Bakht Khattak v. Texas Windstorm Insurance Association, Pacesetter Claims Service, Inc. and Blane E Bergan

MOSTYN 11AW ]FURM

OF H( [SINHOUS FON, BEAUMON 1, A USI INANP SAN AN FON IO

November 6, 2009

Via CMIRRR # 7009 1680 0001 7199 148 7

Latonia D. WilsonGalveston County District Clerk600 591h Street, Room 4001

Galveston, Texas 77551

RE: Cause No. 09CV-0147; Bakht Khattak v. Texas [Vindstorm Insurance Association,Pacesetter Claims Service, Inc. and Blane E Bergan; In the 56 1h Judicial DistrictCourt of Galveston County, Texas

Honorable Clerk:

Enclosed for filing in the above-referenced matter are an original and one (1) copy of thefollowing:

(1) Plaintiff's Fifth Amended Petition

Please indicate your receipt and filing of this document by affixing your file stamp to the

extra copies.

Thank you for your assistance in this matter.

Sincerely,

T_MVMOSTVN L RM

Vanessa MunizParalegal to Rene M. Sig

cc: Via CMIRRR # 7009 1680 0001 7198 6490 Via CMIRRR # 7009 1680 0001 7199 14 70

Michael S. Wilson/David A. Wright David P. Salyer

Davis & Wilkerson McLEOD, ALEXANDER POWEL & APFFEL, P.C.1801 S. MoPac, Suite 300 802 Rosenberg, P.O. Box 629Austin, Texas 78701 Galveston, Texas 77553

cc: Via CMIRRR # 7009 1680 0001 7199 1494 Via CMIRRR # 7009 1680 0001 7199 1500

Walter Mizell S.R. Lewis, Jr.

BROWN MCCARROLL LEWIS & WILLIAMS, L.L.P.I I I Congress Avenue, Suite 1400 2200 Market, Suite 750

Austin, Texas 78701 Galveston, Texas 77550381 0 W. Alabama Street, Hous ton, Texas 77027 1 www.Mostyn Law.com

CAUSE NO. 09-CV-0147

BAKHT KHATTAK § IN THE DISTRICT COURT OFPlaintiff, §

V. § GALVESTON COUNTY, TEXAS

TEXAS WINDSTORM INSURANCE §

ASSOCIATION, PACESETTER §

CLAIMS SERVICE, INC. AND §

BLANE E. BERGAN §

Defendants. § 5 6 TH JUDICIAL DISTRICT

PLAINTIFF'S FIFTH AMENDED PETITION

TO THE HONORABLE JUDGE OF SAID COURT:

COMES NOW, Bakht Khattak ("Plaintiff") and files this Plaintiff'sFifthAmendedPelition,

complaining of Texas Windstorm Insurance Association ("TWIA"), Pacesetter Claims Service, Inc.

("Pacesetter"), Blane E. Bergan ("Bergan") and Reggie Warren ("Warren") (who will be collectively

referred to as "Defendants") and for cause of action, Plaintiff would respectfully show this

Honorable Court the following:

DISCOVERY CONTROL PLAN

I. Plaintiff intends for discovery to be conducted under Level 3 of Rule 190 of the Texas

Rules of Civil Procedure. This case involves complex issues and will require extensive discovery.

Therefore, Plaintiff will ask the court to order that discovery be conducted in accordance with a

discovery control plan tailored to the particular circumstances of this suit.

PARTIES

2. Plaintiff Bakht Khattak is an individual residing in Galveston County, Texas.

3. Defendant Texas Windstorm Insurance Association is a domestic insurance company

engaged in the business of insurance in Texas. This defendant has no designated agent in Texas on

whom service of citation may be made in this cause. The causes of action asserted arose from or are

connected with purposeful acts committed by this defendant. Accordingly, this defendant may be

cited by serving by certified mail, return receipt requested, Texas Windstorm Insurance Association,

Executive Director: Jim Oliver, 5700 S. Mopac Expressway, Building E, Suite 530, Austin, Texas

78749. This defendant has appeared and answered in this lawsuit. No citation is requested at this

time.

4. Defendant Pacesetter Claims Service, Inc. is a corporation organized under the law

of the State of Florida, and the cause of action arises out of this defendant's business activities in the

State of Texas. This defendant may be served through certified mail, return receipt requested

through its Registered Agent, Alan Korhonen, 1921 Suzanne Lane, Lakeland, Florida 33813-3247.

This defendant has appeared and answered in this lawsuit. No citation is requested at this time.

5. Defendant Blane E. Bergan is an individual residing in and domiciled in the State of

South Dakota. This defendant may be served with personal process by a process server at his place

of residence at 4908 East Harmony Street, Sioux Falls, South Dakota 57710. This defendant has

appeared and answered in this lawsuit. No citation is requested at this time.

6. Defendant Reggie Warren is an individual residing in and domiciled in the State of

Texas. This defendant may be served with personal process by a process server at his place of

residence at 17 Longwood, Austin, Texas 78737. This defendant has appeared and answered in this

lawsuit. No citation is requested at this time.

Page 2

JURISDICTION

7. The court hasjurisdiction over the cause of action because the amount in controversy

is within the jurisdictional limits of the court.

8. The court has jurisdiction over Defendant Texas Windstorm Insurance Association

because this defendant is a domestic insurance company that engages in the business of insurance

in the State of Texas and Plaintiff s causes of action arise out of this defendant's business activities

in the State of Texas.

9. The court hasjurisdiction overDefendant PacesetterClaims Service, Inc. because this

defendant engages in the business of adjusting insurance claims in the State of Texas, and Plaintiff s

causes of action arise out of this defendant's business activities in the State of Texas.

10. The court has jurisdiction over Defendant Blane E. Bergan because this defendant

engages in the business of adjusting insurance claims in the State of Texas, and Plaintiffs' causes

of action arise out of this defendant's business activities in the State of Texas.

11. The court has jurisdiction over Defendant Reggie Warren because this defendant

engages in the business of adjusting insurance claims in the State of Texas, and Plaintiff s causes

of action arise out of this defendant's business activities in the State of Texas.

VENUE

12. Venue is proper in Galveston County, Texas, because the insured property is situated

in Galveston County, Texas. TEX. Civ. PRAc. & REm. CODE. § 1 5.032.

Page 3

INSTITUTIONAL FACTS REGARDINGTEXAS WINDSTORM INSURANCE ASSOCIATION

1.

BACKGROUND

13. In 1971 the Texas Legislature created Texas Windstorm Insurance Association

("TWIA" formerly named CATPOOL). At that time, casualty insurers were exiting high risk areas

of the State leaving coastal residents and businesses without access to insurance. TWIA is the

windstorm insurer of last resort for Texas families, businesses and churches in the fourteen coastal

counties without any other choice.

14. Property and casualty insurers join TWIA as a condition of doing business in this

State. The purpose was to create an assigned risk pool in the coastal areas of the state. Essentially,

TWIA operated as a windfall to casualty insurers who were no longer required to write policies of

insurance in high risk areas. Members also share in TWIA's profits. This has resulted in record low

loss ratios for the property insurers in Texas. Despite this windfall, Texas currently has the highest

insurance rates in the country, nearly twice the national average.

15. Hurricane Ike claims made to TWIA are funded first from premiums and then from

unlimited assessments on private member insurers. The Texas Legislature recently modified

TWIA's funding scheme. For claims incurred after Hurricane Ike, TWIA's funding comes from

premiums, assessments on member insurers, and bonds. Though TWIA claims it is a part of the

State of Texas, with the exception of tax credits to the member insurers, TWIA does not receive any

Page 4

money from the State.' Since TWIA's inception, it has been merely an association of for profit

insurance companies that receive no funding from the State.

16. In an attempt to avoid the repercussions of its unfair and deceptive practices that tens

of thousands of coastal residents and businesses endured during Ike, TWIA went to the Texas

Legislature to ask the State to grant it immunity from extracontractual damages and attorneys' fees.

The Legislature deliberated and rejected TWIA's request to limit TWIA's liability beyond that of

its for profit insurers.

17. Undaunted by the Legislature's rejection of its pleas for immunity, TWIA tried to

convincethecourtstojudiciallyimmunizeit. TWIAclaimedthatit"morphed"intoaStateagency.

Refusing to engage in an unprecedented act of judicial activism, this Court allowed Plaintiff to

conduct discovery on TWIA's bogus immunity defense.

18. Undeterred by TWIA's antics, Plaintiff obtained court ordered discovery that has

shed new light on TWIA's outlandish claims of immunity. It is abundantly clear that TWIA does

not have any characteristics of the State. TWIA pays property and income taxes, makes hiring and

contractual decisions based on nepotism, employs lobbyists and TWIA's management accepted and

continues to accept gifts in exchange for valuable adjusting contracts.

19. While TWIA was created with proper intentions, today it is a good ole' boys club

calculated to deny claims and put profits into the hands of a select few. It is clear during Dolly and

Ike that TWIA discussed and implemented a systematic plan to purposefully deny, frustrate, and

underpay the families who had no choice but to be insured by TWIA and were devastated by

I

See "Plaintiff s Exhibit I ", TWIA's Response to Plaintiff s Interrogatories, September 9, 2009, at ROG

No. 9.

Page 5

Hurricane Dolly and Ike. In addition TWIA was grossly unprepared for a storm the size of the Ike

despite having full knowledge of these inadequacies. TWIA had no real catastrophe plan prior to

Ike making landfall. With complete and utter disregard for the duty of loyalty and utmost good faith

it owed to its policyholders, TWIA made up and changed the rules as it went along in direct

violation of the standards and rules governing the treatment of insureds in Texas.

II.THE PLAYERS

1. TWIA

a. The Claims God: Reggie Warren

20. TWIA is controlled by its Vice President of Claims, Reggie Warren, the proclaimed

2"Claims God'. Warren's purpose is to "make lots of money".'

b. The Right Hand Men: Kevin McFarlin and Bill Knarr

21. Kevin McFarlin and Bill Knarr supervised TWIA's internal operations and the outside

adjusting companies.'

2. The Chosen Ones: PrimaKy Adjusting Companies

22. TWIA maintained six "Primary Adjusting Companies".' These included ABJ, Brush

Country, Crawford, GAB, Littleton, and Sabine. Prior to Hurricanes Dolly and Ike, these six

adjusting companies were the only primary adjusting companies that TWIA used. After Dolly and

Ike, these adjusting companies continue to receive the bulk of TWIA's business. TWIA maintains

2

See "Plaintiff s Exhibit 2", Bates 15139.

3

See "Plaintiffs Exhibit 3", Bates 261.

4

See "Plaintiffs Exhibit 4", Bates 1824.

5

See "Plaintiff's Exhibit 5", Bates 5735.

Page 6

an incestuous relationship with its six primary adjusting companies. Kevin McFarlin worked for

GABpriortojoiningTWIA. OneofReggieWarren'ssons,Nick,worksforTWIA,hiswifeworks

for TWIA and his other son Zack is employed by Brush Country along with Reggie Warren's

6brother Joey. Reggie Warren was formerly employed by ABJ. Bill Knarr worked for GAB before

going to TWIA.' The head of Brush Country's son works for Texas Fair Plan, TWIA's little

brother.

3. Dedicated Adjusting Program

23. After Hurricane Dolly hit, TWIA increased its number of adjusting firms to twelve.

These dedicating adjusting firms included the six primary adjusting companies plus Catastrophe

Specialist Inc.; Eberls Claim; Legacy Group; Pacesetter; Schafer, Wood & Associates; and

Wardlaw.'

4. The Enemy

24. TWIA treated the families and businesses that it insured as the enemy. TWIA also

treated the adjusting fin-ns outside of its primary adjusting program as the enemy.'

6 Internal ernails reveal that the head of Brush Country bought Reggie Warren's brother, Joey a new pickuptruck. See Plaintiff s Exhibit 96.

7


8

See "Plaintiff's Exhibit 7, Bates 5736-5739.

9 Seefor example, "Plaintiff s Exhibit 8", Bates 6608.

Page 7

Ill.LACK OF PREPAREDNESS/TRAINING

25. As early as 2007, TWIA knew that it was not prepared to handle a major storm."

TWIA issued 210,000 coastal policies, yet maintained only six primary adjusting companies."

TWIA increased that number to twelve dedicated adj usting companies after Dolly. 1 2 TWIA was fully

aware this number was not sufficient to handle a major event at Galveston." Despite Hurricane

Dolly fully exhausting the 12 Dedicated Adjusting firms resources, TWIA made no attempt to

expand their pool of adjusters for the likely possibility of another storm on the Texas coast." They

stuck their head in the sand and hoped there would be no more hurricanes ignoring the fact that they

are insurer for hurricanes on the Texas coast.

26. Instead of choosing adjusters based on their qualifications, reputation and training,

TWIA employed a pay to pla mentality. TWIA's six primary adjusting companies offered Reggie

Warren gifts, trips and discussed inappropriate relations in quid pro quo for a position on TWIA's

preferred adjusting list. The good ole boys club was in full effect with a you scratch my back and

I will scratch yours mentality.

27. As Hurricane Ike neared the gulf coast, TWIA's catastrophe plan unfolded. It included

bringing in seven of the wives of TWIA's claims personnel to assist, borrowing parking from a

nearby church, gassing up a motor home, buying a new fax machine, building some extra cubicles

10See "Plaintiff's Exhibit 9", Bates 581 1.

I I


1 2

See "Plaintiff s Exhibit 7", Bates 5736-5739.

1 3

See "Plaintiff s Exhibit 9", Bates 581 1.

1 4See "Plaintiffs Exhibit IO", Bates 13415.

Page 8

andhopingeverythingwouldworkout." Intemally,TWIAacknowledgedthatitwasseverelyunder

6staffed and did not have a sufficient amount of adjusting companies to weather the storm.'

28. TWIA put out a desperate plea for additional adjusters in the first couple weeks after

the storm." TWIA tripled the number of adjusting companies that it contracted with in eleven

days." By September 19, 2008, even TWIA acknowledged that any additional adjusters it would

obtain would be "weak at best".'9 The adjusters received little to no training, education or

21 -four new adjustingscreening. In fact, the only training that the adjusters from the twenty

companies received was at an orientation held after the storm." If indeed an adjuster did attend,

there was no way for TWIA to verify attendance because TWIA did not have sign in sheets. TWIA

shifted the responsibility of training new adjusters to the adjusting firms not familiar with Texas law

or procedures and admitted that many of the new adjusters did not receive directives, price

22guidelines, or fee schedules.

1 5

See "Plaintiff s Exhibit I I ", Bates 247-48.

1 6See "Plaintiff's Exhibit 12", Bates 15194; "Plaintiff s Exhibit 13", Bates 246.

1 7See "Plaintiff s Exhibit 14", Bates 6449; "Plaintiff s Exhibit 15", Bates 6462.

1 8

See "Plaintiff s Exhibit 3 ", Bates 26 1.

1 9See "Plaintiff's Exhibit 16", Bates 10684.

20 See "Plaintiff s Exhibit 17", Bates 4555; "Plaintiffs Exhibit 18", Bates 4564-65

2 1

See "Plaintiff s Exhibit 20", Bates 272-273.

22See "Plaintiff's Exhibit 21 ", Bates 647 1.

Page 9

29. Recognizing TWIA's failure to prepare would result in significant shortcomings,

TWIA immediately issued directives to its personnel and adjusters to "Be aware of political entities

,,21and persons ...legislators, TWIA Board Members, Judges, school districts and municipalities.

30. As TWIA unleashed its unprepared adjusters on the coastal community, confusion

2 21andinconsistencyensued.'TWIA'ssoledirectivesweresenttothemassesviaemail. Immediately

after the stonn, TWIA acknowledged that its ernails and instructions were going unread."

31. In the coming months, TWIA unraveled. TWIA personnel were overwhelmed by the

influx of phone calls." TWIA did not have sufficient adjusters or internal personnel to handle the

claims." TWIA refused to take its insureds phone calls and in complete disregard for its non-

21delegable duty owed to insureds, TWIA referred them to adjusters.

32. If a policyholder was lucky enough to have an adjuster keep the appointment, the

chances that an unqualified adjuster receiving preferential treatment would arrive was not only great

but certain. TWIA's entire setup protected the select few who reached the status of a primary

adjusting company. Private emails obtained from TWIA discuss supervisors sending Reggie

Warren's son, Zachary Warren, and Reggie Warren's brother Joey the adjuster's test without ever

23See "Plaintiff s Exhibit 22", Bates 283.

24See "Plaintiff s Exhibit 23", Bates 1214 1; "Plaintiff s Exhibit 24", Bates 13607; "Plaintiff s Exhibit 25"

16786-87.


26See "Plaintiff's Exhibit 26", Bates 4569.

27See "Plaintiff s Exhibit 26", Bates 4569; "Plaintiff s Exhibit 2711, Bates 384.

28See "Plaintiff s Exhibit 28", Bates 10948; "Plaintiffs Exhibit 29", 683; "Plaintiff s Exhibit 3011, Bates

13823.

29See "Plaintiff s Exhibit 3 1 ", Bates 6491; "Plaintiffs Exhibit 32", Bates 16437.

Page IO

attending training." Moreover, the primary adjusting companies received the lion's share of the

claims, and their estimates were pushed through the system quickly." Insureds assigned adjusters

from firms not on the primary list were frequently punished by TWIA's hostile approach to these

companies desire to do the right thing.

33. Once TWIA managed to send an adjuster out to inspect a home, TWIA lacked the

resources to have the estimates evaluated. Adjusters transmitted estimates to TWIA in bulk pdf files

without any identifying information. TWIA was so far behind that estimates would sit in TWIA's

email boxes, unopened and unaccounted for six to eight weeks.

34. TWIA continued to refuse to take calls from policyholders and referred them back

31to adjusters. When an insured would call the adjusting firm to check on the status of the claim,

the adjuster would explain that his estimate had already been submitted to TWIA. Instead of

admitting how far behind it was, TWIA instructed adjusters not tell the insured when the estimate

was submitted for revieW.3' The people at the top of TWIA purposefully withheld information from

insureds stating "we need to keep TWIA business in house, how far we are behind and things of that

nature should not be discussed with insureds."" Thus, depriving the families on the coast the

knowledge that they desperately needed on how long it would be for the money they needed to make

repairs would be coming. For example, if they used the mortgage money to fix their roof, when

30 See "Plaintiff's Exhibit 33", Bates 12058; "Plaintiff s Exhibit 34", Bates 5704.

31


32See "Plaintiffs Exhibit 3 1 Bates 6491; "Plaintiff s Exhibit 35", Bates 16436.

33See "Plaintiff s Exhibit 23 Bates 1655 1.

34See "Plaintiff s Exhibit 37", Bates 324; "Plaintiff s Exhibit 38", Bates 324..

Page I I

would TWIA finally pay? Adjusters were then forced to field calls from angry insureds demanding

to know the status of a claim with absolutely no ability to predict when TWIA would get to it."

35. Adding to the confusion, adjusting companies sent a copy of the estimate to the

insured at the same time it was sent to TWIA for approval." Weeks and sometimes even months

later, when TWIA finally got around to retrieving estimates trapped in email purgatory, TWIA's

17intemalpersonnelwouldreviewandeliminateitemsfromtheestimates. BecauseTWIA'sinternal

personnel lacked adjusting software, they would simply recalculate by hand the amount on the

estimate and send a check without any explanation for the amount of payment.

One adjusting firm summed it up best when it advised:

"When we forward a report making recommendations to your [TWIA's]office we also send as requested a copy of the estimate to the insured. We areencountering numerous phone calls from insureds receiving checks for an amountdifferent than our recommendation. There is no note or letter of explanation sent bythe examiner either to us or the insured. We then get a phone call from the insuredand we are at a loss to explain the difference. Would it be possible either to adviseour office or the insured of the reason for the discrepancy, so that we don't wasteanyone's time.""

TWIA's response wasto "sendthe adjusters fax or something letting them knowthe changes so they

can respond to the insured's calls."

35See "Plaintiff s Exhibit 36", Bates 1655 1.

36See "Plaintiff s Exhibit 3 1 ", Bates 649 1.




Page 12

36. If an insured did actually manage to get someone on the phone at TWIA, the chances

of ever speaking to that person again were slim. TWIA instructed its internal employees not to own

files.'O Thus, an insured could not ask to speak to the same employee each time it called, but would

be given to someone new. Because TWIA's claims personnel were advised not to put anything in

a file that they would not want to read in a lawsuit, the files were sparse and contained little

41information.

37. TWIA placed a tremendous amount of pressure on its supervisors to review so many

files per day that the supervisors had no choice but to deny claims. Before Hurricane Ike, TWIA's

supervisors reviewed five files per day." By September 28, TWIA mandated that supervisors review

1330-40 files each day. The supervisors were forcd to review an overwhelming amount of files per

day orjeopardize the $500 per day they fetched. The supervisors quickly realized that the only way

that they could possibly keep up with the demand was to reject files. As will be discussed in greater

detail below, supervisors rejected files for any reason; they knew that when a file was rejected, it

would go to someone different. It took TWIA five months after Ike made landfall to acknowledge

that file ownership would facilitate the expeditious resolution of claims and eliminate errors."

40 See "Plaintiff s Exhibit 40", Bates 6623.

41See "Plaintiff's Exhibit 41 ", Bates 283.



44See "Plaintiff s Exhibit 43 ", Bates 661 0-1 1.

Page 13

38. By October 8, TWIA had 80,000 claims." Reggie Warren admitted "Lots of

complaints come to me about inconsistencies from our supervisors." "I am not sure how to control

it or keep it on track. 06

39. However, despite the overwhelming need for adjusters, in October, TWIA stopped

giving assignments to adjusting firms who raised concerns about TWIA's unlawful claims

4' This decision was made without consideration to the needs of its policyholders, but waspractices.

instead done to benefit the adjusting companies that offered to give TWIA's managers something

valuable in return.

40. On October 30, TWIA's realization of failure was clear. Reggie Warren

acknowledged: "Our goal is to avoid getting calls and complaints that later turn into lawsuits. We

must all do our jobs better. ,41

41. By November, the situation had become dire. Though TWIA had advised adjusting

firms to handle insureds' calls, it acknowledged that insureds were complaining that when they

41called the adjusters there was no answer. In an email to all independent adjusting firms and all of

TWIA'sintemalclaimshandlers,theheadofTWIAacknowledgedalOO%failurerate." "Italked

personally with insureds today. Without exception, the adjuster had met and inspected the loss, but


46 See "Plaintifrs Exhibit 37", Bates 324.

47See "Plaintiff s Exhibit 45", Bates 16737; "Plaintiff s Exhibit 46", Bates 296; "Plaintiff s Exhibit 47",

Bates 14578.


49 See "Plaintiff s Exhibit 3 1 ", Bates 649 1.


Page 14

had not gotten back with the insured to review their estimate and to agree on the amount of covered

loss and payment."" One independent adjusting firm advised TWIA, "the time to address this issue

is growing short...""

42. In February, TWIA admitted that many of its adjusters were not given windstorm

training." TWIA's spokesman explained to the Galveston Daily News about the adjusters, "It's a

,,54learning curve ... Some of them were not the greatest...

43. It shocks the conscience that a windstorm insurer that insures billions of dollars in

coastal properties, completely and utterly failed to prepare for a hurricane. TWIA turned untrained

adjusters with no screening loose inside the homes of its insureds. As the months dragged on,

TWIA's conduct only worsened.

IV.PRICING

44. The insurance industry almost universally relies upon Xactimate software which

determines pricing based on market forces. The reason the industry relies on Xactimate is because

it has the ability to update prices based on market forces. However, despite the glaring conflict of

interest involved, TWIA disregarded the industry recognized software used to estimate prices and

instead created its own prices far below what the market actually demanded. It begs the question,

how TWIA could have updated prices when it had no resources to do so?

5 1

See "Plaintiff's Exhibit 38", Bates 328.


53See "Plaintiff's Exhibit 49".

54See "Plaintiffs Exhibit 49".

Page 15

45. Before Ike hit, TWIA represented to adjusters that its pricing was developed by

5' TWIA instructed itssoftware that used adjusters and contractors estimates up and down the coast.

adjusting firms not to tell insureds that the prices were developed by TWIA." In actuality, TWIA

developed its pricing by using one roofing estimate from Austin and one from Fort Worth."

46. TWIA maintained that its prices were "guides", yet refused to authorize variances."

TWIA initially refused to give USAA a variance on prices but after substantial pushing, agreed to

5 61allow USAA use Xactimate. ' However, Reggie Warren threatened to tenninate USAA's contract.

6 1Adjusting companies who deviated from TWIA's pricing had their files sent back and rejected.

47. TWIA perpetrated the deception against policyholders and legitimate adjusting firrns

by refusing to break down pricing by category and instead created unit prices that it knowingly

misrepresented included overhead and profit and add ons when in fact they did not."

A. Roofing Prices

48. TWIA was repeatedly advised by adjusters and other insurance companies that it was

61not using adequate pricing guidelines.


56See "Plaintiff s Exhibit 51 ", Bates 6522.

57See "Plaintiffs Exhibit 5211, Bates 14226.

58See "Plaintiffs Exhibit 53", Bates 231-32; "Plaintiff s Exhibit 54", Bates 6473.

59See "Plaintiffs Exhibit 54", Bates 1422 1.

6OSee "Plaintiff s Exhibit 54", Bates 6473.

61 See "Plaintiff's Exhibit 55", Bates 16527.

62See "Plaintiff s Exhibit 51 ", Bates 6522; "Plaintiff s Exhibit 56, Bates 15442; "Plaintiff s Exhibit 57",

Bates 406.


