Ahead of meeting last week of the Actuarial and Underwriting Committee of the embattled Texas Windstorm Insurance Association (TWIA), a number of state level lawmakers sent a letter asking that no recommendation to the Board of Directors be made for a rate increase for policyholders. Even one of the committee's own members sent out a 7 page rebuttal on how he believed that a recommendation for a rate increase was outside the bounds of state law and pointed towards what he and others believed was flawed modeling that was being used to justify such a recommendation. The committee ended up passing the recommendation measure by a vote of 5-2 and committee chair Debbie King is expected to present the recommendation to the Board of Directors on December 10, in Corpus Christi. But what is evident is that TWIA is in possibly in panic mode and that is for perfectly good reasons.
One thing that TWIA does not want to have happen is for the association to come under greater legislative scrutiny or oversight because such a move would hold them to a higher level of public accountability. But from almost every perspective you can find, except for their own, greater oversight is what is absolutely needed.
"What you have here is an Association ran by lobbyists and some very powerful insurance industry players," says Daniel Cardon who worked as an estimator for over 20 years. "The place to look is no further than your producers who have a vested financial interest in the bottom line."
Cardon says that the schemes from the insurance industry are getting more and more aggressive as time goes by. He knows first hand.
"Texas Farm Bureau came to us in the days after Harvey and they made it perfectly clear that we were to make sure that TWIA claims went away as cheap as we could," Cardon said. "It hurts your heart to know that you are going to be forced to stick it to somebody who is already in a bad situation and you're doing it so an insurance company can make money."
And make money they did. In fact, records show that Texas Farm Bureau made more than $4.5 million dollars in 2018 just off of TWIA payouts. And as luck would have it, Texas Farm Bureau happens to hold a seat on the TWIA Board of Directors.
Mike Gerik is the executive vice president at Texas Farm Bureau. Gerik actually fought hard back in August to see to it that a rate increase was filed with the State, a measure which was ultimately voted down by Board members. It is almost obvious where his interests lie--and they sure are not for Texas Coastal residents who are bearing the burden of the policies.
But for Gerik, the pocketbook hits a little bit closer to home. The circle of conflicts goes deeper than almost anybody could imagine. It seems that Mike Gerik and his wife Cyndi, have deep ties to Texas Farm Bureau. Cyndi Gerik serves as the Chief Financial Officer for Texas Farm Bureau--a fact that everybody from Texas Farm Bureau and TWIA tends to try and keep well hidden within a few disclosure statements.
"If you look into this relationship between TWIA and Texas Farm Bureau, you start to see some interesting connections," says Insurance Analyst Rondell Shaw. "Now we are talking about the integrity of the entire association."
When the Board of Directors meet on December 10 at the Omni Hotel in Corpus Christi, they will do so with only a partial Board--something that has many people appalled. The Board of Directors has two vacancies and both of them are from the consumer side of things. Currently, the Board of Directors is swayed in favor of TWIA and many, including some legislators that we have spoken with think that it is out of line for the Board to even consider a rate increase without a full and functional Board that represents the interests of everybody involved.
"If you want to talk about corruption and insurance industry manipulation at its finest then this is your poster child," says Shaw. "Everything this association does and has done to this point should be questioned, if not invalidated."
An email surfaced shortly after the meeting of the Actuarial and Underwriting Committee last week that showed while during the meeting, Committee Chair Debbie King was discussing a letter signed by state lawmakers which spoke out against a rate increase recommendation of any kind. That communication, which was dated and timed while the meeting was underway mentioned lawmakers directly and then became subject to open records and open meetings laws. And though it was sent using a yahoo mail account, it does not disregard the fact that this document became part of open records.
TWIA officials have been pressing the release of the email which is a strong indicator that King herself may have deleted the email from her private server which would call other items into question.
Marty Henricks is an expert in journalist protection and freedom of information. Henricks says that reporters in states like here in Texas do have protections that allow them to obtain such documentation from confidential sources.
"The reason they want that email is so they can get their hands on it and attempt to dispute its validity," said Henricks. "But the fact remains that several persons have now come forward admitting to seeing the email and were party to the conversation. That is what they are concerned with."
Surrounded by all of these potential controversies, TWIA does appear to be in serious danger of going down as one of the most corrupt organizations in Texas history and now, legislators and citizens alike are working together to bring this corruption to light--but coastal residents have been saying that for some time now.