Suit against Farmers a poor case of leadership
By John R. Cobarruvias
(printed in the Houston Chronicle Aug 22 2002)

Earlier this month, Gov. Rick Perry, Attorney General John Corny and State Insurance Commissioner Jose Montemajor took time to hold a news conference to announce the filing of a lawsuit against farmers Insurance. Although the action is needed, it could have been avoided years ago when the issues were first brought to their attention. Over the last few years, our elected officials gave the insurance industry exactly what it wanted, and now, this election year, they are getting exactly what they deserve.

These issues are not new. They were presented to elected officials in detail over the last few years and yet they have continued to provide more protection of the industry and nothing for the consumer. The insurance crisis has been ongoing of years and the facts have been presented in a number of forums.

In the first ­ever hearings on mold contamination held across the state last year, Montemayor heard the testimony of hundreds of Texas homeowners, as well as consumer groups, throughout Texas. Their stories contained the same common thread, namely, abuse by the insurance industry, allegations of possible price fixing, and rate manipulation. After all the hearings and special ìmold task forceî the insurance commissioner provided relief to the insurance industry by removing mold coverage and allowing the use of new policies that excluded water and foundation damage. This is exactly what the insurance industry wanted and it did absolutely nothing to protect the consumer.

Prior to the hearings, Corny was asked by consumer groups to investigate the building practices and materials that are susceptible to mold contamination. This would have provided protection to consumers, as well as the insurance industry, by mitigating the risk of mold contamination. It is only common sense: If we reduce the likelihood of mold contamination and other water-related damage, reducing the risk would protect the insurance industry. As a bonus, consumers would be protected by better-built homes and by a reduction in premiums. Instead, the attorney general began an investigation into third-party adjuster and mold remediation companies. This was exactly what the insurance industry wanted. Again, this did absolutely nothing for the consumer.

Perry, instead of recognizing and responding to the crisis, endorsed the licensing of mold remediators and third party adjuster and then called for yet more tort reform for the insurance industry as the solution to the insurance crisis. This so-called tort reform would place limits on the amounts consumers could sue an insurance company for, regardless of the severity of the loss. This was exactly what the insurance industry wanted, and, again, it did absolutely nothing for the consumer.

The filing of the lawsuit is not only ill timed, considering the facts were available years ago and the close proximity to upcoming elections, but it is truly frivolous. Cornyn, Montemayor and Perry had the opportunity to resolve this situation without resorting to trial lawyers and the court system. Consumer groups and homeowners who volunteered their time and money to help expose the issues provided the facts in order to prevent abuse and litigation. And now, with no action taken, the damage has already been done and the only course of action remaining is a lawsuit.

Our state cannot hide behind a double standard of tort reform. If consumers had filed this suit, it would have been deemed ìfrivolousî, yet when our elected officials file the suit, it is considered ìleadershipî. And now Gov. Perry is recommending more tort reform in liability caps to further protect the same insurance companies he is filing a suit against.

Consumers are told over and over again that lawsuits to not solve anything. But when the facts have been presented and good-faith negotiations with the industry have resulted in no clear resolution, then a lawsuit is not only necessary but welcomed. If found guilty, the industry should be justly punished.