Page 16

49. On September 20, an adjusting firm advised TWIA that its roof prices were wholly

inadequate .64 TWIA's price was $182.00/sq including labor for a twenty year roof6' The adjusting

firm advised that the market rate was $230-255/sq and that the number did not include drip edge,

66ventstacks,leadjacks,valleysoranytypeofroofvents. Theadjustingfirmconcluded:"Thereare

way too many storms in the USA right now and resources are stretched thin. We want to get this

right from the start or else the supplemental issue will become explosive very soon for all Of US.,,61

50. Reggie Warren's response was that he did not know what they were going to do, but

that TWIA would set the market for prices .61 of Course, the market should set the prices, not the

other way around. In addition, Warren opined that if he did correct the pricing, the prices would

6' This indicates that Dolly claims were indeed underpaid and that instead ofaffect Dolly claims.

reforming, TWIA chose to continue its wrongful behavior.

51. Weeks after the stonn, a Farmers agent advised TWIA that TWIA's roof prices were

so inadequate that if an insured was able to procure a contractor at the allotted price, the repair would

not pass a Texas Department of Insurance inspection." He advised that at TWIA's prices, an insured

would easily fall prey to a fly by night roofer." Further he recommended that if TWIA received an

64See Bates 15137-38.

65See id

66See id

67See id

68See id

69See id.


71


Page 17

estimate from an insured's contractor for higher than TWIA's allotment, that TWIA should reopen

the file and do a supplement." in response, Reggie Warren stated "We are not Farmers, as you

74know."" TWIA refused to adjust its pricing guidelines based on the market rate.

52. By November, TWIA had internally admitted that its policyholders could not repair

their roofs for the money allocated by the adjuster.7' TWIA refused to admit defeat and advised its

personnel to respond to policyholders by stating that TWIA's prices were reasonable and they should

just "shop around"."

53. One such area where TWIA used unit prices to short change its insureds was with

regard to roofing prices. Before Ike, TWIA represented that included in the unit cost in TWIA's

price guide was add ons such as drip edge, valleys, turtle vents, starter strips, etc.7' TWIA asserted

that it was justified in using unit costs because its prices were actually higher and accounted for add

ons.7' However, it is clear that TWIA's prices were much lower than the market. In December

TWIAwasadvisedthatthegoingmarketratewas$40persquare.79 TWIAunilaterallydetermined

that the price should be $20 per range."


73See "Plaintiff s Exhibit 61 ", Bates 287.


75See "Plaintiffs Exhibit 62", Bates 658.






Page 18

54. In December, TWIA was advised that the market price was $3 0-$40 per square which

included the cost of add ons." TWIA randomly decided that the numbers were too high and set its

12own price at $20 per square.

55. An example of TWIA's behavior occurred when asked to approve replacement of a

roof because the particular shingles were no longer available after having been recalled and made

the subject of a class action, a TWIA supervisor recommended that the adjuster pull the recalled

shingle from a neighboring roof that was being replaced and use it on the insured's home. 13

B. Overhead and Proflt

56. Typically, twenty-one percent is added to estimates to factor in a contractor's cost of

overhead and profit." Months before Ike, TWIA knew it should pay overhead and profit. On June

6, 2008, one of TWIA's supervisors advised that overhead and profit should be added to estimates

whereageneralcontractorwaslikelytobeneeded." ReggieWarrenrepliedthataccordingtoTDI's

recent directives, overhead and profit was to be added to estimates even when there was not a general

86

contractor.

57. At the Hurricane Ike post-storm orientation, TWIA instructed adjusters not to pay

overhead and profit on roofs, fences, floors and single trades.8' One can only surmise that TWIA

8 1





85 See "Plaintiffs Exhibit 65 ", Bates 13822.


87 See "Plaintiff s Exhibit 53", Bates 229-32

Page 19

selected these items because they are the most frequently occurring damages as a result of a

hurricane and are also big ticket items. TWIA also changed its position and decided to only pay

overhead and profit when it was likely to be incurred."

58. In October, TWIA had refused to give overhead and profit on roofing items, unless

a general contractor was assigned to the project. 81 In November, an adjusting company wrote TWIA

to advise "According to the TWIA Claim Handling Guidelines O+P should not be applied to roofing

items in most cases... I do not understand how O+P can be denied on a complex roofing repair with

a GC. By not adding o+p you are asking the contractor to do the roofing portion for free...The

homeowner in these more complex cases, cannot be expected to hire a roofer and coordinate the

roofer separate from the contractor."90

59. TWIA represented to its adjusters that overhead and profit was already factored into

the unit cost. 9' TWIA's private ernails make clear however, that this was a misrepresentation and

that TWIA did not actually include overhead and profit in its estimates. TWIA even misrepresented

to a reporter from KHOU that overhead and profit was included in its unit prices.

C. Depreciation

60. TWIA's depreciation methods were similarly inadequate. TWIA's training materials

specifically advised adjusters to determine depreciation by factoring in the year built, condition, life

8 8

See "Plaintiff s Exhibit 53", Bates 229-32



9 1

See "Plaintiffs Exhibit 57", Bates4O6.

Page 20

expectancy.9' However, TWIA completely ignored its own guidelines. Adjusters estimates did not

take into account the year built, condition, or life expectancy of buildings. TWIA depreciated

improper items including labor and roof tear off and overhead and profit.9'

61. Similarly, TWIA refused to allow insureds partial recovery of depreciation. If

multiple items were damaged, TWIA would not allow the insured to recoup any depreciation until

everything was fixed. So if an insured had a damaged roof, floors, sheetrock, and contents, the

insured could not recover the money held back for depreciation after the roof was fixed. Instead, the

insured had to fix every item before recouping even the amount for the roof.

62. On November 29, 2008, TWIA instructed not to hold back depreciation of amounts

of $3000 or less." However in December, TWIA instructed its internal personnel not to tell

policyholders that called that TWIA was no longer holding back depreciation of $3000 or less.9'

TWIA reasoned: The next thing that happens after word spreads is that people will be calling in

wanting their depreciation amounts released prematurely."9'

63. In January, TWIA recognized that it had employed improper depreciation methods.9'

While it reformed its behavior going forward, TWIA refused to look back and notify its insureds of

its error.


93See "Plaintiff s Exhibit 69", Bates 538; "Plaintiff s Exhibit 70", Bates 17399.

94See "Plaintiffs Exhibit 71 ", Bates 16424.



97See "Plaintiff s Exhibit 73 ", Bates 3 76.

Page 21

V.DIRECT PHYSICAL LOSS

64. TWIA's policies cover direct physical loss from windstorm. Departing from

principles of law, TWIA contrived its own definition of "direct physical loss" in order to escape

liability on covered damages.

1. Unadhered/lifted shingles

65. Hurricane force winds can cause shingles to become unadhered. Once a shingle

becomes unadhered or lifted, debris is trapped under the shingle preventing it from resealing. It

leaves the roof vulnerable to more damage and unable to repel water. This in turn results in roof

leaks.

66. TWIA initially paid for unadhered/lifted shingles, however once it became clear how

many claims involved unadhered/lifted shingles, TWIA changed its position and categorically denied

those claims without conducting reasonable investigations into each individual claim.

67. In November, TWIA adopted the position that unadhered shingles were not covered

occurrences under the policy." TWIA reasoned that the shingles had debris under them on Labor

Day and the Fourth of July." TWIA thereby created an impossible burden, requiring the

policyholder to prove that the damage was not there before Ike.

68. When TWIA caught wind that its adjusters were telling insureds that their roofs

needed to be replaced because of unadhered shingles in December, TWIA decided unadhered

shingles were not damaged. `0 TWIA advised: "Our opinion is that the shingle must be blown off



100 See "Plaintiff s Exhibit 75", Bates 1343 1.

Page 22

or if it is blown back, that it causes some damage to the shingles, usually a visible crease in the top

of the shingle. Our investigation reveals many shingles are not sealed prior to the ston-n. Shingles

used to be manufactured without the sealant. The sealant is not necessary for the roof to repel

water ...When we get the report, we can see no windstorm damage but the adjuster has figured to

replace the roof. This all being said, good judgment is needed from the adjuster but we need

evidence of direct (means it happened during the storin), physical (means you can see the damage),

loss (damage) due to windstorm.""'

69. TWIA ignored the plight of its insureds and instead suggested outlandish ways to

reseal a shingle. One supervisor advised, "if roofer gets pushy, tell them to get a caulk gun with some

roofing stickum in it and go along all the lifted shingles and restick them and they will stay stuck til

the end of their life.,,102

70. After receiving numerous complaints, TWIA decided to pay to reseal shingles until

the head of Brush Country, Richard Meyers, one of TWIA's primary adjusting companies, "a chosen

one" complained:

I have just received an alarming instruction. Clay Tinnel sent oneof our adjusters a fax that we will not replace a roof for lifted tabs butwe will allow to reseal them. This could cause a wave of problems.Labor would eat us alive. What a can of worms this will cause.

103

71. Meyers recognized that it would cost more money to restick shingles than to actually

repairtheroof"' TWIA'sresponsewasthat"TheseinstructionsarethelastresortwhennoonewilI

10ISee "Plaintiffs Exhibit 76", Bates 16500.




Page 23

take no for an answer."105 TWIA even allowed Meyers the discretion on how to handle the claims:

"This is not to be offered on every loss as an option. Only after all other discussions have failed.

If you want to continue to deny the lifted shingles with no alternatives, okay." 106

72. Afterreceiving numerous calls from insureds, adjusters and agents complaining about

TWIA's position on unadhered shingles, TWIA finally found someone to say that the shingles were

damaged and did not need replacement. TWIA found Don Tarrantola, a seventy year old storin

chaser from Florida with no credentials or Texas owned business, and did not even have a business

phone. At the present, Tarrantola resides in an apartment in Webster, Texas until he finishes

collecting referrals and chases the next storm. TWIA held Don Tarantola out as an expert on

roofs. 107 TWIA even ignored TDI rules and offered to refer Tarantola to unsuspecting insureds who

insisted their roof had to be replaced.'O' In fact, Tarantola is not a Texas resident and does not

operate a business in Texas. An insured who used Tarantola to do roof work, would have had

absolutely no remedy as Mr. Tarantola has no assets in the State of Texas. Likewise, there would

be no ability to guarantee he made good on a warranty issued.

73. TWIA's referral of Don Tarantola was in direct contradiction to TDI directives

contained in TWIA's records."' TWIA failed to follow any of TDI's recommendations before it

referred Tarantola to insureds. "' TWIA said Tarontola was a roofer from Spring, Texas. However,



107 See "Plaintiff s Exhibit 79", Bates 14715.




Page 24

ven a cursory review would have shown that Tarontola had no registered business, no business

location and no business phone. TWIA failed to verify the name, address, telephone number and

references; failed to make sure that he was licensed or bonded; failed to compare written bids; and

failed to look into the terms of a warranty. 1 1 1 Most importantly, TWIA ignored the fact that Tarantola

offered "extra-cheap work", which is an industry recognized red flag for a fly by night roofer."'

74. On February 2, 2009, TWIA authored a memorandum opinion addressed to allow of

its Adjusting firms that provided:

Texas Windstorm Insurance Association intends to pay for the covered windstormloss on every valid claim, including roods. It is important to note that [TWIA] onlycover[s] direct, physical, loss from windstorm. Direct means it happened during Ikeor Dolly, physical means the damage is clearly visible and there must be a loss(destruction or damage to property) involved. Shingles that show no signs of damageother than they are not sealed and can be raised with your hand are not consideredwindstorm damaged.

TDI Notice of Enforcement Action, August 27, 2009, at T 6, p.3.

75. On February 6, 2009, TWIA began to send insureds who complained to TDI about

TWIA's positions letters that stated:

"We cover direct physical loss to the covered property caused by windstorm or hailunless the loss is excluded in the Exclusions." It is the opinion of TWIAmanagement that this means "we need evidence of direct (this means it happenedduring the storm), Physical (this means you can see the damage), Loss (this meansdamage) due to the windstorm. Loose, unadhered shingles in place are notnecessarily windstorm damage. Our research reveals many shingles are not sealedprior to the storm and the sealant is not necessary for a roof to repel water."

II ISee "Plaintiffs Exhibit 92", Bates 15128.


Page 25

76. In March 2009, TWIA changed again and began to claim that the shingle is not

damaged unless it was actually broken."' "We have had a hearing involving unsealed shingles but

have not gotten the results yet. We still contend they are not damaged unless the shingle is

broken.""'

77. Not even the advice of an engineer from the Texas Department of Insurance could

deter TWIA. The engineer recommended replacement of a roof with unadhered shingles. "' TWIA

responded: "We don't put any credence in these two page driveby engineer reports. If we paid for

new roofs because of loose shingles we would buy every roof that had a claim.""' Reggie Warren

even contacted the head of inspections at TDI to complain that TDI should stop telling the insureds

that they needed new roofs for unadhered shingles.' 17 Warren wrote:

"Welch, good day. Just wanted to mention that we are running into

cases where the windstorm inspectors are telling the policyholdersthat roofs need to be replaced when we have allowed for repairs orpartial replacement due to windstorm damage. I was hoping wewould not any or much of this. We like to make the calls oncausation and what we are going to pay for on the windstonn claims.We hope the windstorm inspectors will only inspect the areas allowedby the adjuster and not make comments about what needs to bereplaced.""'

78. TWIA's refusal to pay for unadhered shingles left policyholders in a dire predicament.

Texas law requires that an insured covered by a TWIA policy who sustains windstorm damage



115See "Plaintiff's Exhibit 75 ", Bates 1343 1.

116See "Plaintiff's Exhibit 75", Bates 1343 1.



Page 26

obtain a WP18 certifying that repairs have been made. Without the certification, an insured cannot

obtain insurance. TWIA's refusal to pay insureds with unadhered shingles for their roofs to be

replaced were not able to obtain a certificate of compliance and risked losing their insurance. The

Texas Department of Insurance received so many complaints about TWIA that it is currently

pursuing a Disciplinary Action. (6729).

79. One thing remained constant: TWIA would move the goal post to get the result that

it wanted. Whether that meant that it had to deny coverage, claim that there was no damage, or if

44 no one will take no for an answer" pay to put a bandaid on the roof, that is what TWIA did.

2. Fogged Windows

80. TWIA took an equally ridiculous position in regards to fogged windows. Without

regard for the individual facts and circumstances of a case, TWIA categorically rejected claims for

fogged windows. TWIA's position was that "as a rule, fogged windows are not a direct result from

damage by windstorm. It is common that the seals on windows routinely fail after sustaining hours

of hurricane force winds.

VI.SUPPLEMENTS

81. Once insureds began to try to make repairs for the amount paid by TWIA, complaints

anddemandsforreinspectionsflooded in. ThoughTWIAhadrepeatedlybeenadvisedbyadjusters,

agents, and insureds that its pricing and coverage decisions were wholly insufficient, TWIA refused

to authorize supplemental claims. TWIA openly expressed a hostility toward reinspections and

refused to consider insureds estimates and invoices for repairs. Reggie Warren explained:

Page 27

4 @understand our position on reopens and supplements. We do not like them and are getting way too

many because the job was not done right the first time."' "

82. TWIA advised adjusting firms that the adjuster was to handle the claim to completion,

however tied their hands by setting insurmountable burdens for supplements and reopens. By

October, TWIA had instructed adjusting firms not to reopen claims unless an insured submitted

additional "credible evidence" for the reinspection. 12' Adjusting firms struggled to understand what

qualified as "additional credible evidence". TWIA clarified that just because an insured was

4 4unhappy" that was not enough to reopen a claim.1 2 ' Later, TWIA directed not to reopen a claim

even if an insured submitted a public adjuster's estimate for higher than allotted. 122

83. On October 18, 2009, one adjusting firm advised TWIA that it was necessary to do

supplements where the adjuster missed something on the first round. 1 2' Five days later, TWIA cut

off all adjusting assignments to the firm. 1 2' Reggie Warren refused to consider TWIA's position on

supplements and defended its position by stating that the adjusters were inexperienced and

unqualified and thus TWIA was not going to pay for them to do supplements."' Thus, punishing

its insureds for the adjusters mistakes. 121



121See "Plaintiffs Exhibit 3 1 ", Bates 649 1.






Page 28

84. Similarly, TWIA refused to reopen a file or authorize a supplemental claim to adjust

for the amount it actually cost an insured to replace a particular item. If an insured paid more to

replace an item than TWIA had reserved, TWIA would not allow the insured to recoup the

difference."'

85. TWIA developed a systematic policy regarding the reopening of claims, which made

it very lucrative for adjusters to deny such claims. According to Reggie Warren, a lack of

preparedness resulted in my inexperienced adjusters who could not get the job done right the first

time. 118 TWIA's fee schedule in effect after Ike addressed the issue of reopening claims by setting

several high hurdles for the insured to meet before any help would be provided. "9 First, TWIA

required the insured to prove by credible evidence that a reopen wasjustified."' The problem with

this standard was that TWIA made it virtually impossible to present credible evidence. A report by

a public adjuster that the roof needed to be replaced was insufficient."' In addition a roofer who

personally inspected the property after the original adjustment and subsequently recommended a

replacement would also not justify a supplement."' Even more appalling was that an engineer's

report concluding that a roof needed to be repaired was considered "drive by" and also did not meet

the standard. If the insured managed to meet this subjective and arbitrary standard, he or she still

had to fight against the reality that most if not all adjusters would not properly adjust these types of




130 See id



Page 29

claims. According to its fee schedule, TWIA would pay the adjuster two hundred dollars to deny

the insured's request to reopen the claim."' If the claim was reopened, the adjuster would have to

make a new estimate which TWIA had the sole discretion to pay.134

86. The head of one adjusting firm notified TWIA that its policy on supplements was

causing most adjusters just to deny the claim and take the $200 rather than revisit the property."'

He warned of the dire consequences on the horizon:

"While you may not be seeing problems with the reopens yet, youwill. Adjusters are giving back their inventories of claims and goinghome. I agree with your comment on quality issues. I have beendoing this many years and never has the quality been so poor. Manysenior people are leaving the industry because of age and the lack ofconsistent work. We are a Citizens of Florida trainer but the numberof quality candidates is diminishing. We have to pretty much idiotproof the process. Because of three storm deployments going at once,many of our senior folks grabbed at Fay and Gustav deployments thatwere available as they had not worked in two years. At this point, weare going to see how many of the reopens we can handle from thedesk. I expect that as the holidays arrive we will lose those who havehung around, even if the reopen fees have not driven them off. Wehave not received a single new assignment since 1023-08 so we don'teven have any fresh claims to attract adjusters back. At this point,you are probably better off continuing to send them to your coreforms. At least you will have those firms when the reopens get outof control. I do understand the economics of business. Reggie, wehave worked hard to make things as smooth as we can. I do notnecessarily agree with you entirely on the reopens. Of course there aremany that have not been handled perfectly the first time around but

everyone thought the losses were coming fast and furious so we weretrying to move them along as fast as we could so we could havecapacity. In hindsight, we could have all taken our time, at least myfirm. We have also seen the typical policyholder survival patters arestarting to receive contractor estimates, PA s, etc ... I don't care how



135See "Plaintiff s Exhibit 45".

Page 30

thorough the adjuster was on the first go, when the contractors andPA s start getting involved, that is a step of the process that can't beavoided. To deny at least a reinspection on even the most well donefile is the groundwork for a bad faith claim. That is why I have askedfor consideration on the billing. I do not want to set up TWIA nor doI want to exercise my E&O carrier for the litigation that will certainlycome." 136

87. Acting as a strong deterrent for supplements, if a supplement was required because

the adjuster had missed something, the adjuster could risk being paid at all. TWIA would not pay

additional billing in situations where it was determined that the original adjustment was not

performed properly. TWIA had the final say so in these situations. 117 TWIA clearly stated that it

did not like reopens and supplements and in fact had not "bought into" the idea of having

supplemental or clean up teams to handle such claims. 138

88. The request by the principal of the adjusting firm who wrote the email above was

denied by Reggie Warren. Reggie Warren's response was that although there are some good

adjusters out there, there are many more that are inexperienced and not getting the job done, and that

theproblemwasoccurringacrosstheboard.."' Heconcludedbysaying"Thetimetoaddressthis

53140issue is growing short...

89. Instead of addressing the situation so as to help its insureds, TWIA went in the

opposite direction. In December of 2008. TWIA released its supplemental fee schedule. 14 ' This

136See "Plaintiffs Exhibit 45", Bates 16737-38.

137See "Plaintiffs Exhibit 87", Bates 349




14 'See "Plaintiff s Exhibit 99", Bates 4662.

Page 31

schedule incentivized adjusters to deny the supplemental claim. There were several alarming issues

on the schedule. The first blow to the insured was that TWIA had the option to pay the adjuster's

fees."' If TWIA decided that the original adjuster performed poorly on the initial inspection, the

subsequent adjuster's fee bill was not paid."' An adjuster who reopened a claim ran the risk of

having his estimate rejected by TWIA, because TWIA alone had the sole discretion to deny a

supplemental claim."' Because many claims were not handled by the original adjuster, there was

no incentive to do anything but deny the claim."' In addition to expenses, an adjuster who denied

a supplemental claim was paid anywhere from $105/hour to $1 1 O/hour. For example, if an adjuster

spent five hours re-inspecting and then subsequently denied the claim, he could be paid hundreds

of dollars. But if the adjuster reopened the claim and found additional damages, he could be denied

his entire service fee."' TWIA's goal to avoid paying large supplements was reached by creating

a program that placed unreasonable burdens on the insured, while at the same time making it

lucrative for an adjuster to deny the claim.

V11.

STEERING

90. Despite TDI regulations prohibiting insurers from recommending contractors, TWIA

unlawfully steered its policyholders to contractors. Even worse, there is evidence that these

contractors were not qualified to do the work. As discussed above, TWIA referred its policyholders

142See "Plaintiff s Exhibit 99", Bates 4662-4664.

143See "Plaintiff s Exhibit 99", Bates 4662-4664.

144 See "Plaintiff s Exhibit 99", Bates 4662-4664.


Page 32

with unadhered shingles to Don Tarantola. Tarrantola had no Texas business, employees or

credentials.

91. Another policyholder was told that TWIA would pay her claim, only if she hired

Basco Construction to complete the work. Not surprisingly, the head of Basco Construction, is

friends with Reggie Warren.

Vill.KNOWLEDGE

92. TWIA's flagrant violations of the Texas Insurance Code and breach of the common

law duties of utmost good faith and fair dealing were knowingly committed. Years before Ike

aff ived, TWIA knew it did not have the capability or resources to handle a hurricane that hit the

coast. Yet TWIA continued business as usual of giving adjusting contracts to Reggie Warren's

friends and family therein to "make a lot of money".

93. TWIA knew it had problems during Hurricane Rita. "' TWIA acknowledged that the

adjusters during Rita were "poor" and resulted in significant litigation."'

94. After Dolly made landfall in August 2008, TWIA knew that there was no consistency

1 49in claims handling. TWIA knew that 90% of its insureds did not receive estimates.

95. Days after Ike made landfall, TWIA knew that any new adjusters it would obtain

would be weak."'

14'See "Plaintiff s Exhibit 90", Bates 13820.

148See "Plaintiff s Exhibit 90 Bates 13820.

149See "Plaintiff's Exhibit 91 Bates 745.

150See "Plaintiff s Exhibit 16".

Page 33

96. It immediately became clear to TWIA that the adjusters were not doing their jobs.

TWIA consistently noted a lack of quality control and a failure to meet customer service standards.

97. TWIA knew its prices were inadequate but deliberately misrepresented to the outside

world that the prices were based on market forces. TWIA knew it was required to include overhead

and profit but deliberately left it out of estimates. TWIA knew it was wrongfully depreciating but

refused to right its wrong and inform insureds that it had cheated.

98. Worse still, TWIA disregarded its duties to its insureds. TWIA instructed its

personnel and adjusters to deliberately keep insureds in the dark. TWIA advised adjusters to only

include damages that were specifically pointed out by the insureds. It advised adjusters not to tell

insureds when the adjuster disagreed with TWIA's wrongful denial or underpayment of a claim.

TWIA refused to tell insureds how far behind it was.

99. Finally, TWIA actually knew all of its shortcomings, failures, and violations of the

law when it went to the Texas legislature and asked it for a get out of jail free card. TWIA knew

when it came to this Court of the evil it had done. It was only a matter of time before the public

would find out and what better way to escape than to be shielded from liability.

100. TWIA's systematic underpayment and campaign of denial resulted in shortchanging

an entire community of families, businesses and churches who are forced to insure with TWIA or

forego windstorm insurance completely. Because it is the only windstorm carrier in coastal areas

of Galveston, TWIA's behavior has impacted an entire community's ability to rebuild. The

residents of our coast deserve much better.

Page 34

PLAINTIFF'S EXPERIENCE

101. Plaintiff is the owner of a Texas Homeowners' Insurance Policy (hereinafter referred

to as "the Policy"), which was issued by TWIA.

102. Plaintiff owns the insured property, which is specifically located at 4308 Running

Pine Court, League City, Texas 77573 (hereinafter referred to as "the Property").

103. TWIA sold the Policy, insuring the Property, to Plaintiff.

104. On or about September 12, 2008, in the late evening going into the early morning

hours of September 13, 2008, Hurricane Ike struck Galveston County, Texas, causing severe damage

to homes and businesses throughout the gulf-coast region of Texas, including Plaintiff's residence.

Plaintiff s property and home suffered substantial damages when the roof was damaged by the storm.

As a result, the interior of the residence had water coming through the attic down to the wood floors.

The sheetrock fell, which caused harm to wood floors and furniture. Also, the ceilings and walls had

water damage. In addition, the fence was blown down by the strong winds. Plaintiff also sustained

damage to his personal belongings and contents within the home. Immediately after the storm,

Plaintiff filed an insurance claim with his insurance company, TWIA, for the damages to his home

caused by Hurricane Ike.

