GALVESTON — The Texas Windstorm Insurance Association is refusing to pay nearly $14 million its own experts determined was owed to the city of Galveston for damage from Hurricane Ike, said state Rep. Craig Eiland, D-Galveston, who is representing the city as a lawyer.
The association is also challenging a $3.4 million award for the city of League City.
And, Eiland added, that could be a bad sign of things to come in the future.
“The thing that really concerns me is that this will be TWIA’s modus operandi,” Eiland said.
Eiland said the association’s actions fly in the face of changes made to state law in 2011. Those changes established an appraisal process as a way to lower the number of lawsuits filed against the association in the future.
Instead, the city will be forced to sue the association anyway.
Alainna Giacone, spokesperson for the windstorm association, said the agency would have no comment on the dispute because it does not comment on pending litigation.
In April, city attorney Dorothy Palumbo sent a letter to the windstorm association, demanding it pony up more than $3 million to cover damage sustained to City Hall during Hurricane Ike. The association, in subsequent letters, invoked the appraisal requirement to assess all the damage for which the city was seeking compensation.
That list of damaged property included not just City Hall, but a total of 187 items at 60 city facilities.
According to state law, if a claim is contested, the windstorm association and the claimant each appoint an appraiser. Each side also agrees to an umpire, or arbitrator, to work with both sides. The three work together and agree to an amount to be awarded to the policyholder. Once that amount is agreed to and signed off on by the appraisers and the arbitrator, the windstorm association has five business days to pay.
The windstorm association’s appraiser, John Muller; the city’s appraiser, Mark Domangue; and the arbitrator, Chuck Howarth, signed an appraisal form Nov. 6 awarding the city $13,971,211.86.
The windstorm association has not paid. Eiland said he has talked to association officials, and they are challenging the award.
The association, he said, believes the three-man panel did not properly determine whether the damage was from Hurricane Ike.
“Basically, they don’t believe their own appraiser and the umpire,” Eiland said.