounted for 36 percent of all auto insurance complaints filed in 2000 and 49 percent of complaints filed by third-party drivers who were not at fault.
Weak laws and light penalties for huge insurance companies help drag out the claims process, Whitehead says while also noting that the major insurance companies can be very tough to deal with.
“What has happened over the last five to ten years is that insurance companies, looking at the bottom line have done two things," Whitehead says. "Number one, they have shifted away from hiring outside attorneys to defend cases in order to cut their costs and they’ve gone to in-house counsel. Secondly, they’ve gone away from giving experienced adjusters discretion in settling cases.”
Texas consumers have few, if any, tools to battle back against classic insurance company delay tactics. Because of this lack of accountability, insurance companies have no incentive to fill legitimate claims in a timely manner.
Texas Supreme Court rulings in the 1990’s have made it increasingly difficult to sue insurance companies. In the 1995 case of Republic Insurance Company versus Stoker, the decisions made hold insurers not responsible for shoddy or non-existent investigations of claims in status of bad faith. While policyholders would be allowed to sue insurance companies based on what they believe to be a wrongful denial, there will be no compensation for time or expense if the insurer has what the court finds to be a valid reason.
Texas insurance laws are not on the consumer’s side, but attorney Marc Whitehead said there are several measures policyholders can take to avoid drawn out litigation.
“The first thing that I would do would be to consult with an attorney, one that’s experienced in personal injury litigation," Whitehead says. "And one of the things an experienced personal injury attorney will know how to, as we call it, feed the beast. In other words, provide information in a format to the adjuster that goes into the Colossus program to maximize the insurance company’s evaluation.”
© Copyright World Internet News 2006-07
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