105. Plaintiff submitted a claim to TWIA against the Policy for roof damage, water

damage, wind damage, contents damage and structural damage to the Property sustained as a result

of Hurricane Ike.

106. Plaintiff asked that TWIA cover the cost of repairs to the Property pursuant to the

Policy. Plaintiff requested additional living expenses as well.

Page 35

107. TWIA assigned Warren, the Vice President of Claims at TWIA, to oversee many

aspect of Plaintiff's claim. Warren is responsible for making policy on adjusting insurance claims

and assigning vendors that are retained to adjust the claim.

108. TWIA and/or Warren assigned Defendant Pacesetter to adjust the claim. Pacesetter

then assigned Defendant Bergan as the individual adjuster.

109. As detailed in the above paragraphs, TWIA wrongfully denied Plaintiff's claim for

repairs of the Property, even though the Policy provided coverage for losses such as those suffered

by Plaintiff. Furthermore, TWIA underpaid some of Plaintiff's claims by not providing full coverage

for the damages sustained by the Plaintiff as well as under scoping the damages during their

investigation. Additionally, TWIA continues to delay in the payment of the damages to the property,

including the home and contents. As such, Plaintiff has not been paid in full for his damages to his

home.

110. Defendant TWIA failed to perform its contractual duties to adequately compensate

Plaintiff under the terms of the Policy. Specifically, it refused to pay the full proceeds of the Policy,

although due demand was made for proceeds to be paid in an amount sufficient to cover the damaged

property and all conditions precedent to recovery upon the Policy had been carried out and

accomplished by Plaintiff. TWIA's conduct constitutes a breach of the insurance contract between

TWIA and Plaintiff.

111. Defendants TWIA, Pacesetter, Bergan and Warren misrepresented to Plaintiff that

the damage to the Property was not covered under the Policy, even though the damage was caused

by a covered occurrence. Defendants TWIA's, Pacesetter's, Bergan's and Warren's conduct

Page 36

constitutes a violation of the Texas Insurance Code, Unfair Settlement Practices. TEX. INS.

CODE.§541.060(a)(1).

112. Defendants TWIA, Pacesetter, Bergan and Warren failed to make an attempt to settle

Plaintiff s claim in a fair manner, although they were aware of their liability to Plaintiff under the

Policy. Defendants TWIA's, Pacesetter's, Bergan's and Warren's conduct constitutes a violation of

the Texas Insurance Code, Unfair Settlement Practices. TEX. INS. CODE.§541.060(a)(2)(A).

113. Defendants TWIA, Pacesetter, Bergan and Warren failed to explain to Plaintiff the

reasons for their offer of an inadequate settlement. Specifically, Defendants TWIA, Pacesetter,

Bergan and Warren failed to offer Plaintiff adequate compensation, without any explanation why full

payment was not being made. Furthen-nore, Defendants TWIA, Pacesetter, Bergan and Warren did

not communicate that any future settlements or payments would be forthcoming to pay for the entire

losses covered under the Policy, nor did they provide any explanation for the failure to adequately

settle Plaintiff's claim. Defendants TWIA's, Pacesetter's, Bergan's and Warren's conduct is a

violationoftheTexaslnsuranceCode,UnfairSettlementPractices. TEX.INS.CODE.§541.060(a)(3).

114. DefendantsTWIA,Pacesetter,BerganandWarrenfailedtoaffirmordenycoverage

ofPlaintiff sclaimwithinareasonabletime.Specifically,Plaintiffdidnotreceivetimelyindication of

acceptance or rejection, regarding the full and entire claim, in writing from Defendants TWIA,

Pacesetter,BerganandWarren.DefendantsTWIA's,Pacesetter's, Bergan's and Warren's conduct

constitutes a violation of the Texas Insurance Code, Unfair Settlement Practices. TEX. INS.

CODE.§541.060(a)(4).

115. Defendants TWIA, Pacesetter, Bergan and Warren refused to fully compensate

Plaintiff, under the terms of the Policy, even though Defendants TWIA, Pacesetter, Bergan and

Page 37

Warren failed to conduct a reasonable investigation. Specifically, Defendants TWIA, Pacesetter,

Bergan and Warren performed an outcome-oriented investigation of Plaintiff's claim, which resulted

in a biased, unfair and inequitable evaluation of Plaintiff s losses on the Property. Defendants

TWIA's,Pacesetter's,Bergan's and Warren's conduct constitutes a violation of the Texas Insurance

Code, Unfair Settlement Practices. TEX. INS. CODE.§541.060(a)(7).

116. Defendant TWIA failed to meet its obligations under the Texas Insurance Code

regarding timely acknowledging Plaintiff s claim, beginning an investigation of Plaintiff's claim and

requesting all information reasonably necessary to investigate Plaintiff's claim within the statutorily

mandated time of receiving notice of Plaintiff's claim. TWIA's conduct constitutes a violation of

the Texas Insurance Code, Prompt Payment of Claims. TEX. INS. CODE §542.055.

117. Defendant TWIA failed to accept or deny Plaintiff s full and entire claim within

statutorily mandated time of receiving all necessary information. TWIA's conduct constitutes a

violation of the Texas Insurance Code, Prompt Payment of Claims. TEX. INS. CODE §542.056.

118. Defendant TWIA failed to meet its obligations under the Texas Insurance Code

regarding payment of claim without delay. Specifically, it has delayed full payment of Plaintiff's

claim longer than allowed and, to date, Plaintiff has not yet received full payment for his claim.

TWIA's conduct constitutes a violation of the Texas Insurance Code, Prompt Payment of Claims.

TEX. INS. CODE §542.058.

119. From and after the time Plaintiff s claim was presented to Defendant TWIA, the

liability of TWIA to pay the full claim in accordance with the terms of the Policy was reasonably

clear. However, TWIA has refused to pay Plaintiff in full, despite there being no basis whatsoever

Page 38

on which a reasonable insurance company would have relied on to deny the full payment. TWIA's

conduct constitutes a breach of the common law duty of good faith and fair dealing.

120. Defendants TWIA, Pacesetter, Bergan and Warren knowingly or recklessly made

false representations, as described above, as to material facts and/or knowingly concealed all or part

of material information from Plaintiff.

121. As a result of Defendants TWIA's, Pacesetter's, Bergan's and Warren's wrongful acts

and omissions, Plaintiff was forced to retain the professional services of the attorney and law fin-n

who is representing him with respect to these causes of action.

122. Defendant Reggie Warren and/or other employees of TWIA have contracted with

adjusting companies and vendors based on personal and familial relationships and not the

qualifications of the adjusting companies and vendors. Defendant Reggie Warren and/or other

employees of TWIA have accepted gifts in excess of $500 in exchange for valuable contracts with

TWIA. These and other inappropriate transactions resulting in TWIA's contracts and employment

of unqualified adjusters, contractors, and employees have proximately caused harm to TWIA's

insureds including Plaintiff.

123. Defendant TWIA has taken actions that are inconsistent and incongruent with actions

of the State and/or a subdivision of this State. As detailed above, Defendant TWIA pays federal

income taxes, property taxes, employs or has employed lobbyists, has hired at least one employee

and/or contractor based on nepotism, and has accepted inappropriate gifts in excess of $500 in

exchange for contracts with Defendant TWIA.

Page 39

CAUSES OF ACTION:

CAUSES OF ACTION AGAINST BERGAN AND WARREN

NONCOMPLIANCE WITH TEXAS INSURANCE CODE:UNFAIR SETTLEMENT PRACTICES

124. Defendants Bergan's and Warren's conduct constitutes multiple violations of the

Texas Insurance Code, Unfair Settlement Practices. TEX. INS. CODE.§541.060(a). All violations

under this article are made actionable by TEX. INS. CODE. §541.15 1.

125. Defendants Bergan and Warren are individually liable for their unfair and deceptive

acts, irrespective of the fact they were acting on behalf of TWIA, because they are "persons" as

defined by TEX. INS. CODE.§541.002(2). The term "persons" is defined as "any individual,

corporation, association, partnership, reciprocal or interinsurance exchange, Lloyds plan, fraternal

benefitsociety,orotherlegalentityengagedinthebusinessofinsurance,includinganagent,broker, adjuster

or life and health insurance counselor." TEX. INS. CODE.§541.002(2) (emphasis added). (See also

Liberty Mutual Insurance Co. v. Garrison Contractors, Inc., 966 S.W.2d 482, 484 (Tex. 1998)

(holding an insurance company employee to be a "person" for the purpose of bringing a cause of

action against them under the Texas Insurance Code and subjecting them to individual liability).

126. Defendants Bergan's and Warren's unfair settlement practice, as described above, of

misrepresenting to Plaintiffs material facts relating to the coverage at issue, constitutes an unfair

method of competition and an unfair and deceptive act or practice in the business of insurance. TEX.

INS. CODE.§541.060(l).


failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of the claim,

Page 40

even though liability under the Policy is reasonably clear, constitutes an unfair method of

competition and an unfair and deceptive act or practice in the business of insurance. TEX. INS.

CODE.§541.060(2)(A).

128. The unfair settlement practice of Defendants Bergan and Warren as described above,

of failing to promptly provide Plaintiff with a reasonable explanation of the basis in the Policy, in

relation to the facts or applicable law, for the offer of a compromise settlement of Plaintiff s claim,

constitutes an unfair method of competition and an unfair and deceptive act or practice in the

business of insurance. TEX. INS. CODE.§541.060(3).


failing within a reasonable time to affirm or deny coverage of the claim to Plaintiff or to submit a

reservation of rights to Plaintiff, constitutes an unfair method of competition and an unfair and

deceptive act or practice in the business of insurance. TEX. INS. CODE.§541.060(4).


refusing to pay Plaintiff s claim without conducting a reasonable investigation, constitutes an unfair

method of competition and an unfair and deceptive act or practice in the business of insurance.

TEX. INS. CODE.§541.060(7).

CAUSES OF ACTION:

CAUSES OF ACTION AGAINST DEFENDANT PACESETTER


131. Defendant Pacesetter's conduct constitutes multiple violations ofthe Texas Insurance

Code, Unfair Settlement Practices. TEX. INS. CODE.§541.060(A). All violations under this article

are made actionable by TEX. INS. CODE. § 541.15 1.

Page 41

132. Defendant Pacesetter's unfair settlement practice, as described above, of

misrepresenting to Plaintiff material facts relating to the coverage at issue, constitutes an unfair


INS. CODE.§541.060(l).

133. Defendant Pacesetter's unfair settlement practice, as described above, of failing to

attempt in good faith to effectuate a prompt, fair, and equitable settlement of the claim, even though

Defendant's liability under the Policy was reasonably clear, constitutes an unfair method of


CODE.§541.060(2)(A).

134. Defendant Pacesetter's unfair settlement practice, as described above, of failing to

promptly provide Plaintiff with a reasonable explanation of the basis in the Policy, in relation to the

facts or applicable law, for their offer of a compromise settlement of the claim, constitutes an unfair


Ins. Code.§541.060(3).

135. Defendant Pacesetter's unfair settlement practice, as described above, of failing

within a reasonable time to affirm or deny coverage of the claim to Plaintiff or to submit a

reservation of rights to Plaintiff, constitutes an unfair method of competition and an unfair and

deceptive act or practice in the business of insurance. TEX. INS. CODE.§541.060(4).

136. Defendant Pacesetter's unfair settlement practice, as described above, of refusing to

pay Plaintiff's claim without conducting a reasonable investigation, constitutes an unfair method of


CODE.§541.060(7).

Page 42

CAUSES OF ACTION AGAINST TWIA, PACESETTER, BERGAN AND WARREN

FRAUD AGAINST ALL DEFENDANT PARTIES

137. Defendants TWIA, Pacesetter, Bergan and Warren are liable to Plaintiff for common

law fraud.

138. Each and every one of the representations, as described above, concerned material

facts for the reason Plaintiff would not have acted and which Defendants TWIA, Pacesetter, Bergan

and Warren knew were false or made recklessly without any knowledge of their truth as a positive

assertion.

139. The statements were made with the intention that they should be acted upon by

Plaintiff, who in turn acted in reliance upon the statements, there causing Plaintiff to suffer injury

and constituting common law fraud.

CONSPIRACV TO COMMIT FRAUD AGAINST ALL DEFENDANT PARTIES

140. Defendants TWIA, Pacesetter, Bergan and Warren are liable to Plaintiff for

conspiracy to commit fraud. Defendants TWIA, Pacesetter, Bergan and Warren were a member of

a combination of two or more persons whose object was to accomplish an unlawful purpose or a

lawful purpose by unlawful means. In reaching a meeting of the minds regarding the course of

action to be taken against Plaintiff, Defendants TWIA, Pacesetter, Bergan and Warren committed

an unlawful, overt act to further the object or course of action. Plaintiff suffered injury as a

proximate result.

Page 43

CAUSES OF ACTION AGAINST TWIA ONLY

141. Defendant TWIA is liable to Plaintiff for intentional breach of contract, as well as

intentional violations of the Texas Insurance Code and intentional breach of good faith and fair

dealing.

ANTICIPATORv BREACH

142. Defendant TWIA committed an anticipatory breach of the insurance contract thus

relieving Plaintiff of any corresponding obligation on the contract. Defendant's denial of liability

without justification was unreasonable and unjust.

BREACH OF CONTRACT

143. Defendant TWIA's conduct constitutes a breach of the insurance contract made

between TWIA and Plaintiff.

144. Defendant TWIA's failure and refusal, as described above, to pay the adequate

compensation as it is obligated to do under the terms of the Policy in question and under the laws

of the State of Texas, constitutes a breach of TWIA's insurance contract with Plaintiff.

WAIVER

145. Defendant TWIA's denial of liability before suit was filed and delay in requesting

appraisal in this case resulted in waiver.


146. Defendant TWIA's conduct constitutes multiple violations of the Texas Insurance

Code, Unfair Settlement Practices. TEX. INS. CODE.§541.060(A). All violations under this article

are made actionable by TEX. INS. CODE.§541.151.

Page 44

147. Defendant TWIA's unfair settlement practice, as described above, of misrepresenting

to Plaintiff material facts relating to the coverage at issue, constitutes an unfair method of


CODE.§541.060(l).

148. Defendant TWIA's unfair settlement practice, as described above, of failing to

attempt in good faith to effectuate a prompt, fair, and equitable settlement of the claim, even though

TWIA's liability under the Policy was reasonably clear, constitutes an unfair method of competition

and an unfair and deceptive act or practice in the business of insurance. TEX. INS.

CODE.§541.060(2)(A).

149. Defendant TWIA's unfair settlement practice, as described above, of failing to

promptly provide Plaintiff with a reasonable explanation of the basis in the Policy, in relation to the

facts or applicable law, for their offer of a compromise settlement of the claim, constitutes an unfair


Ins. Code.§541.060(3).

150. Defendant TWIA's unfair settlement practice, as described above, of failing within

a reasonable time to affirm or deny coverage of th e claim to Plaintiff or to submit a reservation of

rights to Plaintiff, constitutes an unfair method of competition and an unfair and deceptive act or

practice in the business of insurance. TEX. INS. CODE.§541.060(4).

151. Defendant TWIA's unfair settlement practice, as described above, of refusing to pay

Plaintiff s claim without conducting a reasonable investigation, constitutes an unfair method of


CODE.§541.060(7).

Page 45

NONCOMPLIANCE WITH TEXAS INSURANCE CODE:THE PROMPT PAVMENT OF CLAIMS

152. Defendant TWIA's conduct constitutes multiple violations of the Texas Insurance

Code, Prompt Payment of Claims. All violations made under this article are made actionable by

TEX. INS. Code §542.060.

153. Defendant TWIA's failure to acknowledge receipt of Plaintiff s claim, commence

investigation of the claim, and request from Plaintiff all items, statements, and forms that they

reasonably believed would be required within the applicable time constraints, as described above,

constitutes a non-prompt payment of claims and a violation of the TEX. INS. CODE §542.055.

154. Defendant TWIA's failure to notify Plaintiff in writing of its acceptance or rejection

of the claim within the applicable time constraints, constitutes a non-prompt payment of the claim.

TEX. INS. CODE §542.056.

155. Defendant TWIA's delay of the payment of Plaintiff's claim following its receipt of

all items, statements, and forms reasonably requested and required, longer than the amount of time

provided for, as described above, constitutes a non-prompt payment of the claim. TEX. INS. CODE

§542.058.

BREACH OF THE DUTV OF GOOD FAITH AND FAIR DEALING

156. Defendant TWIA's conduct constitutes a breach of the common law duty of good

faith and fair dealing owed to insureds in insurance contracts.

157. Defendant TWIA's failure, as described above, to adequately and reasonably

investigate and evaluate Plaintiff s claim, although, at that time, TWIA knew or should have known

Page 46

by the exercise of reasonable diligence that its liability was reasonably clear, constitutes a breach of

the duty of good faith and fair dealing.

JUDICIAL ESTOPPEL

158. TWIA should be judicially estopped from proclaiming to be a part of the state.

159. TWIA convinced the Fifth Circuit of its status as a private entity in a prior judicial

proceeding in Texas Catastrophe Property Ins. Ass'n v. Morales, 975 F.2d 1178, 1183 (5" Cir.

1992), cert. denied, 507 U.S. 1018 (1993).

160. TWIA should be judicially estopped from swearing to be a state agency in this

proceeding as it has intentionally taken a contrary and clearly inconsistent position, asserted and

prevailed upon, before the Fifth Circuit.

KNOWLEDGE

161. Each of the acts described above, together and singularly, was done "knowingly" as

that term is used in the Texas Insurance Code and were a producing cause of Plaintiff's damages

described herein.

DAMAGES

162. Plaintiff will show that all of the aforementioned acts, taken together or singularly,

constitute the producing causes of the damages sustained by Plaintiff.

163. As previously mentioned, the damages caused by Hurricane Ike rendered Plaintiff's

residence substantially damaged These damages have not been properly addressed or repaired in the

months since the storm, causing further damages to the Property and causing undue hardship and

burden to Plaintiff. These damages are a direct result of Defendants TWIA's, Pacesetter's,

Bergan's and Warren's mishandling of Plaintiff's claim in violation of the laws set forth above.

Page 47

164. For breachof contract, Plaintiff is entitled to regain the benefit of his bargain, which

is the amount of his claim, together with attorney fees.

165. For noncompliance with the Texas Insurance Code, Unfair Settlement Practices,

Plaintiff is entitled to actual damages, which include the loss of the benefits that should have been

paid pursuant to the policy, mental anguish, court costs and attorney's fees. For knowing conduct

of the acts complained of, Plaintiff asks for three times his actual damages. Tex. Ins. Code

§541.152.

166. For noncompliance with Texas Insurance Code, Prompt Payment of Claims, Plaintiff

is entitled to the amount of his claim, as well as eighteen (I 8) percent interest per annum of the

amount of such claim as damages, together with attorney's fees. Tex. Ins. Code §542.060.

167. For breach of the common law duty of good faith and fair dealing, Plaintiff is entitled

to compensatory damages, including all forms of loss resulting from the insurer's breach of duty,

such as additional costs, economic hardship, losses due to nonpayment of the amount the insurer

owed, exemplary damages and damages for emotional distress.

168. For fraud, Plaintiff is entitled to recover actual damages and exemplary damages for

knowing fraudulent and malicious representations, along with attorney's fees, interest and court

costs.

169. For the prosecution and collection of this claim, Plaintiff has been compelled to

engage the services of the attorney whose name is subscribed to this pleading. Therefore, Plaintiff

is entitled to recover a sum for the reasonable and necessary services of Plaintiff s attorney in the

preparation and trial of this action, including any appeals to the Court of Appeals and/or the Supreme

Court of Texas.

Page 48

JURY DEMAND

170. Plaintiff hereby requests that all causes of actions alleged herein be tried before ajury

consisting of citizens residing in Galveston County, Texas. Plaintiff hereby tenders the appropriate

jury fee.

PRAYER

WHEREFORE, PREMISES CONSIDERED, Plaintiff prays that upon trial hereof, said

Plaintiff has and recovers such sums as would reasonably and justly compensate him in accordance

with the rules of law and procedure, both as to actual damages, treble damages under the Texas

Insurance Code and all exemplary damages as may be found. In addition, Plaintiff requests the

award of attorney's fees for the trial and any appeal of this case, for all costs of Court in his behalf

expended, for prejudgment and postjudgment interest as allowed by law, and for any other and

further relief, either at law or in equity, to which he may show himself to be justly entitled.

Respectfully submitted,

THE MOSTYN LAW FIRM

BY:

teve ostynTexas State Bar No. 00798389Rend M. SigmanTexas State Bar No. 240374923 81 0 W. AlabamaHouston, Texas 77027Telephone: (713) 861-6616Facsimile: (713) 861-8084

ATTORNEYS FOR PLAINTIFFBAKHT KHATTAK

Page 49

CERTIFICATE OF SERVICE

I hereby certify a true and correct copy of the foregoing instrument was served on thefollowing counsel of record via certified mail/retum receipt requested, facsimile orhand-delivery on this, the 6" day of November, 2009.

David P. SalyerMCLEOD, ALEXANDER, POWELL, &APFFEL 802 Rosenberg P.O. Box 629Galveston, Texas 77553ATTORNEY FOR TWIA

S.R. Lewis, Jr.LEWIS & WILLIAMS, L.L.P 2200Market, Suite 750 Galveston, Texas77550 ATTORNEY FORPACESETTER

Walter Mizell and Daniel R.

Smith BROWN MCCARROLLI I I Congress Ave., Suite1400 Austin, Texas 78701

ATTORNEY FOR REGGIE WARREN

Michael S. WilsonDavid A. Wright DAVIS& WILKERSON 1801

S. MoPac, Suite 300Austin, Texas 78746

ve ostyn

CAUSE NO, 09-CV-0 147

BAKHT KHATTAK, § TN THE DISTRICT COURT OF

Plaintiff §

V.§ GALVESTON COUNTY, TEXAS

TEXAS WINDSTORM INSURANCE §

ASSOCIATION, PACESETTER §

CLAIMS SERVICE, INC. AND BLANE §

E. BERGAN, §

Defendants § 56TH JUDICIAL DISTRICT

TEXAS WINDSTORM INSURANCE ASSOCIATION'S OBJECTIONS AND

ANSWERS TO PLAINTIFF'S SECOND SET OF INTERROGATORIES(APPLICABLE TO IMMUNITY)

Pursuant to Rule 197 of the Texas Rules of Civil Procedure, Texas Windstorm

Insurance Association ("TWIA") files the following Objections and Answers to

Plaintiff's Second Set of Interrogatories (Applicable to Immunity).

FULBRIGHT & JAWORSKI L.L.P.

M. Scott IncertoState Bar No. 10388950

73N

Katherine MackillopState Bar No. 10288450Fulbright Tower13 01 McKinney, Suite 5 1 00

Houston, Texas 77010-3095Telephone: (713) 651-5151Facsimile: (713) 651-5246

Counsel for Texas Windstorm InsuranceAssociation

PLAINTIFFA&EXHIB

85210409.1

McLEOD, ALEXANDER,POWEL & APFFEL, P.C.

David P. SalyerState Bar No. 7549680Ervin A. Apffel, Jr.State Bar No. 1278000802 Rosenberg; P.O. Box 629Galveston, Texas 77553(409) 763-2481 - Telephone(409) 762-1155 - Facsimile

CERTIFICATE OF SERVICE

This is to certify that on September 8, 2009, a true and correct copy of the

foregoing was served by certified mail, return receipt requested, upon Plaintiff s counsel.

T. Schramek

85210W.1 - 2 -

INITUL OBJECTIONS

I The "Definitions" state that the interrogatories cover a ten-year period. A

ten-year period for discovery makes each of the interrogatories overly broad and

burdensome and would result in requests for information that is not relevant to the issues

in the lawsuit nor reasonably calculated to lead to the discovery of admissible

information. Unless stated otherwise in any given response, Defendants will respond

with respect to information dating back to one year prior to Hurricane Ike.

2. The Definition of "Defendant" is overly broad, unduly burdensome and

inconsistent with both the Texas Rules of Civil Procedure and the narrowly-drawn and

appropriate definition of "Plaintiff." In particular, litigation counsel should not be

included within the definition of "Defendant," particularly in light of the exemption from

discovery contained in Texas Rule of Civil Procedure 1933(c). Defendant will defMe

"Defendants" as TWIA.

3. The "Definition" of "Record" is also objectionable. Defendant objects

because the "Definition" seeks electronically stored information ("ESI") because it

purports to require Defendant to conduct open-ended, unlimited searches through all of

its many different computer systems, servers, and databases and are, accordingly, overly

broad and burdensome. Defendant further objects as overly broad and burdensome the

production of documents from any sources that are not reasonably accessible, including

without limitation backup tapes intended for disaster recovery; legacy data from obsolete

systems; deleted or fragmented data sources; instant messages; personal digital assistants

85210409.1 -3

-

("PDAs"); and mobile devices including cellular phones. Defendant further objects to

the production of data in its native form because the integrity of such documents cannot

be insured following production. Defendant will produce responsive documents on a disc

in tiff or pdf fortnat.

4. Defendant reserves all rights to assert privileges in accordance with Texas

Rule of Civil Procedure 193.3.

5. The Definitions of "Document," "Person," "Party," "Relating To," Relates

To," "Concerning," "Communication," "Pertains To," and "Pertaining To," are overly

broad, and make each of the requests for information unduly burdensome and as a result

ask for information which is not relevant nor reasonably calculated to lead to the

discovery of admissible evidence, and are also inconsistent with the Texas Rules of Civil

Procedure. Defendants will give these terms their ordinary meaning in accordance with

common usage.

