HOUSTON -- The director of a state program designed to help consumers quickly and painlessly solve their insurance disputes says the Texas Department of Insurance is failing thousands of Texas consumers who need help.
Houston homeowner Susan Aycock is one of them.
More than a year after Hurricane Ike, she is still waiting for resolution to a dispute with Farmers Insurance.
Aycock has shingles missing from her roof and water damage to walls inside her home.
She says it would cost $10,000 to repair. The problem? She says Farmers Insurance offered her just over $2,000.
"It’s always nerve-wracking when you know a rainstorm’s coming," Aycock said.
KHOU: And here we are under the rain, and you still don’t have your roof fixed?
AYCOCK: Still don’t have my roof fixed. Still praying and hoping it’s not leaking inside.
Consequently, Aycock says she will have to soon take the step none of us like to do: suing your insurance company. The lawsuit will mean more legal bills, more waiting, and potentially more damage, should there be another storm.
But she was never told about a faster alternative to solving disputes like this one -- one that might have worked for Aycock and thousands of other consumers. The program, state-sponsored mediation, comes at no cost to the consumer. Further, if after mediating the two sides cannot come to agreement, they still have the option of filing a lawsuit later.
However, the head of Truce Mediation, the firm that won the bid to manage the mediation program for the Texas Department of Insurance, says state officials have taken actions to prevent many consumers from learning about the program.
"It just hurts my heart," said Linda Olden-Smith. "We sit between and help these people come together.
Olden-Smith has a long record of success after winning mediation contracts with various federal and state agencies, including the Equal Employment Opportunity Commission, the United States Postal Service, the Texas Youth Commission, the Texas Central Appraisal District and the Texas Department of Criminal Justice.
But to her surprise, she says the Department of Insurance has silenced her efforts to get the word out about its mediation program.
"I feel as though I’m handcuffed, and gagged," she said. "They told us not to advertise the program."
When she tried to spend her money to inform consumers about the program by handing out fliers along the Gulf Coast, she says officials ordered her to stop.
KHOU: No taxpayer dollars were involved?
Olden-Smith: Not a dime.
The result, she says, is a strikingly low participation rate in a program Olden-Smith believes could have helped thousands.
"We have completed six -- let me repeat, six. Not 600. Not 6,000. Six mediations," Olden-Smith said.
She does not understand the rationale behind keeping the program quiet.
"I would think I would have a right to be able to share knowledge of a program that could help other people who are suffering," she said.
"The Department of Insurance is clearly failing," Alex Winslow of the consumer watchdog group Texas Watch said.
"You’ve got thousands of consumers along the coast who are still waiting for their insurance check," he said.
One problem: out of all of the Gulf Coast states, Texas is the only one with no requirement for insurance companies to mediate disputes with consumers after a disaster. So when the State of Texas set up its free program, only three companies volunteered to participate: Allstate, Farmers and AAA.
As a result, the Department of Insurance decided not to advertise in a single newspaper in the affected areas.
It all makes no sense to Winslow.
"We have a duty to let those who’re eligible know about it. And if that means we have to weed through some people who aren’t eligible, so be it. That’s the job of the Department of Insurance," he said.
Storm victim Aycock doesn’t understand the state’s rationale, either. Her insurer, Farmers, is one of the participants in the program. But she says she was never informed about it.
"Not at all… Did not hear a single word about it," she said.
In fact, KHOU has learned the Department of Insurance leaves it up to the participating insurance companies to tell or not to tell consumers about the program.
Audrey Seldon is the director of consumer protection for the Texas Department of Insurance, and she defends the state’s record.
"I think we are doing an excellent job given the scope of the program," Seldon said.
KHOU asked her about the difference in how other states like Louisiana run their programs.
KHOU: Post-Katrina, they went through 12,000 mediations. Post-Ike, here in Texas, we’ve had six. What’s going on there?
DEPT. OF INSURANCE: To compare Katrina and Hurricane Ike mediation programs really is not an apples to apples comparison. It just isn’t. There’s not a mandatory program (in Texas), not all carriers are participating, our timetables are different."
KHOU: With all due respect, isn’t it your job, to get the word out to consumers that might benefit from this?
DEPT. OF INSURANCE: We do feel we have advertised the program by using the Web site, writing directly to consumers.
But Aycock disputes that claim, saying she never received any notice at all.
"Obviously, the word’s not getting out. They need to come up with another solution," she said.
The non-mandatory program in Texas also draws criticism from Aycock’s attorney.
"Unfortunately, in Texas, the laws put the homeowner at a great disadvantage when trying to get a legitimate claim paid from the insurance company," attorney Tony Buzbee said. "The mediation program, which is a farce, is just one more example of this."
Farmers insurance did not respond to requests for comment on this story.
After KHOU interviewed the director of consumer protection for the Texas Department of Insurance, Insurance Commissioner Mike Geeslin told KHOU that he will propose to the Legislature to make the mediation program mandatory in Texas. Geeslin says he has tried to do that in the past and will try again.
"The ability to mediate an insurance dispute would provide another option for Texas consumers, before the time and expense of litigation," Geeslin said in written statement. "(The Department of Insurance) made that recommendation to the Legislature prior to last session, and we will propose such a program in the future. We have implemented a pilot mediation program on our own volition, and are optimistic that positive results for consumers in the pilot will be persuasive should the Legislature take it up in the future."
Of the six mediations Texas has completed under Olden-Smith’s company, all six resulted in a settlement between the insurance company and the consumer. Olden-Smith says she also received positive written feedback after each mediation.
Seldon agreed that Olden-Smith had done a good job to date and told KHOU she will face no repercussions as a result of voicing her opinions. Instead, Seldon says, the state will focus on making the mediation program better.
