The Texas Windstorm Association has received around 76,000 damage claims so far from Hurricane Ike. While the number of claims coming in has dropped from a high of 6,000 daily, the Associated Press reports that the Association is still receiving anywhere from 700 to 1000 claims each day.
The Texas Windstorm Insurance Association is the wind damage insurer of last resort for thousands of Texans in 14 counties. It was formed after private-sector companies largely pulled out of the coastal market following Hurricanes Katrina and Rita in 2005. The Windstorm Association has more than 142,000 policies in the six most affected counties.
When Hurricane Ike blasted ashore on September 13 as a Category 2 storm, it had sustained winds of 110 miles an hour, and a storm surge as high as 20 feet. Many communities on the Texas Gulf Coast, including Houston and Galveston, sustained significant damage, and flooding was reported as far away as Mississippi. Even as the storm weakened and moved inland, it was still a force to be reckoned with. Damage from high winds and heavy rain was reported as far away as the Midwest and Ohio Valley.
Right after Ike hit, the Insurance Information Institute’s preliminary estimate said the storm could result in more than $11 billion of claims. In addition to being the third most expensive hurricane, it would also be the fifth most expensive insurance event in U.S. history, behind the Sept. 11 terrorist attacks and the Northridge, Calif., earthquake in 1994, the institute said.
Texas Windstorm Insurance Association general manager Jim Oliver told the Associated Press on Wednesday that the final number of claims that the Association is responsible for will depend on whether damage to a property was caused by wind or storm surge. The Association won’t pay for storm surge damage, which it considers to be flooding. “We are going to look at every single claim individually,” Oliver said. “That is going to make the process slow.”
The storm surge conflict was a major source of complaints among policyholders affected by Hurricanes Katrina and Rita in 2005. Conflicts between Hurricane Katrina homeowners and insurance companies over the storm surge issue led to more than 1000 lawsuits against insurance companies, the largest number ever to follow a natural disaster in the US. A 2008 Government Accountability (GAO) report urged better assessment of “the accuracy of flood payments on hurricane-damaged properties.” Insurance companies’ handling of damage claims from hurricanes, where both wind and water destroy property, needs closer government scrutiny, the report said.
Last month, a Texas consumer advocacy group criticized the Windstorm Association’s stance on storm surge damage. “Though this is a predictable industry attempt to deny thousands of legitimate storm surge claims, this position is ludicrous. After all, storm surge is a phenomenon peculiar to windstorms, which should be covered by windstorm insurance,” Alex Winslow, executive director of Texas Watch, said in a memo to state and local officials.
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