6. The "Definitions" of "Date," "Describe" and "Identify" are overly broad,

therefore making each request unduly burdensome and seeking information that is neither

relevant nor reasonably calculated to lead to the discovery of admissible evidence.

Defendant will give these terms their ordinary meaning in accordance with common

usage.

7. Defendant reserves its right to supplement all responses in accordance with

Texas Rule of Civil Procedure 193.5.

81210409.1 - 4 -

INTERROGATORY NO. 1:

Identify each of TWIA's members for each year for the last ten years.

ANSVMR:

Subject to and without waiving its initial objections, which are incorporated herein

by reference as if fully restated, Defendant responds as follows:

Pursuant to Texas Rule of Civil Procedure 197.2(c), Defendant attaches

documents from which such information can be derived, the burden and expense ofwhich would be substantially the same for Plaintiff as for Defendant.


Identify each of TWIA's board members for each year for the last ten years.

ANSWER:

Subject to and without waiving its initial objections, which are incorporated hereinby reference as if fully restated, Defendant responds as follows:

Pursuant to Texas Rule of Civil Procedure 197.2(c), Defendant attaches

documents from which such information can be derived, the burden and expense ofwhich would be substantially the same for Plaintiff as for Defendant.


State whether TWIA paid property taxes for real property or business personal

property for each consecutive year for the last ten years and the amount of property taxespaid.

ANSWER:


by reference as if fully restated, Defendant further objects to the portion of the

interrogatory asking for the amount of property taxes paid and the years in which any tax

was paid because such information is irrelevant and not calculated to lead to the

discovery of admissible evidence. Subject to and without waiving its objections,

Defendant responds as follows:

TWIA has not paid real property taxes but has paid business personal property

taxes.

85210409.1 -5

-


State whether TWIA paid federal income taxes in any year for the last ten years,and if so identify the year and amount paid.

ANSWER:

Subject to and without waiving its initial objections, which are incorporated hereinby reference as if fully restated, Defendant finther objects to the portion of the

interrogatory asking for the amount of property taxes paid and the years in which any tax

was paid because such information is irrelevant and not calculated to lead to the

discovery of admissible evidence. Subject to and without waiving its objections,

Defendant responds as follows:

TWIA pays federal income taxes.


State whether TWIA contends that TWIA is entitled to sovereign immunity and ifso, the factual bases for TWIA's contention and when TWIA contends TWIA becameentitled to sovereign immunity.

ANSWER:

Subject to and without waiving its initial objections, which are incorporated hereinby reference as if fully restated, Defendant ftirther objects to the interrogatory because it

improperly attempts to force TWIA to marshal its evidence. See Tex. R. Civ. P. 197, cmt1. TWIA refers Plainitff to TWIA's Motion for Summary Judgment and Response to

Motion for Summary Judgment filed in this case concerning sovereign immunity, as well

as any amending or supplemental briefing. Subject to and without waiving its objections,TWIA responds as follows:

TWIA does contend that it is entitled to sovereign immunity.


State whether TWIA contends that TWIA is entitled to governmental immunityand if so, the factual bases for TWIA's contention and when TWIA contends TWIA

became entitled to govenimental immunity.

ANSWER:

Subject to and without waiving its initial objections, which are incorporated hereinby reference as if fully restated, Defendant further objects to the interrogatory because it

improperly attempts to force TWIA to marshal its evidence. See Tex. R. Civ. P. 197, cmt

85210409.1 - 6 -

1. TWIA refers Plainiff to TWIA's Motion for Summary Judgment and Response to

Motion for Summary Judgment filed in this case concerning sovereign immunity, as well

as any amending or supplemental briefing. Subject to and without waiving its objections,

TWIA responds as follows:

TWIA does contend, in the alternative, that it is entitled to governmental

immunity.


Identify by name each lobbyist employed by TWIA in the last ten years and the

amount paid to each lobbyist.

ANSWER:


by reference as if fully restated, Defendant further objects to the to the portion of the

interrogatory asking it to identify the amount paid to each lobbyist as irrelevant to this

case and not calculated to lead to the discovery of admissible evidence. Subject to and

without waiving its objections, TWIA responds as follows:

TWIA has retained, including in the year 2007, lobbyist Todd Hunter of Hunter &

Handel, 555 N. Carancahua, Suite 1600 Tower II, Corpus Christi, Texas 78478, Phone

(361) 884-8777, Fax (361) 884-1628.


State whether TWIA or TWIA's employees have accepted a gift in excess of $500,

the identity of the donor, identity of the recipient, description of the gift and the purpose

therefor for each gift in the last ten years.

ANSW


by reference as if fully restated, Defendant fiu-ther objects to the interrogatory because it

asks for information irrelevant to the issues material to this case and is not calculated to

lead to the discovery of admissible evidence. Defendant finther objects that the

interrogatory is overly broad and unduly burdensome because it asks for all gifts given to

any TWIA employee from any person in any context and would include gifts exchanged

between family members. Subject to and without waiving its objections, TWIA responds

as follows:

TWIA is unaware of any employee accepting a gift in excess of $500 in

connection with his or her work.

8521MA -7-


State the amount of money TWIA received from the State of Texas' general

revenue fund in each year for the last ten years.

ANSWER:

Subject to and without waiving its initial objections, which are incorporated hereinby reference as if fully restated, Defendant further objects to the interrogatory to the

extent it asks for the amounts as such information is irrelevant to any issue material to

this case and not reasonably calculated to lead to the discovery of admissible evidence.

Subject to and without waiving its objections, Defendant responds as follows:

Since 2007, TWIA has received money that would have gone into the General

Revenue Fund as a result of premium tax collections but was sent to TWIA instead (with

such taxpayers receiving a premium tax credit for such payments).

95210409.1 -8

-

THE STATE OF TEXAS

COUNTY OF TRAVIS §

BEFORE ME, the undersigned authority, on this day personally appeared Jim Oliver, on

behalf of Texas Windstorm Insurance Association, known to me to be the person whose name is

subscribed to the foregoing and after having been duly sworn stated on oath that with the

e x c ep t i 6 n o f i n ter ro g at o i i e- s at io i i @@ b fi s -w i ff I E no- N@ 71aj i of iii I i, @ ia-n-tF" , 'i Fa f -WA i @ @ i sie' s-, - fieg -a-I

contentions, and answers based on information obtained ft-om other persons, the above answersto interrogatories are true and correct.

SUBSCRIBED AND SWORN TO before me on September 8, 2009.

Ro 0@blic in and forthe State of Texas

8521D40.1 -9

-

From: Russell StoutSent: Sunday, September 21, 2008

To: Reggie Warren

Cc: Steve Boyles;

Subject: RE: Roofing Prices for Houston

Reggie, thanks. We will ponder also and Steve was going to confer his Houston contacts. I am sure your adjusters will have additional info on this for

us.

----- Original Message-----From: Reggie WarrenSent: Sunday, September 21, 2009 9:08 AMTo: Russell StoutSubject: RE: Roofing Prices for Houston

We have provided our price guide to adjusting firms. Not sure how to fix this unless we change based on these numbers and send it out. Prices will

likely change again before long plus this could affect our Dolly losses in the VALLEY. I will think- about it and come up with something. I have to

meet \,\,itli adjusters tomorro\,\, and Tuesday.

-----Original Message -----From- Russell StoutSent: Sunday, September 21, 20D8 7:57 AMTo: Reggie Warren, Bill KnarrCc: Russ DavisSubject: FW: Roofing Prices for Houston

Reggie & Bill, after you guys consider please lot us have your thoughts and/or additional feed back that has occurred. It does not appear our initial

price guide will hold for long regarding roofing.

----- Original Message -----Froni@ Russ DavisSent: Sunday, September 21, 2008 7:48 AMTo: Russell StoutSubject: FW: Roofing Prices for Houston

See Kevins comments below...

----- Original Message -----From: Kevin Redd [mailto:kevinxedd@@@]Sent: Saturday, September 20, 2008 4:11 PMTo: Russ DavisSubject: Roofing Prices

Russ,

WORT) FROM THE FIELD T HAVE CONFIRMFT): We will be sending in some agreed price closed claims with insured's this weekend. They will

open right back LIP for supplemental, on roofs as soon as the insured's can find a roofer that will replace their roofs. Please call when you have a

moment. Attached are the roofing prices we have received from Holden Roofing today. We have dealt with Holden Roofing for years in Houston

They are one of the largest roofing companies in Houston and I have dealt with the owner Brett Holden many times myself over the years. I have

known Brett to always run a fair and honest roofing company. I had requested him to send me his current roof prices as well as a letter from the VP of

Owens Conting dated 9-5-09 about a week before the hurricane addressing cost increase. He has additional letters he has recently received to support

the above statement and he will get them to me the next couple of days or so. I will forward them as soon as I receive them for your records. Ben

Ralph is telling me he is getting an agreed price for roofs with the insured's. But that when he is trying to get an agreed price on roof claims with

insured's that have roofers, the roofers mill not accept TvVIA/ TFPA roof prices for this hurricane. Xactimate has always been higher then

Intigraclaim across the board. Xactimate went up half way through the 3rd quarter price list update this vear on many prices, including roofing

approximately 20% due to fuell cost which effects from the roofing manufacture, to transportation, to distributors to the roofing contractor and finally

the insured, We know now that the claims closed with insured's that do not haw roofers at this moment VVill Supplement due to the roofers will not do

them for current prices on the price guide. Ben is dealing with J&J Roofing out of Alvin, Texas, south side of Houston on a TFPA claim now. He has

tried to get an agreed price on 2 TFPA roof claims today and the roofers will not accept an agreed price settlement due to the prices. TWIA/ TFPA

roof price for remove/ replace for shingles, labor & felt only on a 20yr. 3 tab is $192.00 square. Roofers are getting from $230.00 to $255.00 a square

right now before the next material increase. This does not include drip edge, vent stacks, lead jacks, valley metal or any type of roof vents. Xactimate

for roofing only includes felt, not all the above mentioned that is included per the TWIA price list guide we have received. Please let me know what

PLAINTIFF'SEXHIBIT TWIA Instit 00015137

management has to say on this matter because if TFPA is getting closed files with agreed prices with roofers then it is more then likely not true and

supplementals will begin very soon. There are way to many storms in the USA right now and resources are stretched thin at the moment. We want to

get this right from the start or else the supplemental issue will become explosive very soon for all of us.

I look forward to your response so we can convey to our adjusters.

Thanks.

Kevin Redd

Cross Claims Service, Inc.

(281) 392-2230

Note: The information contained in this e-mail is confidential. If vou are not tile intended recipients or an emplovee or agent responsible for

delivering Us message to the intended iecipierit, do not distribute or L@opy this corriniuriicadon. If you have received this communication in error,please noLify us immediately by replying to the sender, and delete this message. Thank you for your cooperation.

TWIA-Instit-00015138

From: Reggie WarrenSent: Wednesday, July 16, 2008To: Garry Kaufman

Subject: RE: Tim Molony

Thanks for understanding Garry and I agree with your approach and suggested response to Molony. We do our best to make solid decisions about all

aspects of claims handling. That include., being fair and honest with vendors.

Reggie

----- Original Message -----From: Garry Kaufman [mailto:Garn,.Kaufman",@)gia-tx.com]Sent: Tuesday, July 15, 2008 7:31 PMTo: Reggie WarrenSubject: RE: Tim Molony

Thanks...that helps a lot. I Was not going Lo call Us guy back because I knew why lie was calling and I told in@ assistant if he called aeuin tell him lie

needed to speak with you. On his last call he said he had already spoke with you so I figure he wont stop calling undl I call him back and tell him he

has done all he can do and I can be of no help.

Does he riot know you are the Claims God and your word is the final word? I will make sure he knows that. I hate it when people try and go

around all of the rules......

Garry

Garry P. KaufmanPresidentGalveston Insurance AssociatesGalveston League City(409) 740-1251

(281) 442-7663Fax (409) 740-0513,,Nv@,wgia-tx.com

Please remember that insurance coverage cannot be put into effect or changed via messages on our email or voicemail systems.

CONFIDENTIALITY NOTICEThe information contained in this communication, including attachments is privileged and confidential. It is intended only for the exclusive use ofthe addressee, If the rcadcr of the message is not the intend cd recipient, or the employee of agent responsible for delivering it to the intendedrecipient, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have receivedthis colililiwiication in enor. please notify us by telephone immediately-.

From: Reggie Warren [mai1to:REGGIE(aA'WIA.ORGSent: Tuesday, July 15, 2008 7:02 PMTo: Garry Kaufma nSubject: RE: Tim Molony

Garry,

Mr. Molonv is well aware of oul- procedures of selecting and ushig IA En-ins to handle TWIA and TFPA clainis. Quite frankly, I am ver.y surprised he

lids contacted you about this. He contacted Craig Eiland about Lliis less than a year ago. He also c onLacted Oli,@er. I had previously explainedeverything to his marketing person and thought he and she understood. Apparently he feels the way to get approved by TWIA is to make a politicalend-run and we cannot do business that way. We treat all qualified TA finns with fairness and respect, but we can only use so many especially during

non-cat periods.

His firm is on the "Cat List" but there are other firms ahead of his firm if and when the time comes to add another dedicated firm to handle ourclaims, Ir-andiscuss,,vithyouourphilosophvaboutelaimshandlingandthebalancingofadjustingresourcesifyouUe . ...........

it is too long for anemail.


Deggie Warren

Om: Reggie Warrensent: Friday, September 19, 2008 i2:36 PMTo: Reggie WarrenSubject: Hurricane IKE Adjusters I BorrovAng or renting adjusters

All,

Presently, 36 adjusting firms have committed various numbers of adjusters to handle only TWIA

and/or TPFA claims. We are assigning these claims by territory to each firm based on the number of

adjusters on it's list and the capability of those adjusters (commercial, residential, complex lossesetc.).

We have recently gotten reports that some firms did not actually have the adjusters theypromised ............

they are having to borrow them or rent them through another source/ A firm making

some sort of special deal.

We cannot have thisl If we assign losses to your firm and you re-assign to another firm, totalcontrol is lost at our end. I think most of you have seen this happen in other storms and it wasineffective causing many delays and litigation issues.

I know which firms are doing this. Please stop it]

also know that everyone wants to make a lot of money. So do 1. Let's don't let greed get in the way.)f getting these losses handled.

If your firm cannot handle the number of losses we are sending, be professional and let us know.We can stop or slow down the assignments as necessary. A couple of firms have done this and that

means a lot to me and TWIA.

Thank you,

Reggie WarrenTWIA ClaimsAustin, TX512-899-4902

PLAINTI WV

TWIA-Instit-DO000261

TWIA/TFPA Claims Organizational Chart

Bill Kevin C I-Calostrorho Office C'o'nis Man or,

kiwager. TV'IlA W., AS1*111,

Claills

@S.Clr'111:1611111-11r.

TV)IA ,ieve Boyles -General Adjuster

I

TFPA

Crxwdiiijlo,, TVVIA

@7,

ay 0 Alaii R 11

Clain Claims Fq -Coordinator: 'TVVIA (@reg Resnick - Clain's

Examiners TFPA

Courtney Frericli -@-Cll -1@1!;

L ColleCieIntein. TVIAA Examiners, IFPA

Jeff Rech - ClaimsExaminers TFPA

CAT OfficeKevin hiyers. - ins

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TFP,7...,

Supervisors E.a

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PLAIWTW.Sx'@'- 12TWIA Instit 00001824

Primary Adjusting Companies

A 13 C 0 E F G H I K L

MASS

CITY. STATE. ZIP CITY. STATE. ZIP AVAIL. EMAIL

1 HAVE MAILINGADDRESS (MAILING) PHY31CAL ADDRESS (PHYSICAL) PHONE PAX TAX ID$ CONTACT ADJ. COMPANY EMAIL ADDRESS LIST

SO Vincalrar 281-360 5776

2@W

PO go. 73066 H--st-n TX 77')73 Perniangtt W..sllon. TX 77090 @2811-872-5655 291-872-444a Conr Vimeat 281-374@01 71

Allyars: Wl-W4-8323cel 381-227-5300

3 Drusn PO Bo. A26 Al.", TX 78333-0426 361-416-17f3 [email protected], :74.293915a DOWN @600AI&1773 125

RoyCuppe 678-578-7215

Bud Tilice: 404-705-G407

Jay Campbell 404-51MIXY;

@67"37-5630I2y_Caff43bQ0Q US. Cla@=.CO.

Svnpon@ 314-5MO10DR~cell 3114-308-0477

Houston TX 78466-8278 713-780-9826 713-28118835 5&WO6554 roben simosontlus crawoo corn4 Crawford 3100 S. G@ner Suite 500

bicilettsMabrotmns.corn

803-96D-0071

5LAB

[email protected]'vkG@ft235 H-t.n TX77036 713-088-6700 :713-270-30CO 13-27470r>4 [email protected]

4M3474)W3 Phd Maloux, 409-3474)883

6 itfieton 1310 IH-10 S@ 9 100 Beaumont TX T7707 @409-924-0728 :409-347-004 iChucAUse 972-2414;813

Save Vmvenr: 400 781-511

R7.

abine PO BOX 14as Beaumont. TX 777D4 8830 us @Wy 69 so Be-lnclrit TX 77105 409-729-=2 409-729-8333 76-0575774 hornal 409-727-4488

CD(D0(.111

Revised - 0312i/2008 Page 1 of 1 Printed On 02125120094

From: Bill KnarrSent: Friday, February 08, 2008 06:51 PM

To: Bill klriarr

Subject: I FW: TWIA Dedicated A4juster Program (DAP)Dailv and Maint Fees 2007 revised.doc-1

Fee Schedulel.doc Feb 07.doc;Attachnnents:Fee Schedule'2.doc Feb 07.doc,

Fee ScheduleIdoc Feb 07.docI-

Fee-Schedule4.doc Feb 07.doc

Original Message-From: Peggle Warren

Sent: Friday, February 06, 2008 12:14 PM

To- Bill Knarr

SubJect: FW: TWIA Dedicated Adjuster Program (DAP)

----- Original Message----

from: Renie Warren

Senti Wednesday, June 06, 2007 3:16 PM

To:Emall.Blaster;'billGabjad)usters.corrC;'cory*abjadjusters.com';'donbLMbrushoDuntryclaims,com';vickleb0brushoDuntryclaims.com';'richardmObrushcountryclaims.com';

'jamess0brushcountryclairns.corW; Jay_c&mpbeN0us.crawca.com'; 'roy_cuppsous.crawco.corn; 'BudIffriceous.crawco.com'; 'librigharnoeberls.corn'; 'rpetrovicsoeberls.com';

'bickettWgabrobins.com';'hubbordhogabrobins.com'; @eff0thcicgacy-group.com';'stevc*thelegacy-group.corrf;'mblerek0littleWn-group.com'; 'PmeauxClittleton-group.com;

'dbrassfield0pacesetbercialms.com'; 'bcolemanQpacesetterclairns.c(>m,, IsmootipMpacesettercialms.com'; 'benny_brocato(byahoo.com'; 'scvincent0sablneclairns.com';

'bilftwardlinvc1alms.com'; '[email protected]'; )ohn(bwordlowdairns.com Kevin McFarlin; Ka5y Wilson; Susan Schiller; Courtney Frerich; Gene Kounse; Gayle

Needham; Oil Knarr

Subject: TWIA Dedicated Adjuster Program (DAP)

All,

I hope things are going well for each of you.

I enjoyed seeing you at the annual meeting in West Columbia. Next year, we will have a meeting of the principals only. More

information about next years meeting will be provided late this year and early next year.

The 2007 hurricane season is upon us. The forecast is for an active season. We hope that that your adjusters are committed to this

program and that we can depend on them if Texas gets hit. Your support of this program is very much appreciated.

The first attachment is a summary of the Dedicated Adjuster Program. I hope the document addresses any questions or concerns you

have. It not, let me know. We teel this program is attractive to the adjusters.

Also, attached are our four (4) adjuster fee schedules that will be in place for this season. We wrill decide which schedule to use after a

cat event. Each schedule contains two (2) pages. You are free to share these with our Dedicated Adjusters.

In addition, I wanted to let you know that Bill Knarr (previously with GAB) who many of you know is now working for TWIA1TFPA as

Catastrophe Office Manager. He has essentials taken Joe Rosentritt's position even though we hope Joe wIll still come In to help, We

are very glad and fortunate to have bill and his extensive knowledge of the claims business.

Please make certain your adjusters are aware of how the DAP program works and the commitment we expect from each of them.

Again, thank you very much.

Reggie

PLAI'J


DAP

A B C D E F __t_ G H

CITY, STATE, ZIP :CITY. STATE. ZIP TAX ID COMPANY EMAIL

NAME MAILING ADDRESS (MAILING) FHYSWAL ADDRESS number CONTACT ADDRESS(PHY31GGAL) PHONE FAX

SAU Vincent 281-350 ST76

2 ASJ _.,P0 9-73065 H.Ust... TX 77273 222 Pembtalit H-t-, TX 77090 2811-872-5556 251-872-4443 Cary Vwerti 281-374-0171

RiCinfirdlui 301-ON-8323.Cell 361-227-5300

3 Brush P 0 Bor 425 Alice. TX 7&333-D426 ".415-1773 381435443155 7A.2939156 Debbie @BOC-416-1773

Ron P*tN (Nat'l Cat N, I

cell 214-549-9097

romoccatcri mmMace A. Fainvor (VP)

Catastrophe

-11 214-782 0208

972-073-M4 Macefaca"I.Com,

4 Specialist Inc. (CSO 500 Turtle CoUe SW SW. I I 0 R-4-111, TX 7%87 403 Turte Go""' SW Suite I 10 Rockwell, TX 75037 803-215-7057 972-4734)W 75-2620041 Ron Garmor,

Ruy Cupps @076-578-7215

Bud Ther, A04-705.6,1107

Joy C~eff 404-300-1202

67"37-5638j-Y_c-.Pbs IOUs @@co comRobert Similean: 31 A-SMOI 00

cell 314-306*477

54 robed s,mp"m@uI,.craU,,m.corn5 Cm~d 31 00 S. Gessner Suite 500 Houston. TX 784666278 713-71109926 713-2688835 W05055

y Rob P*trwics (Field Op@ C-rd.n.Io,):cell 210-842-9887

[email protected] oo.Ebert's Claim

Ste"PyAm., 320-422-41165

6 Service, Inc. 7276 Mansfield A". L,,k.,,.,d, Co So= 7270 Mansfield AUe 'Lake-ccl. CO 80235 303-96MM 3173-9N.2771 pyliamealoorl.=n,@Shewrfilfekott,

281-384 II e5bicked.@gsk-loin-Hart h'ubb*f(f1103-960-0071

7 GAS 8700 Commerm Park Suite 235 Houston. TX T7= 7134884r= 713-27(-38M 13-274705A hUlobaldhGa2brObins corn

Jo" W Perkins (Presld.,t) 972-370-7315

cell 214-755-0103

jsffCPleq_y-g..p

Jo" 0, Pwk#w (AVP.O,,wt., of P.pwtv

8 Giroup, The 7552 N Main SL The Colony TX 7MM 7552 N. Main St The Colony, TX 730515 972-370-7370 75-31729M cell 214-475-3475

409-347-0883 PhIfUlarilux 409-347-M83

9 Littleton 13101H-10S. 0 1010 Beaumont. TX 7707 4CO-924-0728 4og-w-3684 Chiucili 972-241-9813

CITY. STATE. ZIP -CITY, STATE. ZIP COMPANY EMAIL

10 NAME MAILING AIDORM (MAILINO) PhYSICAL ADDRESS (PHY31CAL) ;PHONE FAX !CONTACT ADDRESS

Barry Cox~. (VP oirchunw)coll 918.871-1204

H.W 5moQ(' 886-218-41WO ..t 2M

call 918-040-0868 108-540-11,11,46

f..918-665113Wksnootppaceseffelclaims.cornStan, grown,

call 105@820 7919

faxgla-6695-6m

iRaymond Stewart 830-

028-7110 93D,105-2461

Pricesefter Claimstax M626-71 50

i Iserv Catcova, OK 74015 918-8654M 73-15111-C>

we 1P.O.Sm,172107 TO", OK 74`147 25111 N HWY 101

m1w.,artClosceriettemle-s mm

Revised - 08/04/2008 Page I of 4 Printed on 0212512009

LUGOOOO 111sul Viffil

ic

it

13

6EL90000 Msul VIAAI

SL

aK

0

DAP

A C D E F G H

Sfinev VIVICOM 41061-7011-51&5

call,109-78115`185 hom&409.727-4458

salmaeclaunsCilawneclants oorn

sonny 1111rocato

12 Sabine P 0 SC. 1485 Beaumont, rX 77704 OM US hWY 69 So Beaumont, TX 777CS 4109-729-8222 4M72"333 76-GS75774 bsnny@@WOGIII*Gyahoo. oom

Arrodd Schafer (Pmsidenti@

cell 903-814-9494

annodwhaforCwhallet.,oodcom

Schafer, Wood A,Lk& C Wood.

1 3 laws. Inc. PC. Box 2159 Denson, TX 75mi .1200 FM 120 PoMbato TX 75075 &M-337-0112 a8"15-O'll 75-21MI9332 caII903-814-9390

John Fontenot (Clm. Direct.,)

=II 805-501-2252tax 512-233-26NjohnQwanfavoclams corn

;mat D. Fathered (Drector Field Opwabws@Imil 254-824-9552I

14@Vardlww

PO Box 7817 Waco, TX 76714-7817 2725 Texa. Canh.l P.,k-y lWao:,, TX 76712

i fax 877-894-2540

74-2674209 1MaddG@ardla--claI-S mm

0C)CD

0CPORevised - 08/0412008 Page 3 of 4 Phirted on 02/25/2009

4C13

co

Frorn: David DicksSent: Tuesday. February 10, 2009

Alan Renshaw; Amelia Key;Ben Glover.- Bill Astin-

Bill Hooper: Bill Jones;Bill Tassinl- Bob Inmon,Bob Latta; Bob Parrish;Brad Short, Bi-andlVanderneut,Carl Brownl- CathySanders;Cathy Weidner, CharieneCoker-Chris Zimormicz; ChrisiopherWhite;Clay Tinnell- Corey Crawford;Cory Kendrick,- David Dicks;Dean White' Demian Kolb;Dennis White: Diana Orta:Don Fielder, Don Turner.Donna Glover; Duncan St. Clair',

FranL Hughes-, Gene Latbarn.-

Greg Briefs. Harold Philyaw,Helen Frank; Huck Huckabee-Hugh Meloche: James Harp-,

To:Jamie Gladman; Janie GarciaJason Garrett; Jason Young;Jean Burke: Jeff Stockdale;Jeffrey Goretzke; JenniferAmistrong;Jerry Dickerson; JerryLerma;John Hilliard; John Jenkins,,

John Wright; Josie Fielder;Judi Rosenblat; Ken Colestockl-Kenneth Robbins-, Kevin McFarlin;Kris Weidenfeller- Lance Cooke;Linda Jones; Lou Skinner;Marie Avalon, Marie Merida;Mark Chancellor; Mark Lesley;Marshall Clack; Martin Greco;Melissa Richardson- Michael Boyer.Miguel Riveros; Mike Calvin.Mike Elvington.- Mike Guidry.,Mike Jay; Parn Bowe;PaulMikkelsen. Paula Smith,Phil Hays; Preston Kuhn;Ralph Frank- Randy Stone,

Cc: Gayle Needharn.-Susan Schiller,

Subject: Solicited Service Invoices

All.

It has come to our attention that a particular 1A firm (TMS) have been submitting invoices on supplemental claims that they in fact solicited from the

insured. If yc)u come across any service invoicc, particularly IMS, give close attention to the fact if there arc no additional damages docurnentedand

the IA firm is submitting a base service fee, we need To investigate this by contricting the insured and asking whether they requested the supplement

be opened. PIcasc bring this to your Team Leaders attention or mysclf if addition] assistance is rcquircd.

If you have any questions to this, please ask.

Thank you!DdVid

PLAINTIFEXHIS TWIA Instit 00006608

Cat Plan Additions/Revisions July /August 2007

Section VI, Dedicated Adjuster Program, page 30

Dedicated Adiuster Proi!mm (DAPI

The DAP is a significant part of the overall catastrophe plan. The purpose of this program is to

secure a sufficient number of qualified adjusters through Independent Adjusting Firms (lAs) thatwill be committed to helping TWIA and its policyholders after a significant storrn event. Theseadjusters must be committed to responding if and when TWIA activates the DAP. They must befiwffier committed to remaining near the storm site to handle claims for as long as necessary.

'niis program began in 1997 with five (5) adjusting firms providing ten (10) adjusters each, Due

to growth in policy count and exposure over the last ten (IO) years, this program has beenincreased to ten (I 0) firms with each providing twenty (20) to twenty-five (25) adjustersfapproxinwte@j, 220 as ofJuly 2007). While this is not enough adjusters to fully handle a major

cat event at Galveston or Corpus, it is a good nucleus. The DAP firms plus other firms on ourCat List have committed to providing additional adjusters outside the DAP if we need them.

The adjusters will work for the IA firms and not directly for TWIA, in most cases. There could

be instances where TWIA hires a DAP adjusters) as contract workers to perform various tasks

consisting of claim file supervision, auditing of files and reinspections. These adjusters couldalso assist with particular disciplines such as salvage, subrogation, ALE claims, PP/BPP claims,

Bl/EE claims and/or complex, larger losses.

TWIA determines when to activate the DAP and communicates this through pre-identifiedprincipals at each of the firms. Upon activation, the principals Will contact the adjusters and startthem on their way to the storm site. The principals will maintain control of their adjusters andwill have them on standby awaiting an orientation meeting and loss assignments.

The DAP adjusting firms wflI be paid on a TWIA Fee Schedule, per file. The adjusters -hill

receive a Daily Rate after they arrive until they receive loss assignments. After receiving loss

assignments, they Will each receive a retainer fee to help with their expenses as long as they arehandling only TWIA claims and/or until released by TWIA. These fees are all decided at thetime of the storm and are paid to the IA firm who is responsible for paying their adjusters.

TW1A is not involved in the fee arrangements between the firms and adjusters.

Each year, we try to enhance the program to make it attractive for qualified adjusters. We have

regular seminars for the adjusters and principals, which provide education and entertainment.

The DAP roster is maintained by a TWIA Claims Coordinator, College Intern/Clerk and the

Catastrophe Office Manager.

As TWIA grows, it is likely additional, qualified IA firms and adjusters Will be asked to join this

program.

SEE THE FOLLOWING PAGES ABOUT THE MANAGEMENT OF THEDAP

PUJNbFFSISIT

TWIA Instit 00005811

From: Bob TantSent: Wednesday, October 0 1, 2008To: Reggie Warren

Subject: follow up for work for Texas based adjusting company

Attachments: M contact inforynation-O.doc,TIA qualification summary-Ldoc

Dear Mr. Warren,

With the utmost respect for your busy schedule, I am just following up with you on your clainis assignitients. TIA clairris is a texas adjusting

company with Texas adjusters who call Slav here long tenn LO Clean Up Claims. We have a cat office established in Houston for Ike Our

corporate offices are in Dallas and m College station.

We art: really hoping we can Set some work from the TWIA on this storm, so that we can be on your roster. We know that TWIA is swamped

and having jo give out work Lo companies outside ofTcxas. We would like to have the opporLur'uty to get some claims also. We contacted JVLA

earlier in the y@ar, before Ike hit and after Ike hit, and were told you were all set with adjusters.

Since then, we are hoping that the situation may have changed as we are talking Arith small companies from outside of Texas who are getting new

clainis from TWIA who were not on your vendor list a ftw weeks ago. So t1lis is why I am following up with vou. We are hoping we would be

given a chanuc Lu handle claims in our own backyard.

I have Texas adjusters who havejust finished up in CA, Florida and lAmisiana that I call put to work immediately handling hoineow-ners or

commercial wind claims for I'WlA.

I am attaching a contact sheet for your convenience.

I thank vou for taking the time to give us consideration as all experienced Texas Cat adjusting company.

-- On Sat. 9/217/08, Reggie Warren <RE(36IECayl'W1A.0R6> wrote:

From: Reggie Warren <REGGlEUa)TW1A.0RG>Suklect: Hurricane IKE A4iuster ResourcesTo: "Reggie Warren" <REGGIEaTWlA.0RG>Date - Saturday, September 27, 2008@ 12:50 PM

Thank you fur @vur offer to provide adjusters to handle IKE losses for Texas Wind-,Lonn Insurance Association (TWIA).We are doing our best at evaluating our needs. Some firms and adjusters are in place handling our claims but we are not certain. if we have

enough.FortwoNveek-ssinceUCE,,@vehavereceivedmanylossesandtheyaTestilleomingirL,butat.gmuchslowerpocethelostcoLipleofda3,s. Itisexpected that the pace of new losses will pick up again, butAho can be certain.We also realize how difficult it is for vou to retain and manage adjusters.As,.vedeterrnineoxirneedsgoingfonvard,ilma5@benecessaryloaskforadjustersfromyourfinn. Wexilltmderstandifvotituivenonelefiandthat they are all on assignment elsewhere. Our goal is to balance the number of losses for each adjuster and IA firm so they have enough to make

some money. That is very tough to do as you know.Your inquiry and offer does not go unnoticed and it is much appreciated by TWIA and me.We will let you know when we can if we need more adjusters.Sincerely,

Reggie WarrenTWÌA ClaimsAustin, TX

IT


Reggie Warren

rom: Reggie Warrensent, Thursday, September 11, 2008 9:54 AM

To: Kevin McFarlin; Bill Knarr; Joe Rosentritt; Ray Roe; Gayle Needham; Susan Schiller-, RussellStout-, Alan Renshaw; Gene Kounse; Norma Rosentritt; Courtney Frerich; Nancy Hrin', PattyKnarr; Wendy Scarborough; Terry Partiow; Ray Lang; Sam Jones; Michael Cortese; TomGlow; Sheldon Maxwell; Helen Frank; Ralph Frank, Carl Brown; Jim Coggin; Don Turner; Bill

Hooper; LaJean Warren', WD Scott; Woody McMahon

Subject: Logistics for IKE-Confidential to TWIA Claims

Some thoughts and info:

• If IKE takes its present projected path, it could heavily involve 3 of the largest populated counties insured by

r`WIA. -...Brazoria, Galveston, Jefferson.• It could also bring in Houston which has windstorm coverage through TFPA (50,000 policies about).

• So, TFPA Claims is having to gear up and get ready also.

• We should expect to work this weekend, Sat and Sun 9-1 3 and 14. This all depends on the landfall of the storm andthe workloads

• Work hours will typically be 7:30 am to 6 prn but could change as warranted.• We are moving the Texas FAIR Plan Claims Department to the front (east end) of the building.

• TWiA Claims will then encompass the area where TFPA Claims is now.

• Russell's new office will be where the NOTUS training room is currently. Russell's current office will be vacated for thetime being.

• The NOTU S training room will move to Tom's old office in the corner next to Tina Frank.

• Kevin will need to coordinate with Tom on the move of the training room.

• A new set of fax, printer and copy machines will be placed in TFPA Claims' new area up front.

• We may need to have another set of machines over by where Carl Brown and Jim Coggin are, if we need to put more

cubicles back In that area. (We would have to move all the filing cabs etc. back in that corner first).

• We should have 2 now temp data entry persons this morning 9-1 1.

• Two more temps for tomorrow, one data entry and one to help Gayle, Norma, Susan, Courtney.• Knarr is keeping a list of temporary support staff to include LaJean Warren (part time), Nancy Hrin, Patty Knarr,

Wendy Scarborough.• We WI) have others volunteer to work for data entry, maybe Kevin McFarlin's wife, Jim Murphy's wife, Russell Stout's

wife.

• We will also have volunteers from other departments who ran help us before hours, after hours and weekends. WesKoehl who works with Lee has volunteered. There will be others from TWIA Underwriting, TFPA Underwriting,

Accounting. We will get a list from each department and Knarr %will keep that.

We will be having additional claims supervisors come in in stages for training on Notus etc. Knarr keeps up with this.

Scotly and Woody are return along with some new persons.These supervisors will be in the cubicles vacated by TFPA Claims plus possibly scattered around the building.

The data entry persons will be on the raw of cubicles across from Joe, Terry and Ray. The volunteers frrm otherdepartments may need to work from their personal desk. This Vill require the NOTUS software to be installed on eachwork station.Parking will be an issue. There is available parking in the southeast portion of the complex near UNISYS andhopefully some more parking will free up in the rear (west side) of our building. Apparently members of the adjacentchurch park there now.Tom and Donna have ordered chairs for the cubicles and phones. IT is installing workstations in most all cubiclesaround the building.We should have an ample supply of checks and file folders to start out.

We will leave the large filing cabinets in the middle of the floor and may need to use some more back in theOperations File room.We will discontinue the mobile office unit in South Texas (Dolly) and move it to a stragegic and visible point nearwhere IKE makes landfall, to be determined.We may need 2 mobile office locations depending on landfall

.............i.e. Galveston/Houston area and Beaumont ar,

(hopefully not Corpus too)

• We have a motor home and 2 trailers for living quarters available. Turner and Hooper will continue to man the mobile

office. We may need another supervisor to join them at some point

• We have made many contacts with adjusting firms, in advance, getting adjuster numbers for standby. This is our


fourth time to do this this year. We have been promised many qualified adjusters and some inside supervisors.

• We have the 12 Dedicated Adjuster Firms and have reached out to 15 other firms. And, we may have to reach out

further. We have competition for these resources, espedially in the aftermath of Fay, Hanna and Gustav.

We will do our best to determine adjuster resource needs once landfall is made and then communicate that to the

firms.

• We will then need full lists by firm of each adjuster, phone#s, email addresses, license info etc.. Plus the princpals

names, phones etc.

• Our system will need to have the CORRECT information for IKE for each IA firm.

• Hopefully everything will work properly including NOTUS, printers, faxes, email, check printing etc.

• We will be making some changes on what we require from the adjusters in the adjustment of claims. We will consider

a more strearn-lined process in some areas. That will be communicated to you asap.• There are many other items to mention, but wanted to get some of the initial information in front of you.

Thanks,

Reggie

2

TWIA-instit-00000248

From: Bill KnarrSent: Wednesday, SeptembeT 17, 2008 06:26 PM

To: Reggie Warren

Subject: RE: Hurricane IKE Misc Issues / CAT # 60 / STATUS

No,workstations. Wcwilincedsupcrvisorsinabi)uttwoorthreeNveek-sNvbenreportsstartcDmingin.

--Onginal Message---From: Reggie WarrenSent: Wednesday, September 17, 2008 12.23 PMTo: Bill KnarrSubject: FW7 Hurricane IKE Mise Issuer I CAT # 601 STA73S

Bill; the Walker Group has supv if you need them, Reggie

--Original Message----From: Dan Walker imailto:dan.walke[gNv&claimscomSent: Wednesday, September 17, 2009 11:28 AMTo: Reggie WarrenSubject: Re: Hurricane IKE Mise Issues / CAT $160 / STATUS

Reggic:The people we have were collected to work Large Loss and all have 10-40 years experience. What can we offer them for Daily rate? $850?

How many do you wanP

When?

We %hill send you some resuntes ftt mnich your time line and pay offering.

Thank you.

Dan Walker

---- Original Message ---From: Reggie WarrenTo: Dan Walk-etSent: Wednesday, September 17.2008 10:06 AMSubject: RE: Hurricane IKE Misc Issues / CAT # 60 J STATUS

We @Alll need to ramp up ,vith supervisors as we go ihmugh the sionn. Please send names and resumes. We need experience Reggie

--Onginal Message----From: Dan Walker Imailto:dan.w-alker(dwftclaims,comISent: Wednesday, September 17, 2008 10:02 AMTo: Reggie WarrenCc: Caleb Flyrm; Roland Wells

Subject: Re: Hurricane IKE Misc I ssucs / CAT # 60 / STATUS

Reggie:

I'hdnks for till vour hard work. Can we help you by providing any inside managers, adjusters or file review'! I have gathered several GA's wiLb

excellent credentials and at this time haven't put them all to work. Let me know.

Dan Walker

cell 650-521-1512

---- Original MessageFrom: Reggie WarrenTo: Rcggic WarrcnSent: Wednesday, September 17,2008 8:23 AMSubjeuL Huriiewte IKE Nfisc Issues I CAT 601 STATUS MM

-1--Exinarr.TWIA, Instit 00015194

All, good morning.

First, thank you andyour adjusters for supporting TAIIA and TFPA We will receive many losses mostly in Galveston, Brazoria, Chambers, Harris

and Jefferson Counties.

Some bullet points. PLEASF READ AND DISTRIBUTE TO YOUR ADJUSTERS AS NEEDED@

1.) We arc assigning losses as fast as we can.

2@) WC are territorializing the losses by city a.% best we can You will need to fine tune territories within your area.

3.) Hopefully, we vAll assign losses to your firm either in the Beaumont/Pon Arthur am OR the Ualveston/Housion area. If we do crossover,

please handle the losses as best you can- You will receive both commercial and residential losses. We are attempting to assign these the best we

can based on the information you gave us about your adjusters'capabilities.

4.) 1 get lots and lots of emails. I try to respond to all if I can

5.) We are trying to manage your list of adjusters the best we can. We need to receive your list and revisions in Excel spreadsheet format.

6.) If you make revisions to yoLo list, let us know dic changes iii dic body ofyout ellidil.

7.) Hopefully, ad-lusters are making contact and appointments as they can. I know conditions are bad. It will take time to get through this, but

%xe will with vout he] p

9.) We are getting an extremely high volunic of claims. The system is bogging down a little right now, but that will get bettcrAith time.

9.) We are getting walk-in policyholders in Austin, asking for advances. Ms is very time-consuming but we will handle it.

10.) Our mobile office is being set up at the GulfGreyhound Park on IH-45 near Hitchcock, TX. It will be manned by Don Turner, Bill

Hooper, Gene Latham and Jim Hill. It should be open this weekend if not sooner

I 1.) The).- will have 'door hangers' for contact purposes and `TDI Building Code Brochures' for the adjusters to give to the policyholders when

inspecting the losses.

12.) The mobile office is there to facilitate the adjustment process the best they can. Four (4) people may not be enough, but it is a start.

13.) 1 have sent you the Pricing Cifidelines, TIA11A Fee Schedule and an orientation outline for the adjusters in prior emails. I hope you have

gottenthisinformationctittoyoiiradjtisters Theoutlineis informative.

14.) The outline points out that we are 'streamlining' the adjustment process a great deal to make it easier for adjusters. For example, there is

no requirement for evaluations of risks, no requirement for an underwriting risk report, no requirement to apply coinsurance penalties, proofs are@Nuivod up to $25,000 paid claim, your principals supervisors have authority on each claim up to S25,000 paid claim. If your adjuster feels there

is a need to address any of the waived tcquircm ents, they should let us know.

15.) It is important that adjusters go to our website and review the TWIA Claims I landbook ww-wtwia.org password IREDACTE

16.) WeareLryiiigtoschodulcoilt:nLatioiiinwLine-swiLhadjuSLers. nieywillbenexlweckiii;.)stlikel),oneinNt:dtalaiidandoneiiidieHoustonarea. Wevvillietyoukriow. Noncedtoemailmeaboutthis.

17.) T will get you infoTmation about floodkinnn qurge v. windslorm damage.

18.) 1 will get you information about ALEYDisplacement payments for insureds and primary dwellings

19.) 1 will get you information about condo and condo unit-owners losses.

20.) You should have an individual email box at TWIA to submit PDF reports to. They must be PDF. If you do not have that email box

address, email Susan Schiller sschillcr(iovvia.org

21.) In the meantime, we need your adjusters to begin working claims. Prompt contact must be made with policyholders. Use "door hangers"

iryouncedto %F.MlJgTk4TMtvtlZFCONWT,ATNTSTOTHF. TFXAS DEPARTMENT OF TNSIJRANCF AS MUCH AS POSSIBLE

22.) Ifyou need an advance(s), send a report to your TVA email box with instructions on amount and where to send.

23.) There is much more that I coifld say right now, but just wanted to give you an update.

24.) Please be safe in your efforts. You are highly important to the recovery process.

Thank you,


Reggie Warren

rom: Reggie Warrenent, Monday, September 08, 2008 5:1 9 PM

ro: 'Gory Vincent (E-mail)'; 'Bill Vincent (E-mail)'; 'vickieb@brushcountryclaims-com';'rictiardmCbrushcountryclairns.com'; 'ronpocatcsi.com'; '[email protected]';

'Jay [email protected]';'Bud [email protected]';'[email protected]';lrp;Frovier,@ebeds.com'.'[email protected]';'[email protected]';'[email protected]'-,'[email protected];'[email protected]';'[email protected]'; 'pmeaux0litUeton-group.com';'[email protected]', '[email protected]';Irstewart@par,esetkerclaims.mm'-, '[email protected]':'benny_@[email protected]'; '[email protected]';'amold,[email protected]'; '[email protected]';'mattd@"rdIawcIaims.com'-, '[email protected]';'[email protected]';

'Jeff Bode (E-mall)'

Cc: Bill Knarr, Kevin McFadin; Joe Rosentritt; Ray Roe; Don Turner-, Bill Hooper

Subject: Hurricane IKE I Adjuster Resources I TWIA

All, good afternoon.

I am sure you are all aware that we could have a major hurricane strike the Texas Gulf Coast in the latter part of the week

(Sept 12 or 13).

Please let us know your adjuster resource availability for Hurricane IKE ASAP (by tomorrow morning if possible).

You should provide me two numbers, one for Dedica @td Ad usters and the other for non-Dedicated Adiusters.Jj_As the storm approaches the coast, we all get a better feel of its track and potential impact to TWIN As early as we can,

ve will let you know how many adjusters we vvill need, if any. -

.i the meantime, please place your TWIA Dedicated Adjusters on standby for IKE.

This all being said, we cannot abandon Hurricane Dolly losses in South Texas. There is still a lot of work left on that storm

and a lot of filles open. We have received good marks on our handling of Dolly losses thus far and cannot afford that to

deteriorate.

We place a lot of confidence in you managing your adjusters, especially the Dedicated Adjusters, with efficient customer

service in mind.

P. S. In addition, we may have the need for to work at TWA in Austin through your firm. Please reply with the

number of supervisors you have available to work at TWIA. If we need any supervisors, we can discuss pay arrangements

at that time.

Thank you for your response ASAP (today would be great).

Thank you for all your support,

Reggie Warren512-899-4902

PLAINMFEXHIS TWIA-Instit-DO000248

Toll Free 877-481-7004Email gIcnkc(_a)[email protected]

From: Reggic Warren [mailto: EGGIE i,,TWIA.ORGI

Sea Saturday, September 13, 2009 3:51 PM

To: Reggie WarrenCc' Bill KnalE Kevin MeFurlin. Susun &-hillej. Courtne) Fiericli-. Joe Ruseritritt

subject: Hurricane IKE / Adjuster Resource Request I TVA A

Below is the text of some emails to the adjusting firms for your review and information. Please provide us with the needed information so we can get

you into our vendor system and sLart assigning claims to your company.

Thank vou.

Reggie WarrenTWIA Austin, TX512-899-4902

Adjuster l,i.4 and Firm Information Request (First Rinail)

Hurricane IKE made landfall in Galveston early Saturday morning, Sept. 13 The path of IKE will involve many TWIA policyholders in the first tier

of counties (primarily Matngorda, Brazoria, Galveston, Chambers and Jefferson ) and'I'l-PA. policyholders in the second tier counties (Harris, Yort

Bend, Orange, I lardin and other East'l X counties),

We are asking your firm lo provide TIA71A 20 to 30 qualified properly adjusters, We also need the name of the principal contact person with one

back-up person and their contact information for the storm.

We will need your list to include:

Adjusters narric, last name first

Pi inituy phone inimbeiSecondary

.phone nurnber

Adjimer license number and stateEmail addreqs

Please provide this information asap, preferably by tomorrow morning, Friday Sept. 12. When we receive your list of adjusters and supervisors, we

will get back with you about the adjuster orientation and other details.

If we determine we need in-house file supervisors in Austin, we will contact you via separate email at a later date.

In addition. attached is the TWIA pricing guideline and Fee Schedule 3 for Hurricane M claims. Please note: The Fee Schedule has been revised

effective September 11, 2008.

Finally, we need the following information about your company:

Complete name of companyPhysical addressMailing address if differentPhone numberFax nurnberTax ID No (TIN)Email address you want loss assignments sent to

Adjuster Orientation (Second email)We will have at least 2 adjuster orientatio n meetings at the best possible time after IKE makes landfall. One meeting will likely be in the

GalvestontHouston area and the other in the Beaumont area. We may have follow up meetings if necessary.

We will make the meeting announcement amp and it be required that all the adjusters handling TWIA losses attend one of the meetings. We will


9 weeks into the storm, there will not be that many.

5.) Adjusters arc to handle our losses as 'full adjustments" which means they make every cffort to agree on the estimate and payment amount

wide the insured. The firnis have $25,000 authority, so it is A that they mail the insured and agent copies of their estimates prior to submitting

them to us. On the ones over $25,000 paid claim, Lhev should reach a tentative agreement with the insured. submit their report to us for approval,

and when approved, they should mail the estimates to the insured and agents-

I hope you find the time to read the tristructive emaiis.

Tbank ) ou.

Reggic


From: Reggie Warren 1mailto:M'UGlE(&TWIA.ORU I

Sent: Monday, September 09, 2008 6:36 i;m--To: Reggie WarrenCc. Bill Knarr, Kevin McFarlin; Joe Rosentritt; Ray Roe; Don Turner, Bill HooperSubject: Hurricane IKE / Adjuster Resources / TWI A

All. good evening. I hope all is well.lwanitothankvouforrcspondingtomyrequcstsregardingT.S.Edouardandliur-iicaneGustav Edt)uardandGuslavdidnotproduceinanylossesfor T'Wl A.

As you know, South I'cxFis was hit by HinTicane Dolly on July 23. We have deployed adjusters to handle those elnims find. for the most part, things

seern lo be going well.

I am sure you are aware that there is the potential of a major hurricane striking the Texas Gulf Coast the latter part of Ns week (Sept 12 or I 3).

It may be necessary for us to secure adjuster resources beyond our 'approved/dedicated" adjusting firms. If IKE hits Texas and we need more

rcsou. recs, can we count on you to provide qualified propcrty adjusters? If so, how many do you have available? The adjusters that have amended one

of our workshops in the last two year's are preferable.

IL is obviously too early to predieL our adjuster needs, but we %%anted Lo put you and your adjusters on standby just in case.

In addition, we may have the need for experienced property claims supervisors to work at TIA11A in Austin through your firm, Please reply Aith the

number of supervisom you have available to work at TW1A lf,@%e need any supervisors, we can discuss pay arrangement,; at that time

Thank you for your response ASAP (by tomorrow morning if possible).

Reggie WarrenTWIA and TFPA ClaimsAustin, TX512-899-4902rcggie(ktwia.org

NOD32 3152 (200806021) Information

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From: Stephen M. lerulliSent: Friday, September 19, 2009To: Reggie Warren

Subject: RE: Hurricane Ike / TWIA A4juster Orientation Meeting / Galveston, Houston area

Word.Docuincrit

Microsoft Word I I

I completely agree with you. That is why I contacted Bill direct The remaining adjusters I can offer are finishing their Fa) claims for us in Florida

and aresome of our most seasoned adjusters. I am going into a meeting right now and will call you in an hour if you are available to discuss Your

other queifinns Do you have a direct line that T may contact you?

Stephen M. lerulbPresident]MS Claims & Catastrophe Services, Inc(941) 746-3328 ext II 2SleruilirdIMSClaiins.com

From: Reggie Warren Jm&iIto:R.EQGlE(aYI'WIA.0RGJ

Sent: Friday, September 1 9, 2008 9:02 AMTo: David lerulliSubject: RE: Hurricane Ike / TWIA Adjuster Orientation Meeting / Galveston, Houston area

We do not endorse firms getting adjusters from other films. 'That is what bogged down the process in Florida back in 04 and it caused many, many

complaints. I want to know which firms you are supplying adjusters to. I know two of them are Brush aryJ Bright. I assume the) are paying you it

fee for each. How does that work? Does your adjuster work the claim, report to the other IA then they report to us. I dodt like that, Let me knov,6

the process.

In the meantime, we are assigning claims as quickly as possible. Your firm should be getting some daily. They may be slow in coming but that ain't

always bad, If my prediction is right, there will be plenty of work for all adjusters that I know.

I hate to take another 50 from you. I was told that any adjuster I get from here poing forward will be weak at best. Let me have your thoughts on

that, I don't waitt promises of quality that cainiot be delivered.

Reggie

----- Original Message -----From: David Icrulli [mailto:131crulli@&IMSClaims.Com.

Sent: Friday, September 19, 2008 7:31 AM

To: Reggie Warren; Bill KnarrSubject: RE: Hurricane Ike / TWIA Adjuster Orientation Meeting Galveston, Houston area

Thanks for the update Reggie! We will be there.


From: Rav RoeSent: Thursday., November 13, 2008

Amelia Key; Bill Astin;Bill Hooper: Bill Jones;Bill Tassin; Bob Inmon"Bob Latta, Bob Parrish;Brad Short; Carl Browrn,Cath), Weidner, Charlene Cokei-,

Christina Turner, Christopher White,Cory Kendrick@ Dan McGuire"David Dicks; Dean White-Dernian Kolb; Diana Orta;Don Fielder, Don Turner,Gene Latham; Greg Briersl-

Helen Frank; Hugh Meloche"James McRae, Janie Garcia;Jason Garrett; Jennifer Armstrong,Jerrv Dickerson; Jerry Lerma.'Jim Coggin; John Hilliard,

To: John Wright; Josie Fielder.Ken Colestock; Kenneth Robbins;Kevin McFarlinl- Kris Weidenfellerl-Lance Cooke: Lou Skiriner;Marie Merida: Michael Cortese,Miguel Riveros; Mike Calvin:Paula Smith; Ralph Frank,Rav Drury- Ray Lang,Sarn Jones'. Sam Wellman,SatoriSochandamandou- Shane Gulley-SheldonMaxwell.- Sonnv Jenkins-,

Steve Frve; Susan Herrm-1

Tarnri Morgan; Terry Partlow;Thomas Christiansen; Tom Glow;Von Watson; WD Scott;Wendy Scarborough- Wesley Wemeking;WillianiHaygood.- Wilson Dunn;Woodv McMahon

Cc: Joe Rosentritt.,

Subject: RCC Payments

There are quite a few RCC docunicnts coming in and tliere seems to be some confusion as to how to handle.

HoWfully, Die following will cletu up some or die wicei-Lainty.

1. We reseme RCC to the penny and this sets the ceiling as to recovery. They may spend more but they are limited to Lhe reserve amount for

recovery. We do not need to solicit reopens or -supplemental c1nims when ihe Invoices reveal innte expenditure Often Upgrades and other changes

account for the i ticrease. Review the documents and be sure they apply to the RCC. Do not allow items not part of the original RCC, such as fences,

Abole roofs rather than half roofs, etc.

2. Assuming the paid loss (ACV4RCC) exceeds the threshold of $500, the name of the mortgage holder must be included.

3. As to methodology, go to the documents tab and under the Documents Package Creation hit the drop do%Nm and pick RCC Statement. This is a fill

in the blank tvpc letter and the insured gcts the original with a cop), to the agcnt.

4. We do not ask an ad ustcr to reinspect for completion, we rely on paid invoices. On occasion it may be wisc to call Vic roofer to verify but rarely is

any more Ilian thin nLcessary.

_,-t FILAINTIFFS


From: Reggie Warren

Sent: Friday, October 31, 2008To: mblazek(a,)Ilttleton-group-com;mbla7,ek(a'iittleton-group.com

Subject: RE: Displacement money

Michael,

There are so many scenarios with displacement payments that it is tough to explain. The purpose of it is to pay S100 a day tip to 25 days for those that

evacuated and could not return to their home due to infrastructure loss (roads out, water oil, electricity out, etc) and that had expected Aindstorm

damage or a covered Joss under their TWIA policy. As you can see, early in a storm, there were a lot ol these claims. There are

different circumstances for the various stonri-affected areas (Galveston Island, Surfside, Galveston mainland, Port Bolivar, Winnie, Beaumont, Pon

Arthur etc.). Some insureds were out I day, some more than 25. Inaddition, IKE has the storm surge issue mostI3 on Bolivar Peninsula and the west

side of Galveston Bay and Anahuac.

You can see there arc many scenarios and then when you add manv people into the mix (agents, adjusters, policyholders, claims supervisors,

Politicians, news media) that coriftiscs things even morc arid Icrids itself to unavoidable inconsistencies. As we moved driough the first 7 week-, oftlic

storm, we leave Itzrned more alx)ui the clamages Lit individual risks, oAweiv-Al losses etc.

One thing is this........

if it has now been determined that if there is no covered loss under the TWIA policy, we do not pay displacement or ALE. We

could have paid policyholders some displacement inoney in the early weeks after the storm because we did not know if they had a covered loss.

Again, once we determine there is no covered loss, our instmelions are not to offer anything for displacement. If we did that, everyone with a TWIA

policy without windstorm damage iould and would have a claim and that is not fight.

If the adjuster finds a covered loss, then some displacement can be allowed. The adjuster needs to determine how many days the policyholders were

evacuated and allow S I 00 per day. This is of course for Primary Dwellings only. The exceptions are "slab' losses. On those. we have not made final

decisions as to the covered ,%indstorm loss, but we expect that most of those structures had some degree of %sandstorm damage before they were

washed away. In those cases wc have allowed IO days to 25 days of displacement. The average amouni allowed by out mobilc office that is on the

ground, interviewing. policyholdc" etc. is about $1,300 to $1,600.

I will admit that tic concept of displawment payments has evolved a little as we have gone through the stonn, but it is i=essarv to do this as tJie

informa6con aboUL losses becomes more clear

It is important that the adjuster report to us on hovN they arrived at displacement money amounts, and with this proper explanation, it is not our goal to

renirn TbM 10 the adjusters,......

@_hi it to Pay them and move on.

I hope this helps.

Reggie

----Original Message---From: Bill KnarrSent: Friday, October 31, 2008 3:25 PMTo: 'Micha@l Blazek'Cc' Raggic WarrenSubject: RE: Displacement money

Michael,

I am fonvarding onto Reggie as I don't want to contradict something he has already told you.

Bill

--Original Message----From: Michael Blazck [mailto:mblazck(a'littleton-group.comISent: Friday, October 31, 2008 3:07 PM

To: Bill KnairSubjecL. Displacement moneyImportance: High

8111

Can you please give me some clarification on this displacement money? I spoke to Reggie earlier this week and he said that he was preparing

PLAIEX TWIA Instit 00004564

something on this issue. Until we receive that memo, we have been getting conflicting reports from your exam mers on how to apply and where to

place the displacement in estimate. We have even been told that TWIA no longer pays it. You can see how this gets confusing to us trying to explain

it to the insured and while submitting a report.

We have been receiving different calls from agents also on ft., matter. They we stating somebody in TWIA told them one thing arxJ somebod) else

\,%ith TWI A is telling them another thinp. We have been told tliat other adjusting companies arc paying for this even though they do not have any

storin damage to die stiucture. I even had wit; agent vcsterdav stated fliat some warplanes tire giving Li blailleL I I davs no Matter how Jorig die

evacuation was ir. place. I know this not Correct because of my discussion with Rcggic. Can you address this issue to us because of the conflicting

advice we have receiving from your office.

Thanks for your help

Michael Blazek

The Littlelon Group

Director of Catagirophe Operations

Cell Phone 337-257-9695

Business Phone Number 512-328-4447

13usiness Fax Number 512-128-2017(Fax)

Business Address

22 24 Walsh Tarlton Ln, Ste. I IO

Austin, TX 78746

Finail -mb1a7:ck(Dqlitt1cton-group.coTn

No viruses found in fts outgoing messageScanned by iolo AntiVirus 1. 5.5.5httn:/1wwwJo1o.com


Reggie Warren

DM: Reggie Warren-nt: Thursday, September 25, 200B 7:03 PM

To: Reggie WarrenSubject: Hurricane IKE Claims Handling Information / TWIA

All,

Below is a considerable amount of important information concerning the handling of IKE claims.

It is important if you are a principal of an IA firm that you distribute this information to each and every

one of your adjusters and that you make certain they abide accordingly.

I am concerned that many attendees did not receive the 1.) Meeting outline 2.) Pricing Guidelines3.) TWIA Fee Schedule that had been distributed several times prior to the meetings. It is very

important that you convey the information to your adjusters.

Please make certain you send adjuster reports to your designated email boxes. Watch yourspelling.

Orientation Meeting Outline

askCA.,

adjuster matingoutline SEP...

TWIA Fee Schedule for IKE Losses (Revised 9-25-Ogl

mailLai

Fee Scheduie 3 eff

09 11 081...

Condo and Condo Unit-Owner Losses

Use the attached letters as appropriate to explain the adjustment process and to allow theAssociations to choose their coverage. This should be done early on in the investigation. If the

Association has a 280 and 282 endorsement, R is not necessary to give them the letter for them to

make a selection.

PLAINTIF F,3 1 Ta TWIA Instit 00000272

R-AIM

I" 19Condo Claim Condo Claim Condo ClaimCorresplb.do: Instructionstdoc... Corresp 2a.doc

Windstorm vs. Storm Surge-2'SLAB" Claims

See attached packet. Print for Vour use In Investigating each "slab" claim.

We discussed this at length at the orientations. The adjuster is to meet the insured at the risk siteand collect as much physical information as possible concerning the risk. The letter, blank Proof of

Loss and blank Inventory should be given to the insured. You can use the check list provided tosecure any information you can from the insured. Follow the instructions as closely as possible.

It is important that you do not tell the insured that we are not going to pay anything for windstormdamage.

It is also important that you make no Commitments. You are a fact gatherer and TWIA will make thedecision if any payment can be made for windstorm damage and how much. -

We are working with certain experts and others to develop the facts concerning the winds and surge.Hopefully, this can be done in the near future so we can adjust these claims properly and based on

the TWIA policy contract.

3259_D01.pdf

Windstorm vs. Storm Sur-ge-"Non-SLAB" Claims

Use your adjusting experience to segregate the windstorm damage, if any, from the surge damage.This does not mean that everything above the "water line" is considered windstorm damage. You

have to imagine what damage their may have been to the structure (exterior and interior) andpersonal property if there had not been a surge. Investigate fully. Talk to the flood adjuster if

possible and determine flood's course of action.

Prepare your estimate of covered windstorm damage accordingly. Please communicate well with the

insured and their representative.

Another email with additional information to follow tomorrow:

-Price Guide revisions-Cladficabons on questions at the orientations-Other

2


From: Reggie Warren [rnailto7REGGIEPd.TWlA.0RQSent: Thursday, September 25, 2008 7:03 PMTo: Reggie WarrenSub) . cct: Hurricane IKE Claims Handling Information / TWIA

All.


It is important if you are a principal of an ]A firm that you distribute this information to each and every one of your adjusters and that you make

certain they abide accordingly.

I am concerned that man@ attendees did not receive the 1.) Meeting outline 2.) Pricing Guidelines 3. TWIA Fee Schedule that had been

distributedseveraltiniespriortothemeetings. Itisveryimportantthatvouconveytheinfomationto),ouradjusters.

Please make certain you send adjuster reports to @ our designated mail boxes. Watch your spelling.


<<adjuster meeting outline SEI11'08 14 rev.doc-

TWIA Fee Schedule for IKE Losses (Revised 9-25-08)

-Fm Schedule 3 eff 09 1 1 081 fev 9 25 08.doc-

Condo and Condo Unit-Owner Losses

Use the attached letters as appropriate to explam the adjustment process and to allow the Associations to choose their coverage, This should be done

early on in the investigation, If the Association has a 280 and 282 endorsement, it is not necessary to give them the letter for them to make a

selection.

<<Condo Claim Corresp I b.doc- <<Condo Claim Instructions Ldoe>> <<Condo Claim Corresp 2a.doc-

WirKisiorm vs. Storm Surge-'LAB" Claims

See attached packet. Print for your use in investigating each 'slab' claim.

We discussed this at length at the orientations. The adjuster is to meet the insured at the risk site and collect as much physical information as possible

concerning the risk. The letter, blank Proof of Loss and blank Inventory should be given to the insured. You can use the check list provided to

secure uny informution you can from the insured. Follow the instructions as closely as possible.

It is important that you do not tell the insured that we are not going to pay anything for windstorm damage

ItisalsoiiiipoitmiLLhAlyouiiiakt;nueoiniiiiUne]]Ls. Youurcafdc(giiUicierandTWIAwilliiiakealedeci:iioniftiii),payiiit:iitcaiibeintideforMridstorm damage and how much.

We are working with certain experts and others to develop the facts concerning the winds and surge, Hopefully, ibis can he done in the near fiatureso

ixe can adjust these claims properly and based on the TWIA policy contract.

-3259-00l.pdf-


Claims issucs, TWIA, IKE

October- 4, 2008

TWIA Claims issues / Hurricane IKE:

1.) If you leave a note on someone's desk or chair, sign your name to it.

2.) If you identify Rpj@@@@ of any kind, notify Bill Knarr, KeviTiMcFarlin or Reggie.

3.) Make appropriate written rile comments. Do not be derogatory or belittling lo [lic

adjuster or anyone else, especially in written communications.4.) lfyougct;l h@orit@,total(eaProofpleasecominunicatethalbacktothead '

juster.

5.) Try to find coverage for the claim. Do not look for ways to send the file back to the

adjuster for revision orCOTrection. Use good judgment.6.) Ifyou desire owng: the last Log/Comment you put in the fileAp of a

should indicate you want the file back when the next report comes in. This is the only

way vve can manage this. Otherwise, Joe would have to open each PDF and deterrili lie

the assigned supervisors7.) Ehggg5. Stay ready to answer the phones as much as possible. I know it is hard to work

files and be on the phone, but we need all supervisors participating in receiving calls. If

this does not work, we will have to do something differently.8.) "Slab" cl2ims from storin surye:

a. We ate forming a unit to handle these, but it will be a couple of weeks until they

are in place.b. We would like to hold onto these without making a decision until the unit is in

place. This may not be possible in all cases.

c. Please notate the file if it is a true "slab" claim. The complete structure is gone

with maybe the exception of a piling or so still standing,

d. If you get a repOftfrorn an adjuster, we need to get it logged to a spreadsheet.

Will deterinine who will manage the spreadsheet asap.

c. If you rcceive a completedPTOOffromthe imured, and the evidence does not

support windstorm damage, we will need to write a letter to the insured indicating,

we cannot accept the Proof until we get the remainder of the evidence. Ourclairns counsel is drafting this letter for our use.

f. We are evaluating all the weather evidence from IKE and hopefully can use that

with other evidence as to what happened at a particular risk to detern-iine i I' it was

possible the structure sustained windstorm damage prior to being destroyed.

g. We will contract with engineers and attorneys to help us with our decisions in

anticipation that there could be litigation.h. We will investigate each claim individually.i. We will not blankelly allow a percentage of the claim on a group of losses.

J, We will not blanketly deny claims without an investigation.k. The adjusters in the Field do not have authority to determine coverage on "slah"

cwms.1. Adjusters submit the evidence to us for determination.

in. We expect the adjuster to determine if there is flood insurance and communicate

with the flood adjuster on each claim.

n. We will possibly include the heavy flood v. wind-damaged structures in this unit.

9.) nts:a. Considered for Prim y 12 ilinza-0-n-1Y.

b. Must have been part of mandatory evacuation and the insured must have

evacuated.

;f-A PLAINTIF .F, 8TWIA-Instit-00000282

Claims issues, TWIA, IKE

c. Must have filed a clairn for windstorm damage to their covered properly or atleast expect they have windstorm damage.

d. Can be considered when damage is known but cannot return to home due to

infrastructure loss (even if a "slab" claim that we have not investigated yet).

e. $1 00 per day up to 2 5 days max.f. Not necessary to document expenses for displacement.g. Should be coded ALE on payment.h. Could be a legitimate ALE claim once adjuster inspects and deten-nines

windstorm damage. Then, the adjuster should handle as usual.i. Get good mailing address before issuing checkj. If no evacuation and no windstorm damage ate determined, no. ALE or

displacement should be paid.k. If the adjuster determines flood is the sole cause of the lisk being uninhabitable.

we would not owe ALE.

I 0.) A'hcn the File is finished, please close the file in Not-Lis or set to RCC. Mally 111L@s

arc left open when they should be closed.I 1.) We are not pulling the paper claims files as you know. If you have paper docs lor

the file, make sure they get into the file. Leave them in your 'outbox' area for drop

filing.12.) We are asking for Proofs of Loss for over $25K paid claim.I Claims under,$25K can be approved at the IA level before we get thern.The-n we

should search for anything that boldly stands out and process the claim accordingly.14.) If you notice a particular adjuster or firm doing things incorrectly, please notil@

the principal at the firm to do it the correct way going forward. Fax the principal ()I'Ihc

IA firni a note with your concerns.15.) 11 is not necessary to return every file where you see something incorrect.16.) Logging succinct file notes are a must on every claim. Do not type in what you

wouldn't want to read later in a lawsuit.17.) Paying attention to MJ-8 requirements (,AindstSj@buildin SQ&) is important.

especially on roofs, siding, doors, windows, etc. If you do not understand how to do this

in our Notus system, get with Kevin McFarlin or Eduardo Mena (ro.18.) Pay close attention to the adjusters' invoices and make sure they comply will) tile

Fee Schedule we are using for 1K.E.

I 9.) Issue advance payments when appropriate. Use good Judgment and make sureyou understand there is a covered wind loss. Make sure payments axe coded properly to

Loss, Expense, ALE, RCC, etc.20.) Pay attention to payees on cbecks. Include mortgagces on dwelling loss payments

over$500.21.) Adjuster reports with requests for authority over $1 OOK should go to Bill Knarr

for approval.22.) Be aware of political entities and persons ........

legislators, TWIA BoardMembers, Judges, school districts, municipalities. Any issues that develop should go to

Reggie.2-3.) When you think an engineer is needed, get with Kevin McFarlin, Bill Knarr, Joe

Roscntritt, Ray Roe, Terry Partlow for approval.22 4.) We do not offer engineers in all situations especially when the file is well

documented and stands on its merits.25.) Consequential Loss:

2


Claims issues, TWIA, lKF

a, Dwelling policies must have the 320 endorsement.b. A.I. of the endorsement is for on-pLemises physical windstorm dainagc. Pi' limit

applies and no deductible for the consequential portion of the loss

c. A.2. is for off-premises power outage. $500 firnit and the loss is subject to the PP

deductible.d. This is coverage for Personal property items damaged or destroyed duc to change

in temperature.e. Commercial risks must have direct physical windstorm damage to the hCaGril-,.

power or cooling equipment on the described building. Something visible No

power surge coverage for consequential.f. There will likely be some incorrect adjustments on consequential loss, such as

paying $500 regardless of coverage, deductible etc. If the claim is resolved, do

not send the file back to the adjuster over this issue. Fax a note to the principal at

ibe, TA firm if needed.g. This coverage can apply to food and other PP iterns that may have been damaged,

such as refrigerators, freezers. It does not apply to Dwelling items damaped SLICII

as floor coverings, wood floors etc.26.) Landscape damaze I Dcbris removal:

a. The policies basically cover dwellings, buildings, personal property etc.b. T here is not coverage for trees (value of), landscaping etc. N a endorsement

covers this-

c. Occasionally it is appropriate to allow some landscape repair if a tree removerca,Liscssomedamageingcttingatrecofftherooforsomethinglikcthat. Nominal

amount.d. We do cover debris removal of trees and damaged covered property.

27.) Mold is not covered. We do cover the labor to remove mold in gain access to a

covered loss.28.) asbestos is not covered. We would owe only the cost to remove windstorm

damaged asbestos items as if they were non-asbestos materials.

29.) Work smart. Try to manage the use of printers and walking around the office as

best you can.

30.) Deductibles. Remember, most Items on the policy have individual deductibles-

For example, on the Dwelling policy there is a deductible for the Dwelling and another

deductible for the Personal Property. Deductibles are not applied to individual repair

items such as roofs, siding, windows, etc.

1.) Issuinr, Checks: Pay close attention to payees. Make sure you are paying the

correct person or entity. Verify the amount. Notate proper comments on the check.

Make sure the check applies to the appropriate coverage, Loss, ALE, RCC etc. When

issuing supplements, double check with the prior checks that you arc issuing correctly.

Verify mortgagee changes. Make sure you mail to the correct location.

3


From: Reggie WarrenSent: Sunday, December 14, 2008

Wfley LeBrun (E-mail)- mlebrun,@a,)uhrhinc.com;To. [email protected]

Cc: Bill Knarrl-

Subject: All-Tech File quality / Ile / TWIA

Wiley and Nlatthew,

It Avas brought to my attention that several of your files arc being kicked back because of poor a4itistments. I asked one of the supervisors rcyic,@N-ing

your files to give tile a brief write tip of the issues and I will sunimarize in bullet format 1

Estimating to replace roofs that are not a total loss from windstormPaving for roofs with "lifted" shingles when there is no pbysical damage at lossStaling things in your report that are not represented in the photos i.e. 40% of shingles misming but photos show no sbingles ml . ssing

No evidence to support the adjuster got on the roof. Photos being taken with telephoto lenses or at least it appears that way.

Roof diagrams created from ground level measurementsInflating the RC estimate to generate a substantial fee billFailing to consider repair v replacementEstimating tree removal with no documentation or photo of the tree or stump or evidence it damaged covered property

Not segregating windstorm v flood/surge darlangc. Including flood damage in the wind estimates

Estimating damage for inherent defects that are not related to windstorm damage

There are some other issues, but you should @et the point with Us list. 'I'lie last thing we want Lo do is kick Li file Wck to an I& especially afm die

insured's expectations have been set.

We "an[ to pay ever) cent owed under The TWIA policy L;ontlract on each claim and it is crifical that we do not overpay or pay For items not damaged

or covered.

Your firm has a substantial number of files Ml open. Please improve the quality ofthe Li4justments and have each tile supervised by quality control

before submission to MA.We arc doing our best to get claims paid and closed and if we have to return f iles, it obviously bogs down the process.

Tbank you for your attention to this email.

Reggic WarraiTWlA ClaimsAustin, TX

7@ =VHC TWIA-instit-00012141

From: Reggie Warren

Sent: Saturday, February 21, 2009To: Jodie L. Roberts (E-mail)

Bill Knarr; Kevin McFarlin,Cc: Don Turner,@ Bill Hooper-,

Kenneth Robbins, David Dicks;

Subject: M. Questions

Jodie, I tried to answer your questions below. Hope this helps.

---cniginal Message-----From- Jodie RoherLs ftnailw idieR(h? 7.QuityClaimsinc.corn]

Sent: Fnday, Febmary 20,2009 9:40 AM

lb: Bill KnarT

Subject: Questions

Importance: ffigh

Dill,

I wanted to sue if you could answer a few questions for me. We are hearing different t1iings from rile reviewers and we wanted to clarify sonle

issues. Also, we art! having a hard time reaching TWIA examiner's and it lot of messages art: going unreturned. I know everyoue is busy bu(I

wanted to bring this to your attention. Should we send an email to a specific address with questions on specific claims?[Reggie WaiTerif Use

your TWIA email address and submit a report if there is a question on a file. If you happen to have an Examinees direct line and want to call him or

her, do that if you prefer.

Here Is a few other things we need to find out

I. If we get a supplement for price updates only on a claim, do we.just submit a status report to TWIA so they are aware of the issue? [Reggie

Warreul [Reggie Warren] Many roofers have agreed to repair oi replace roofs etc. based on otu- pricing "guidelmile". We do not give names of

contractor. Our price guidline isjust thdt.[Reggic Warren) a gwdulurie. We must always consider any new information tha L is presented. I

would secure the estimate that shows the different pricing, consider it and submit to us if pricing is the only issue. If there is a glaring difference in

pricing and scope, we need lo determine if an adjustment should be made. There are many reasons why phicing could vary i.e. access, shingle type

%kHs incon-ect, two layers instead of one, two slory inslead oforte, steep, special mawrikils such coppa eave lin etc. We want io pHy what we owe but

ttiisdoesnoimeanweaiiiomaticallydeviatefromourpricesjustbecauseacontractOT%vanistochargemore. Keepinatind,thereisalotofmisinformation being circulated out there that we have to overcome when adjusting claims.

2. If we get a supplement we do not agree with that does not require a reinspecuor4 do we again send in a status report to make TWIA aware)

(Reggie Warren] A status report would be nice to receive along%vith any new information. In these situations the adjuster should document their

time and it is appropriate to send a reasomble T & E invoicevith your report. [Reggie Warren] Please watch ariy supplemental billing and make

certain that it is in line with the work done or it may be rejected.

3. On claims that do not have a file c\amincr assigncd who do we call for questions? All we can do now is call between 9 and 3 to the main

nuniber and are mostly transferred to a voicemail with never a return call. [Reggie Waffenj You can call any Examiner on any file. If an

Examiner lies ownersltip of a particular rile. the Examiner You icacli can transfer Your call to that Exaniiiier. Or. swiply fax or euiad Your question

to us via 51 2-899-4903 or your TWIA email box.

I'hank you in advance for your help.

Jodie L, Roberts

National Director of Claims & Marketing

N&C Claims Sorviccs

988-295-94?7

941-720-4717 Lvll

941-316-0233 fax


From: Bill KnarrSent: Saturday, January 03, 2009 10:36 PM

To- Reggie Warren

Subject: RE: @,T E D

Why don't you give Richard Nita's number. I think it would do them both good. They could talk over old times. etc.

---onginal message -----From: Reggie WarrenSent: Saturday, January 03, 2009 12:39 PMTo: Bill KnarrSubject: FW:IREDACTED

Not sure if I sent this to you

Mcssagc--From: Repeie WarrenSent. Saturday, January 03, 2009 12.38 PM

To: 'Nita Adc ock'Subject: RR 7ED

Nita, I think I gave you the wrong information previously.

See below excerpt concerning displacement. This was circulated to our staff but is not inconsistent %vith what we are trying go do. I apologize for the

misdirection, but if you or your adjusters have strong recommendations to deviate from these guidelines regarding displacement Or anything else,

please have the adj=er make hiAcr case in their narrative report to TWIA.

I think Bill Knarr has given some leeway on the displacement payments when TNVIA Examiners try to kick them back. It is a judgrnent call as to

v%hat is fair, but based on the below information this is what we expect going forward.

Again, displacement is a diff jeult concept for all to grasp including me, so sorry for Lhe confusion. I hope displacement is riot aiat big of an issue

going forward since we are 2 months post Nov I and their aren' t that many new losses being reported.

Th.qnkq.

Displacement Payments:

These payments -tvcrc basically to aid those that had to cvacuatr their primary dwc1hng from the storm. Prior to us knowing if there was covered

windstorm damage to the insured property in. ,these pay crits were made by our mobile office or us OR recommended b@ the adjuster. Our average

payment for displacement for Ike has been about $1 500, although we set a limit of S I 00 a day for 25 days from evacuation.

Later in the -torm, we decided that if the insured reported their loss or we inspected it after

November 1, we would not make any displacement allowances. Please %katch the adjuster's reports closely as to when the loss was reported and when

they made their inspection I see some files being kicked back where the a4juster inspected prior to November 1, 2008, 1bund no windstorm damage,

but made a tentative commitment to the insured that displacement would be allowed. We should not kick those back.

Also, if the adjuster figured thirteen days or $1,300 and you fccl its should have becrininc days and $900. do not kick that back. We relied on the

adjuster in the Field to make that call and due to the nominal amount; it is not appropriate to return the file to the adjuster. Remember, you are to see

Bill Kriarr before you reject oi return an adjuster s repon.

Message---From: Nita Adcock fmailto:NAdeock(@_TMSClaini%.Coml

Sent: Saturday, January 03, 2009 9:56 AMYo: Reggie WarrenSubject: RE1 [REDACTED

Okay, Tharils. Wejustwant to get in the some book with TWIA and maybe same page. Please remember we are all striving to make


yovirjobandminckc%,cryone's)bctterandbeabletouse-ourtimeprodtictivelv Ihavesomeqtiestionsregardmgsomeisgue3thatha%,ecomeiiponre-insWctions,rm@isionrequests,instructionsfromillereviewersandproceduresN%,bcnyouhax,etuiie. freallyappreciate@oirhelpandgWdarr-e.

I look forward to hearing back from you.

Thanks,

Nita

From: Reggie Warren [mailto:REGGIE(a),T*'1A.0RGSent: Saturday, January 03, 2009 9:10 AMTo: Nita AdcockSubject: RE 1KE0804308.DELACRUZ.1:MAIL.pdf

Nita, let me think niore on this. I inay have given you sonic contradictory information about displacement bascd on prior memos I did.

-0figinal Message----From: Nita Adcock JmaiIto:NAdrock(a)JMSCIaim s.Coni I

Sent: Friday, January 02, 2009 1:27 PMTo: Reggie WarrenCo: Chris Siloo; Christina BarbourSublect: RE: IKL,'0804308.DLLACI@U/-.L-MAIL.pdf

Reggie,

T have attempted contact with Belen as you requested but have been unable to reach her. However, we continue to get the same instruction from

several file reviewers at TWIA regarding the game rare. No displacement after November I even if there is wind damage Rome instmetions tell Its

to revise our adjustment and invoice accordingly and some tell us to just let the insured know. I understand that ir there is no wind damage there is

no displacement. However, ifl understand your belo%% instruc6ons they can be paid displacement after November I st ifthey had %vind damage and

were displaced.

Am I missing someNng? If we need to make corrections to (be files that we have gotten kick backs on that's no problem. It would be helpful if thefile reviewers would be consistent and tell us what to d o with the estimate. insured and Livoice. If it's okay to pay the insured's maybe there is a

misunderstanding within the file revivwcis tit TWIA. A IOL of dit: files have been SCM in f6i Li while and we ure now getting client NA. ]just need to

know so we can stop these before they go to TWIA.

Iliariks for your help.

Nita

From: Reggie Warren [inaiIto:REGGIE(u-).TW-IA.0RGSent: Wednesday, December 31, 2008 1:24 PMTo: Nita AdcockSubject: RE: IKE(-)[email protected]

I think I talked to Helen about these. If the inspection was made prior to Nov I and there was wind damage and the adjuster agreed on displacement,,Ne should allow for it. If you inspect the IOSS Or receive a loss assignment after Nov I and there is no vvindstorm damage found, no displacement.

TWIA-Instit-12100 1 6787

From: Rav RoeSent: Thursday. October 30, 2008

Amelia Key; Bill Astin;Bill Hooper, Bill Tassin-1

Bob Inmon; Bob Latta;Bob Parrish, Carl Brown--

Cathy Weidner-, Charlene Coker;Christina Turner- Christopher Whi te-Corv Kendrick: ban McGuire;David Dicks; Dean White,Diana Orta; Don Fielder;Don Turner.- Eric Turner;Gene Latham; Greg Bners;Helen Frank; James McRae-,

Janie Garcia; Jason Garrett-Jennifer Armstrong.: Jerry Dickerson;Jerry Lerma; John Hilliard;

To: Josie Fielder: Ken Cannon;Kenneth Robbins, Kevin McFarlinl-Kris Weidenfeller; Lou Skinner:Marie Merida; Michael Cortese-,

Miguel Riverosl- Mike Calvin:Paula Smith; Ralph Frank;Ray Drury- Ray Lang-Sam Jones. Sam Wellman.Satori Sochandarnandou.- Shane Gulley--

Sheldon Maxwell; SonnyJenkins;Susan Herrin; Tarnri Morgan-,

Terry Partlow,- Thomas Christiansen;Tom Glow; Von Watson;WD Scott; Wendy Scarborough,Wesley Werneking; WilliamHavgood;Woody McMahon

Subject: FW: Customer Service / IKE and Dolly Claims TWIA

Here is wt emuil from Reggie in the event it did not ieauh)ou.

Ray____Original MeR%age----From: Reggie WarrenSent: Thursday, October 30, 2008 11:18 AMTo- Reggie WarrenCc: Reggie WarrenSubject: Customer Service / IKE and Dollv Claims I TWlA

All,

Thanks to you and your adjusters for all tlic hard work.

That being said, I must (ell you we are getting it ton of calls from upset insureds. agents and others, So many, that %ke cannot get ourjob done in

Austin.

It is highly important that Nve are professional, nice and Understanding of each persoifs issues %viih their individual claim.

An appropriate amount oftime should be spent vAth each insured to explain the adjustment process. This includes interviewing the insured and

collecting all the information available to assess and adjust the claim.

Based on the calls we are getting, this is not being done much of the time.


The ones that are doing the professional job know who they arc and this is not meant for them, but we all need reminders from time to time.

Our goal is to avoid getting calls and complaints which later turn into lawsuits. We all must do our job better to achieve this goal.

It is apparent to me and others in this office that our emails mith instructions and directions for adjusters arc going unread and that is unfortunatc.

I feel that your firm is one that wants a continued relationship with TVvIA beyond IKE and DOLLY, and if that is the case, it is imperative that you

follow ota ii)su uctions

Later iodav or tomorrow,, I will he sending an informational email to you that should help with some of the recurring iq.-;ues in the adjustment

Thank you again,

Reggie WarrenTWIA Austin


Reggie Warren

.Om: Reggie Warren'ent: Wednesday, February 18, 2009 12:26 PM

To, Alan Renshaw; Amelia Key; Anthany Hart Arnold Phillips; Ben Faircloth; Ben Glover, Bill

Astin@ Bill Hooper, Bill Jones; Bill Knarr Bill Tassin; Bob Inmon: Bob Latta; Bob Parrish- Brad

Short; Brandi Vanderneut Bruce Edmund; Bryan Ayoub; Cathy Sanders; Cathy Weidner,Charlene Coker; Cheryl Robinson; Chris Zimorowicz, Christopher White; Clay Tinnell; Gorey

Crawford; Cory Kendrick; Courtney Frerich; Dan Short@ Daniel Bailey, Jr.; David Dicks; David

Ross; Demian Kolb; Dennis White; Diana Orta; Don Fielder, Don Tumer-. Donna Glover:

Duncan St Clair: Erin Power- Franz Hughes- Gayle Needham; Greg Briers,- Harold Philyaw;

Huck Huckabee; HughMelo@he; James

Har'p; James Sciandra; Jamie Gladman; JanieGarcia; Jason Garrett; Jason Young; Jean Burke-, Jeff Stockdale-I Jeffrey Goretzke; JenniferArmstrong; JeM Dickerson: Jerry Lerma-, John Hilliard; John Jenkins; John Wright; Judi

Rosenblat; Ken Colestock; Kenneth Robbins; Kevin McFarlin'. Kris Weidenfeller- LanceCooke; Linda Jones; Lou Skinner@ Marie Avalon; Marie Merida; Mark Chancello@ Mark Lesley,

Marshall Clack; Martin Greco; Matthew Weeks; Michael Boyer', Michelle Rodgers; Miguel

Riveros; Mike Calvin; Mike Elvington; Mike Guidry; Mike Jay, Nick Cavalluzzi; Pam Bows;

Patti Willits; Paul Mikkelsen; Paula Smith; Phil Hays; Preston Kuhn; Randy Stone; Ray Drury@

Ray Knight; Ray Lang; Ray Roe; Ray Sims; Reggie Warren', Rhonda Cole: Richard White;Rick Olivere; Robert Campbell; Roger Ball; Sam Wellman; Sandy Boothe; Satori

Sochandamandou; Scott Locker; Skip Owens; Sonny Jenkins: Steve Frye; Susan Schiller:

Tamri Morgan; Terry Cafferty; Terry Keene; Thomas Christiansen; Tim[ Ayotunde; Tom

Holbrook; Tracy Todd; Tripp Haynes; Vernon Cooper-, Von Watson; Wesley Wernieking;

William Bailey; William Britton; William Haygood; Wilson Dunn

Subject: Phone calls

Ladies and Gentlemen:

.( you a re assigned to phone duty, please try to stay In your cubicle and answer your phone. I

have had numerous calls from Insureds In the last couple of weeks stating that they cannotget through to an Examiner.

Also, I occasionally review the phone log and find that four or less persons am logged in to

receive phone calls. That is not enough.

I know many of these callers can be difficult, but we must try to work with them to resolveissues.

Thanks for your compliance with this request

Reggie


Reggie Warren

Om: Kevin McFadinjent: Thursday. February 19, 2009 1:46 PM

To: Paula Smith, Ray Lang; Sam Wellman; Sonny Jenkins; Susan Schiller-, Alan Renshaw, BenGlover; Bill Tassin-, James Harp; Marie Avalon; Mark Chancellor; Ray Sims. Rick Olivere:Robert Campbell; Roger Ball: Satod Sochandamandou; William Britton; William Haygood;Wilson Dunn

Cc: David Dicks; Don Turner, Reggie WarrenSubject: Phone duty I Files

All:

One issue that keeps drawing negative attention to TWIA is our phones- Complaints that no one can talk to us by phoneare a common theme amoung our insureds and the lAs. Our management has been asked to address this issuerepeatedly during Hurricane Ike.

In the past I have allowed members of our groups to stay off the phones while working on a pressing assignment. It is

understandable that an individual's work load or specific file may demand their undivided attention. If you have a need to

stay off the phones please discuss this with me.

Otherwise, TWIA needs each person in the phone groups to help field the calls that we receive. This includes those of youwho are working in the Litigated and TDI Units.

The following file handling items have surfaced this week, and I just want to touch on each of them as a reminder:

1. In the bottom right hand corner of Notus, if the file says Closed Rejected or Pending. These are files that have beendetermined not to have coverage. Please do NOT re-open them. If you get an attorney or PA letter on one, discuss with

ne.?. Take the time to review each of your files and update the Reserves.3. When we re-assign a file to another IA firm to meet with the PA. Be sure to call the principal at that IA and discuss whatis expected for the assignment. Specifically address that we want them to work with the PA. We don't want the IA to set up

a duplicate assignment by accident when we send them the file. The IA needs to subtract the prior payments.4. Any discussions you have with our legal counsel need to be labeled -ATTORNEY CLIENT PRIVILEGE"' whether in

comments or documents.5. When appropriate take a Policyholders Release. If you don't have one, let me know.

Thanks,

Kevin McFarlin AICClaims Manager

kmcfarlinCtwia.orgph 512-899-4915fax 512-899-4953


From: Joe Rosentritt

Sent: Tuesdav. October 14, 2008Alan Renshaw; Amelia Key;Bill Astin; Bill Hooper,Bill Tassin- Bob Inmon;Car] Brown. Cathy Weidner;Charlene Coker; Christopher White;Corv Kendrick. Dan McGuire,Dave Brockett; David Dicks:Dean White-, Diana OTta-I

Don Fielder- Don Turner,Doug Mattson; Gene Kounse:Gene Latham; Greg Briers;Helen Frank-, James McRae-,

Janie Garcia; Jennifer Armstrong;Jerrv Dickerson- Joe Rosentritt;

To: John Hilliard; JQe Fielder;Ken Cannon-, Kenneth Robbins,Kevin McFarlin; Marie Merida;Michael Cortese, Miguel Riverosl-

Paula Smith; Ralph Frank;Rav Drury. Ray Lang.-

Ray Roe; Reggie Warren;Sam Jones. Sam Wellman-,Satori Sochandamandou; Sheldon Maxwell;Sonny Jenkins; Tamri Morgan;Terry Pardow. Thomas Christiansen;Tom Glow; Troy Teasley;Von Watson, WD Scott-,

Wesley Weimeking- William HaygoodI

Woodv McMahon

Cc: Reggie Warren;Bill Knarr-KevinMcFarlin;

Subject: PDFs in the wrong file

We must make sure that the PDF we are putting in the file belongs to that file.

Open the file and go to loss details. Once this is done open the PDF and what address did the adjuster inspect, do they match, if not you need to stop

and do some checking. When dicy both match check the named insured and make sure ftt it matches. The adjusters are just like us, we mixup file

numhersandin%ured@;.Sometimesyou,xillsee2file.qmixedti)gatheTinthe.samePOF. Theonlydifferencei:%oncewepaythelikelyhoMof

gening the money back is slim and none.

BE CARDFUL OUT THERE

ThanksJoe

P


From: Rav RoeSent: Wednesdav. October 29, 2008

Amelia Key; Bill Astin;Bill Hooper: Bill Tassin-1

Bob Inmon; Bob Latta;Bob Parrish: Carl Brown@

Cathy Weidner-, Charlene Coker,Clu istina Turner, Christopher

@611tel

Corv Kendrick- Dan McGuire;David Dicks-, Dean White-,

Diana Orta; Don Fielder-,

Don Turner.- Eric Turner;Gene Latham; Greg Briers;Helen Frank- James McRae;

Jason Garrett;Janie Garcia,Jennifer Armstrong-- Jerry DickersonJerry Lerma; John Hilliard;

To: Josie Fielder- Ken Cannon;Kenneth Robbins-, Kevin McFarfin;Kris Weidenfeller, Lou SkinnenMarie Merida: Michael Cortese-Miguel Riverosl- Mike Calvin.Paula Smith; Ralph Frank;Ray Drwy,- Ray Lang'.

Sam Jones- Sam Wellman.Satori Sochandamandou; Shane Gulley;Sheldon Maxwell; SonnyJenkins;Susan Herrin; Tamri Morgan'.Terry Pardowl- Thomas Christiansen,Tom Glow; Von Watson;WD Scott; Wendy Scarborough,Wesley Wemekig; WilliamHkvgood;Woodv McMahon

Cc: Joe Rosentritt:

Subject: Remarks in Comments section of the file

Some of us are over-utihzi@ng the cut and paste or highlight and paste feature on the computer. I ani not saying that you should never use it but I think

it should not be used for namti@v remarks. We want ibe remarks and evalmdon to bt vours, not that of ft aqjusLer. Besides, Iiis remarks we

available in the report that is being filed into the'documents'part of the file.

Wbenvouputintbecommentsthat'ImetwiththeinsuredatbispnmaTyTesidence" laTnprettycertainthalthecomment.%aTenolyoursbutarethe

adjuvers.We need to know what you think shout the litigation Rinet we. can read the actiuster's report under the'docurnents'lAb

Ray

PLAINTIFPSEXHIBIT.


From: Russell StoutSent: Wednesday. September 24, 2008

To: Repgie Warren

Subject: RE: Weekly Time Sheet for TFPA A4justers

Reggie, prefer to pay th@s one as submitted. You will note they ordy have (6) with firial dates. I do intend to look at their final closely and verify we

hive reports coming in from each individual adjuster charged. Prompt payment of their initial should demoinqtrate our good faith and allow for time

prior to payment of their final.

----Original Message----From: Reggie WarrenSent - Wednesday, September 24, 2008 11:26 AMTo: Russell StoutSubject: FW: Weekly Time Sheet for TFPA AdjustersImportance: High

I would -.laid this hdek and ]el them know that 9-21 -08 was the last date For the ddily I'd[C and to send their Final revised itivoice The OTICS on 9- 1 9-08

affuugh 9-20-08 art; final already.

If you think there dates are appropriate, we will get this paid. Sounds like a long time, eTecially the ones that are 7 or R days. You can call them on

this if You want, but I think we better get it pnid and they need to now do their job without n hitch

Russ, per Oliver this morning, I would move quickly to find more space and get some people in to man them. 11hones calls are killing us IVIA and

TFPA. We have got to get to a point where the Examiners can take some calls and get out some advances. Push what we can out to the adjusters but

that will only work so long. Extended hours from all is a must right now.

Rcggic----Original Message---From: Russell Stout

Sent: Tuesday, September 23, 2008 5:53 PM

To: Reggie WarrenSubject: FW: Weekly Time Sheet for TFPA AdjustersImportance: High

Reggie, I would like to visit on fail,, prior to submitting for payment, Let ine know as youi time allows,

--Original Message----From: Ben Ross [mailtm`h.ross:Zi)nornadadJ sting.com)Sent: Monday, September 22, 2008 1 l:C5 AMTo: Russell StoutCc:'Ash1cv Molony'@ ShaunaMcginnisSubject: FW: Weekly' Time Sheet for TFPA Adjusters

Russell,

Please see the attached invoice for our Dailv Rate adjusters. Please let me knoA if I should send this to someone else to process.

Thanks,

Ben Ross

Quality Assurance Manager

Nomad Adjusting, LLC

mobile: 904-477-2317

c-mail: b.ross(4,nomadadjusting.romPLAINTIFF"SEXHIBIT


From: Regwie WarrenSent: Saturday, November 01, 2008

To: Reg ie Warren91

Subject: Misc Issues for Adjusters / IKE / TWIA

Displacement Payments update Nov I 08-2.doc;

Attachnients:Slab claims update to adjusters Nov I 08-O.doc,-

Heavy Structural Claims Nov 01 08-I.doc

Mis email and attachments are going to all IA firms handling'IVIAclaims.1his is the only way we know how to communicate with all adjusters

collectively.

Please review with your adjusters.

I promised another vinail after the one issued on W- 30 about 'Customer Service".

We are getting complaints from insureds and agents about when they call your main number or adjuster's number and no one answers. They

get a voice mail box and leave a message and no call backs. Or. Your mail box is full. Please have someone answer the phone or at least return

the phone calls if a message is left.

We expect you and your adjusters to handle the claims to completion (full adjustment), If the insured or agent calls You or your a4juster

about something you missed, please handle Tegardless if the rile is open or closed. Do not refer the insureds find agents to us....reopen and handle.

If you have done the proper investigation on a file and the insured or agent calls wanting another inspection, they must supply, you with

additional credible evidence that supports another inspection. Such as, roofer estimates, photos, other estimates, engineer report, ctc. We do not

reopen files when the proper investigation and analysis has been pcifonned andjust because someone is 'wiliappy".

Point is. most of the time we cannot avoid reinspections especially if there is other information to consider. We want to consider all

available information on each claim, But. do not tell the insured and/or agent that you cannot do anything and that they have to call TWIA for

approval when there is other information available or offered.

We are getting many complaints from the Texas Department of Insurance. Man) have to do with the adjuster. Think about that when you

"re out there. Do everything you can to resolve the claim within the parameters of the policy contract, be fair, be courteous Find tie respectful.

Mat always helps, even if you ha ve to deny the claim or a portion of the claim.

Please ask the insured if there has been a mortgagee change. If so, get the new information and advise us accordingly so we can include the

1'orrm;t payee on the claim Check.

Please get accurate mailing addresses for where checks are to be mailed, if different than the address on the policy.

Please mail copies of your estimate to die iiiswed and agent. If it is over $25K paid claim, it should be approved by TWIA before mailing.

Beforc submitting a report to us for authority to take a Proof, at least have some tentative agreement on the adjustment with the insured or

their representative.

Vi,PLANW.TWIA-instit-00006491

vi,

onrooftoplacoments,u,,cgoodjudgmentoneuttingwastcaliox%,anecs- 15%isnotforeveryroof.

If you can. please remove the color logos from Your estimates- It takes up extra space on our server and it is not necessary.

Attached are three (3) documents that can be helpful to you and your adjusters regarding "slab" claims, "heavy structural" claims. andDisplacement

money

IttakesudequLitect)mniutiicatit)llwidI

insureds and others to achieve this goal.

Thank you,

Reggie Warren

TWIA-Instt-00006492

From: Rav RoeSent: Friday, September 26, 2008

Bill Hooper; Bill Tassin"Carl Brown, Dan McGuire"Diana Orta; Don Turner;Doug Mattson-, Gene Latham,Helen Frank; James McRae;Janie Garcia; Jim Coggin;

To:Jim Hill; John Hjlliard;Michael CoTtesel- Paula Smith-,

Ralph Frank; Ray Lang"

Sam Jones.- Sam Wellman.-

Sheldon Maxwell; Sonny Jenkins;Terry Partlowl- Tom Glow.Von Watson-' WD Scott-,

Woodv McMahon

Subject: FW: Hurricane IKE inspections / Adjuster phone numbers

--Original Mcssagc-From: Reggie WarrenSent: Friday, September 26,2008 11:43 AMTo: Reggie WarrenSubject. Hurricane IKE inspectiuns / Adjuster phune numbers

IMPORTANT INSTRUCTIONS

Please make sure your adjustem

Make prompt contact with policyholders.Inspect losses asap. Take time, be thorough.Keep appointments by all means (big complaint issue).

If you cannot keep an appointment, at Icast notify the insured.

Interview the insured or representative about the loss.

Give the insureds their contact number, email or whatever so the insured can get back with them.

We are gening entirely ion many calls in Austin on these isques and it Tnuqt stop. Please see to it that it does! We are paving theadjuqters to dothese

things. You have all promised me and TWIA quality adjusters ...... .please show Lis.

Thank you,

Reggie WarrenTWIA ClaimsAustim,rx


From: Bill KnarrSent: Wednesday, June 04, 2008

To: Reggie Warren

Subject: Exam and blank answer sheet

Attachments:Examination for Certificafion 2008'TVIA Workshops 05-07-08-0.docl-

Answer Sheet 2008 A4j Workshop 05-07-08-I.doe

Reggie,

Here are the exam questions and blank answer sheet ifyou want to send to Joey and Zack. We could send them a certificate worth 4 CE hours il'they

pass.

Bill

Bill KnarrCatastrophe Office Manager512-637-2902

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From: Reg ie Warren91

Sent: Sunday, September 29, 2008

To: Reggie Warren

Subject: Hurricane H,,E / VAPORTANT INSTRUCTIONS TO ADJUSTERS

DAPORTANT rNSTRUCTIONS To ADRJSTERS

After the adjusters have met with insureds, we are getting many phone calls at TWIA chrectlv from insureds with questions about their claims.

They lell us the adjusters are referring them to us.

We expect the adjusters to adjust the claims. If the adjusters have questions, they should first go to their internal supervisor at the firm they are

contracted to. If that does not resolve the issue, then the supervisor can contact our off ice.

Please do not refer insureds directly to MIA.

If it is an emergency question and the adjuster needs an immediate answer, he/she can call Bill Knan-, 512-637-2902.

There will obviously be times when we need to speak to the adjuster directly, but we do not want the adjuster referring insureds directly to us

?&nv ofthe insureds call in here already, so we do not need the additional referrals from the adjuster handling the claim.

Plcasc cornmunicatc this information to your adjusters.

Thank you,

ReMe Warren

ei.TWIA-Instit-00016436

From: Reggie WarrenSent: Tuesday, November 11, 2008

To: Reggie Warren

Subject: Reopens or Supplements etc. / IKE / ADJUSTER INSTRUCTIONS

I ) If your adjusters handled Hurricane IKE losses and are recontacted by the insureds or agents stating there is additional damage due to the Teceni

mins (or other valid reasons), please reopen and handleaccordingly. 11 does not MOUCT if your file is open or closed at the lime.

LX) No'l refer the insured or agent to us. At this time, we are not creating a new loss assignment and the new damage will be considered part ofthe

Hurricane IKE claim..

If the adjuster has left the area, another adjuster from your firm should handle.

We on]) want a justified supplement and the estimate submitted should only be for the new damage. The supplemental estimate should be mailed to

the insured and agent

These should be billed put die TWIA Fee Schedult.

2.) Adjusters should pay close attention to comments made to insureds and agents regarding when their closing reports were submitted to TWIA.

Theyean%aythatthereportha%heen;;uhmiltedRndi@heingpToce.%.-edtisquicklyfispossihle Tnotherwords,theadjtisler-shouldnotm.,ike

c,ommentstoinsiredsandagentsthat.qredetrimentaltoiisgettingtheelEiimsworked.

3.) Many of your adjusters are still not agreeing with the insured on the loss adjustment prior to submitting a closing report. 9 out of I 0 times these

claims will reopen and we dodt want that.

4.) Copies of estimates are to go to the insureds and agents. By and large, this is not being done. WHY NOT? Please comply with our instructions.

5.) Please have the adjusters veri6, the correct mortgagee and advise us accordingly.

Thank you,

Reggie Warren

PLAINM


Reggie Warren

.Om: Reggie Warren'ent: Saturday, November 01, 2008 8:08 AM

To: Joe RosentriftCc: Bill Knarr', Kevin McFerlin

Subject: RE: TWIA business

Thanks Joe. I will try to got out another email today. The supervisors do not need to be setting TWIA DOliCV in their

emails back to adjusters, agents or anyone......J.e, by telling them we no longer make displacement payments (this is

not true), that all roof replacements should have a 1 5% waste factor (this is not true), to not send estimates to insured and

agents unless we approve them first (this is wrong especially on losses under $25K paid claim). I am sure there are other

issues, but these are a few that come to mind- They should come to you or me or Knarr or Kevin for authority to send out

this type of into.

Lots of complaints come to me about inconsistencies from our supervisors. I am not sure how to control it or keep us on

track.

Thanks.

--Original Message--From: 3oe Roseritritt

Sent: Saturday, November 01, 2008 7:56 AM

To: Alan Renshaw; Amelia Key; Bill Astin; Bill Hooper; Bit Knarr, Bill Tassln; Bob Inmon; Bob Latta; Bob Parrish; Carl Brown; Cathy

Weidner; Charlene Coker, Christina Turner; ChrlsWher White; Cory Kendrick; Dan McGuire; David Dicks; Dean Mite; Diana

Orta; Don Pelder; Don Turner; Eric Turner; Gene Latham; Greg BrIers; Helen Frank; James McRae; lanle Garcia; Jason

Garrett; Jennifer Armstrong; Jerry Dickerson; Jerry Lerma; Joe Rosenbft John Hilliard; John Jenkins, Josie Fleldw, Ken

Cannon; Kenneth Robbins, Kevin McFarlin; Kris Weidenfeller, Lou Skinner; Marie Merida; Michael Cortese; Miguel Riveros; Mike

Calvin; Paula Smith; Ralph Frank; Ray Diury; Ray Lang; Ray Roe; Reggie Warren; Sam ]Ones; Sam Wellman; Satori

Sochandarnandou; Shane Gulley; Sheldon Maxwell; Sonny Jenkins; Susan Herrin; Tamrl Morgan; Terry Partlaw; Thomas

0-risirliantsen; Torn Glow; Von Watson; WD Scott Wesley Wemeldng; William Haygood; Woody McMahon

Subject: TWIA business

We need to keep TWIA business in house. How far we are behind and things of that nature should not be discussed

with insured's and agents. I know you want to get them off of your back when on phone duty but that is not the way to

do it

Please keep our business in side these walls.

ThanksJoe

PLARMFES-'__'TWIA Instit 00000324

Reggie Warren

rom: Reggie WarrenSent, Wednesday, November 05, 2008 7:40 AM

To: Reggie WarrenCc: Reggie WarrenSubject: TWIA losses I Business Income J Causation / Agreeing with Insureds

This email is going to all 1A firms and internal TWIA Examiners/Supervisors. PLEASE PAY

ATTENTION TO THIS EMAIL AND REVIEW VATH EACH OF YOUR ADJUSTERS:

1.) If an insured is presenting a Business Income (131) claim under Endorsement 17 (required) and

the building has windstorm damage, please immediately determine if money is owed under BI and

what amount. Then, email the request directly to me at [email protected] We need to getthis money in the hands of insureds ASAP

There must be windstorm damage to the building and the insured must be out of business due toIKE. It is not necessary to secure any documents supporting loss of income.

If the business is partially open, make an effort to agree with the insured as to a percentage of the

daily rate shown on your loss assignment information. For example, if it is reasonable to believe thatthe insured would have been fully or partially out of business due to windstorm damage and thebusiness is now partially open, we may want to pay the full day rate up to the time the businesspartially reopened, then pay a prorata amount up to when it appears the business will fully openagain.

To determine the information, it is imperative that you interview the insured and hopefully make areasonable determination.

If you feel the loss was entirely due to flood or surge and no windstorm damage, please submit thatinformation ASAP as well. We will make the determination on any BI payment.

2.) We are adjusting losses for windstorm damage, not flood or surge or any other peril. It is

important that your adjusters do not make statements in their reports or to insureds regarding

tornadoes or microbursts and/or give any other information that they are not certain of. We aredeveloping information concerning specific causations, through meteorologists, engk*ws and other

experts and do not have that verified information as of today. So, it is highly unlikely that an

adjuster in the field knows if a tomado or microburst hit a certain area or structure.

And, your loss assignments are generally for Hurricane IKE losses and we are not concerned with

handling claims for old, unreported losses in the middle of handling IKE losses. If the insured wants

to report a loss that happened sometime before IKE, they can do so through their agent.

3.) 1 talked personally with 27 insureds yesterday. 'Without exception, the adjuster had met and

inspected the loss, but had not gotten back with the insured to review their estimate and to agree on

the amount of covered loss and payment. And, the adjuster reports had already been submitted to

TWIA for payment. Why are you allowing t1his, to happen? We cannot get any work done because

we are taking so many phone calls from insureds and agents and are having to complete the

adjusters'work. This has to stopfl Please handle our losses as full adjustments. You should agree

on each loss under $25,000 paid claim and provide the insured and agent a copy of the estimate


only. On losses over $25,000, you should have a tentative agreement with the insured beforesubmitting the report to TWIA for authority to take a Proof. Once approved, then send a copy of the

estimate to the insured and agent.

4.) Finally, if you and your adjusters cannot comply with these instructions and prior instructions sentto you by TWIA, we will begin scrutinizing your service invoices and removing the supervision chargewe have been allowing on a trial basis. We ran easily see that many files are not being supervisedat your office before being submitted to TWIA.

PLEASE PASS THIS ON TO ALL OF YOUR STAFF and THANK YOU.

2

TWIA-insth-DO000329

Page I of I

Reggie Warren

From- Reggie Warren

Sent: Wednesday, January 07, 2009 7:16 AM

To: Alan Renshaw, Amelia Key; Ben Glover', Bill Astin; Bill Hooper, Bill Jones; Bill Knarr, Bill Tassin;Bob Inrnon Bob Latta- Bob Parrish; Brad Short; Brandi Vanderneut-, Carl Brown-, Cathy Sanders;Cathy

Wei@ner- Charlene Coker; Charlotte Phiter; Chris Zimorowicz; Christina Turner-, ChristopherWhite; Clay Tinnell Corey Crawford; OM Kendrick- Courtney French Dan McGuire; David Dicks@

Dean White;Demi@n Kolb; Dennis White Diana Ort

.

a; Don Fielder; Do.

n Turner; Donna Glover;

Duncan St. Clair Franz Hughes; Gayle @eedharn; Glida Downey; Grady McClure; Greg B.riers,'

Harold Philyaw; kelen Frank: Huck Huckabee: Hugh Meloche', James Harp, James McRae; Jamie

Gladman; Janie Garcia; Jason GarreU; Jason Young; Jean Burke; Jeff Stockd2le; JenniferArmstrong- Jerry Dickerson; Jerry Lerma- Jim Harman: Joe Rosentritt; John Hilliard', John Jenkins;John

Wrig@t'Josle Fielder; Judi Rosenblat; Ken Colestock, Kenneth Robbins; Kevin McFarlin, Kris

Weidenfeller- Lance Cooke- Lillian Saldivar; Linda Jones-, Lou Skinner@ Marie Avalon-. Marie Merida;

MarkChan@@llor, Mark Lesiey- Marshall Clack; Martin Greco; Melissa Richardson; Michael Boyer;

Miguel Riveros 'Mike Calvin: 6ke Elvington.- Mike Guidry; Mike Jay.- Norma Rosentritl,- Pam Bowe:

Paul Mikkelsen; Paula Smith; Phil Hays; Ralph Frank- Randy Stone; Ray Drury; Ray Lang; Ray

Roe- Ray Sims; Reggie Warren; Rhonda Cole;Rlcha@@

White; Rick Olivere; Robert Campbell@

Rog@r Ball: Sam Wellman: Sandy Boothe; Satori Sochandamandou; Scott Locker, Sonny Jenkins;

Steve Collins; Steve Frye- Susan Schiller Tamri Morgan; Thomas Christiansen; Timi Ayotunde;Tom Holbrook; Vernon &oper, Von Watson-, Wesley Werneking: William Britton@ William Haygood;

Wilson Dunn

Subject- Check issuance / differing amounts

All, please see note below from Marc at MGO Claims. I agree that we should notify the insured and the

adjuster if we pay something different than their submitted estimate. Send the adjuster a fax or

something letting them know the changes so they can respond to insureds'calls.

Thank you.

Reggie

----Original Message----From: Marc Dubois [mailto-.adjuster@kingston-net]

Sent: Tuesday, January 06, 21309 10,.47 PM

To: Reggie WarrenSubject: Check Issuance

When we forward a report making recommendations to your office we also send asrequested a copy of the estimate to the insured. We are encountering numerous phonecalls from insureds receiving checks for an amount different from our recommendations.There is no note or letter of explanation sent by the examiner either to us or the insured.We then get a phone call from the insured and we are at a loss to explain thedifference. Would it be possible either to advise our office or the insured of the reasonfor the discrepancy, so that we do not waste anyone's time.

Best RegardsMarc DuboisM.G.D. Claim Services Inc.

1/7/2009TWL@k_lnstit D0000367

From: Rav RoeSent- Tuesdav. December 09, 2008

Amelia Key-- Bill Astin;Bill Hooper.- Bill Jones;Bill Tassin; Bob Inmon;Bob Latta; Bob Parrish,Brad Short; Carl Brow-n.

Cathy Weidner, Charlene Coker,Charlotte Pbifer; Christina Turner,Christopher White-, Cory Kendrick;Dan McGuire-, David Dicks;Dean While, Dernian Kolb-Diana Orta; Don Fielder;Don Turner.- Gene Latham-Gilda Downey; Greg Sners;Helen Frank-, Hugh Meloche,James Harp-, James McRae;Janie Garcia. Jason Garrett-,

Jennifer Armstrong-. JerryDickerson.-Jerry Lerma; Jim Coggin.John Hilliard; John Wright,Josie Fielder; Ken Colestockl-

To: Kenneth Robbins-, Kevin McFarlin;Kris Weidenfeller; Lance Cooke;Lou Skinner; Marie Merida;Mark Chancellor-, Marshall Clack:Melissa Richardson; Michael Boyer;Michael Cortese, Miguel Riveros;Mike Calvin; Mike Guidry;Paula Sniitli; Ralph Frank-,

Randy Stone-, Ray Drury;Ray Lang; Ray Sims,Rh onda Cole; Richard While;Roger Christie; Sam Jones;Sam Wellman; Sandy Boothe;Satori Sochandamandou. Sheldon Maxwell-,

Sonny Jenkins; Steve Frye;Tamri Morgan, Terry Partlow;Thomas Christiansen; Tom HolbrookVernon Cooper, Von Watson.-

WD Scott; Wendy Scarborough-,WesleyWerneking: William Britton,W

Cc: Joe Rosentritt:

Subject: File Ownership

A couple of things.With the exception of die slab group, we do not own files.

If you get u telephone cullAith an mquin on u particular file, other than a slab claim, it is vour call to handle. There will be few exceptions Lo this.

There are a few files where people have claimed ownership for some reason and in that ease, you should forward the call to the file owner. In all

other cases I can think of, when the call comes to you, it is yours to handle.

Also, there is no need to discuss our rules outside the building. The fact that we no longer opt to hold back depreciation when the amount is $3,CK)U

Or less is not something to discuss with insureds or even adjusters. The next thing that happens after that word spreads is that insureds will be calling

PLAINTIFFTWIA Instit 00006623

Claims issucs, TWIA, IKE

OutohLr 4, 2008

TWIA Claims issues I Hurricane IKE:

1.) If you leave a note on someone's desk or chair, sign your naine to it.

2.) If you identify potential fraud of any kind, notify Bill Knarr, Kevin McFaTlin or Reggie.3.1.) Make appropriate written file comments. Do not be derogatory or belittling to the

adjuster or anyone else, especially in written communications.4.) If you get ffighgdV to take a Proof, please communicate that back to the adi ustcr.

5.) Try to find coverage for The claim, Do not look for ways to send the file back to the

adjuster for revi5ion or correction. Use goodJudgment.6.) Ifyou desire gWqq1ahjp of a ile_p41!igq1KLh(s), the last Log/Comment you put in the f

should indicate you want the file back when the next report comes in. This is the only

way we can manage this- Otherwise, Joe would have to open each PDF and deterillincthe assigned supervisor.

7.) EhpM@. Stay ready to answer the phones as much as possible. I know it is hard to work

files and be on the phone, but we need all supervisors participating in recciving calls. It'

this does not work@ we will have to do something differently.8.) "Sl2b" claims from storm surge:

a. We are forming a unit to handle these, but it will be a couple of weeks until they

are in place.b. We would like to hold onto these without making a decision until the unit is ill

place. This may not be possible in all cases.

c. Please notate the file if it is a true "slab" claim. The complete structure is gonewith maybe the exception of a piling or so still standing.

d. If you get a report from an adjuster, we need to get it logged to a spreadsheet.Will determine who will manage the spreadsheet asap.

c. If you receive a completed Proof from the insured, and the evidcDcc does not

support windstorm damage, we will need to write a letter to the Insured indicating

we cannot accept the Proof until we get the remainder of the evidence. Ourclaims counsel is drafting this letter for our use.

f. We arc evaluating all the weather evidence from IKE and hopefully can use that

with other evidence as to what happened at a particular risk to determine i f it was

possible the structure sustained windstorm damage prior to being destroyed.

g. We will contract with engineers and attorneys to help us with our decisions in

anticipation that there could be litigation.h. We will investigate each claim individually.i. We will not blanketly allow a percentage of the clairn on a group of losses.

J. We will not blanketly deny claims without an investigation.k. The adjusters in the field do not have authority to determine coverage on "Slah"

claims.1. Adjusters submit the evidence to us for determination.

rn. We expect the adjuster to determine if there is flood insurance and communicate

with the flood adjuster on each claim.n. We will possibly include the heavy flood v. wind-damaged Structures in title Unit.

9.) ALE/ Displacement payments:a. Considered for Primary Dwellinas only.

b. Must have been part of mandatory evacuation and the insured must have

evacuated.

EXHIBIT TWIA Instit 00000282

Claims issues. TWIA. IKE

c. Must have Filed a claim for windstorm damage to their covercd properly or at

least expect they have windstorm damage.d. Can be considered when darnage is known but cannot return to home due to

infrastructure loss (even )i F a "slab" claim that we have not investigated yet).

c. $1 00 per day up to 25 days max.f. Not necessary to document expenses for displacement.g. Should be coded ALE on payment.h. Could be a legitimate ALE claim once adjuster inspects and deten-nines

windstorm damage. Then, the adjuster should handle as usual.

i. Get good mailing address before issuing check

If no evacuation and no windstorm damage are determined, no. ALE Or

displacement should be paid-k. If the adjuster determines flood is the sole cause of the risk being uninhabitable.

we would not owe ALE.

When the file is finished, please glose thq.f 0!lp in Notus or set t RCC. Many 1-iles

arc left open when they should be closed.I 1.) We are not pulling the paper claims files as you know. If you have paper docs; 1161-

the file. make sure they get into the file. Leave them in your 'outbox' area for drop

filing.i 2.) We arc asking for Proofq..ofLoss for over $25K paid claim.

13.) Claims under $25K can be approved at the IA level before we gel them.Then we

should search for anything that boldly stands out and process the claim accordingly.

14.) If you notice a particular adjuster or firm doing things incorrectly, please notify

the principal at the firm to do it the correct way going forward. Fax the principal ol'111c

IA firm a note with your concerns.15.) It is not necessary to return every file where you see something, incorrect.

16.) Logging succinct filenotes are a must on every claim. Do not type in what you

wouldn't want to read later in a lawsuit.

17.) Paying attention to wRi-8 requirements (,Arindstonribuilding Lgde) is important.

especially on roofs, siding, doors, windows, etc. If you do not understand how to do this

in our Notus system, get with Kevin McFarlin or Eduardo Mena (IT).I S.) Pay close attention to the adjusters' invoices and make sure they comply with the

Fee Schedule we are using for IKE.I 9.) Issue advance payments when appropriate. Use goodJudgment and make sure

you understand there is a covered wind loss. Make sure payments are coded properly to

Loss, Expense, ALE, RCC, etc.20.) Pay attention to payees on checks. Include mortgagces on dwelling loss payments

over$500.21.) Adjuster reports with requests for authority over $ 1 OOK should go to Bill Knarr

for approval.22.) Be aware of Rolitical entities and persons ........

legislators,'I-WIA Board

Members, Judges, school districts, municipalities. Any issues that develop should go to

Reggie.23.) When you think an @@neq is needed, get with Kevin McFarlin, Bill Knarr, Joe

Rosentritt, Ray Roe, Terry Partlow for approval.

24.) We do not offer engineers in all situations especially when the file is wcl I

documented and stands on its merits.

25.) Conseguential Loss:2


Claims issues, TWIA, lKF

a. Dwelling policies must have the 320 endorsement.b. A.I. of the endorsement is for on-pr@rnises physical windstorm darnauc. Pi' 11mil

applies and no deductible for the consequential portion of the loss

c. A.2. is for pff-premises $500 limit and the loss is subject to the PP@Power OUtRgC.

deductible.d. This is coverage for Personal property items damaged or destroyed duc to change

in temperature.e. Commercial risks must have direct physical windstorm damage to the licatill"'.

power or cooling equipment on the described building. Something visible. No

power surge coverage for consequential.f. There will likely be some incorrect adjustments oil consequential loss, such as

paying $500 regardless of coverage, deductible ctc. If the claim is resolved, dot@

not send the file back to the adjuster over this issue. Fax a note to the princi pal HI

the 1A firm if needed.g. This coverage can apply to food and other PP items that may have been dama- d.

such as refrigerators, free7ers. It does not apply to Dwelling items damaged -.,,act)

as floor coverings, wood floors etc.26.) landscape damage / Deb!@is removal:

a. The policies basically cover dwellings, buildings, personal property etc.b. There is not coverage for trees (value of), landscaping etc. No endorsernent

covers this.

c. Occasionally it is appropriate to allow some landscape repair if a tree removercauses some damage in getting a tree off the roof or something like that. Nominal

amount.d. We do cover debris removal of trees and damaged covered Property.

27.) Mold is not covered. We do cover the labor to remove mold lo gain access to a

covered loss.28.) ALbestos is not covered. We would owe only the cost to remove windstorm

damaged asbestos items as if they were non-asbestos materials.

29.) Work smart. Try to manage the use of printers and walking around the office as

best you can.

.)O.) Deductibles: Remember, most Items on the policy have individual deductibles.

For example, on the Dwelling policy there is a deductible for the Dwelling and another

deductible for the Personal Property. Deductibles are not applied to individual repaii

items such as roofs, siding. windows, etc.

31.) 1,!suin Checks: Pay close attention to payees. Make sure you are paying tile

correct person or entity. Verify the amount. Notate proper comments on thif check.

Make sure the check applies to the appropriate coverage, Loss, ALE, RCC , etc. When

issuing supplements, double check with the prior checks that you are issuing correctly.

Verify mortgagee changes. Make sure you mail to the correct location.

3

TWIA Instit-00000284

From: Rav RoeSent: Sunday, September 28, 2009

Bill Hooper-, Bill Tassin-1

Car] Brown, Dan MCGUiTe;

Diana Orta; Don Turner;Doug Mattson- Gene Latham,Helen Frank; James McRae;Janie Garcia- Jim Coggin-

'@n

To:Jim Hill; Jo Hilliard;Michael Cortese- Paula Smith,Ralph Frank; Ray Lang;Sam Jones.- Sam Wellrnan@

Sheldon Maxwell; Sonny Jenkins;Terry Partlow, Tom Glow',Von Watson-, WD Scott'.

Woodv McMahon

Cc: Joe Rosentrill"

Subject: Work Load and Dragging and Dropping

our work load is starting to increase and soon you will be getting 30 or 40 files to review where you have been getting about 5 at a time.

This vNill create a need to make the most ofvour time.

Here are some suggestions:o the proper file. This is very important from a time

Keep one file open on your monitor at a time in order to be ccrtaiii that reports are dropped int

drid nucwney standpuinf.

Make adequate comments but no need to over do it.

Don't le customers drag you into debates about damages. Be courteous but tell them they need to work these issues out xxith the adjuster. We cannot

adjust the loss from here.

Cut down on time spent -visiting in the office. If you have questions about procedures, ask myself. Terry Partlow or Joe.

Ray

PLAIPMFr aIBM


From: David DicksSent: Monday, February 02, 2009

Alan Renshaw; Amelia Key;Ben Glover; Bill Astin;Bill Hooper; Bill Jones:Bill Tassin. Bob Inmon;Bob Latta; Bob Parrish:Brad Short. BrandiVandemeut-ICarl Browri; CathySanders;Cathy Weidner, CharieneCoker-Chris Zimorowicz" Christophe4hite:

Clay Tinnell, Corey Crawford"Cory Kendrick; David Dicks;Dean white: Deniian Kolb,Dennis White; Diana Orta;Don Fielder: Don Turner,Donna Glover,- Duncan St. Clair;Franz, Hughes; Gene Latham"Greg Briers; Harold Philyaw,Helen Frank-, Huck

Huckabe;:

Hugh Meloche; Jarnes Harp;Jamie Gladman, Janie Garcia-,

To: Jason Garrett; Jason Young'.Jean Burke-I Jeff Stock-dale;Jeffrey Goretzke-I JenniferAmistrong;Jerry Dickerson; JerryLerma,'John Hilliard. John Jenkins;John Wright, Josie FieldenJudi Rosenblai; Ken Colestock.Kenneth Robbins; Kevin McFarlin;Kris Weidenfeller; Lance Cooke-,

Linda Jones-, Lou Skinner,Marie Avalon; Marie Merida;Mark Chancellor; Mark Lesley;Marshall Clack-, Martin Greco;Melissa Richardson-- Michael Boyer.Miguel Riveros; Mike Calvin;Mike Elyington; Mike Guidry'.Mike Jay; Pam Bowe;PaulMikkelsen, Paula Smith,Phil Havs: Preston Kuhn;Ralph Frank-. Randy Stone.

Subject: File OwnershipAttachments:File Ownership-O.pdf

All,

Attached is a docwnent regardilig File omjersiiip. please read and if you have al* quesLivils Please ask.

David

IFFSTWI,@ Instit 00006610

File Ownership

The goal should always be that the Claims Supervisor would work the file as presented to

them and conclude the file to completion. Attention to comments should be paramountwhen completing work on a ifile so that any other Claims Supervisor could pick up and

complete as needed.

With that said, there will be occasion for a Claims Supervisor to take ownership of a

particular file for various reasons. These reasons could include the size of the file, the

complexity of the file, specific assignment of the file by management or ongoingmonitoring of corrections needed on the file.

The following guidelines should be adhered to as we move forward with regards to File

Ownership:

1) Claim Supervisor will send an email to Kenneth Robbins or Bill Hooper for an), file

that ownership is taken on with the following information.

Claim NumberReason for Ownership

2) Kenneth Robbins or Bill Hooper will physically change assigned supervisor in file if

approved.

3) Once Claim Supervisor has been notified that approval has been given for file

ownership, you will make a note in the comments scction of file with the following.

!!!!!FILE OWNERSHIP!!!!!

PLEASE FORWARD ANY ACTIVITY FOR THIS FILE TO "YOUR NAME".

4) As needed, Kenneth Robbins or Bill Hooper may request updates on status of files

with file ownership.

The purpose of taking File Ownership should be to expedite the handling and closing of

these files. When ownership is taken the Claims Supervisor should be in regular contactwith the adjuster, insured or others to complete the file as soon as possible. These files

should not be handled as usual with an email only sent for action. The Claims Supervisorshould be physically making contact with the appropriate person to push these files to

completion.

PDF created Wth pdfFactory thal version wwwWactory.corn


From: Bill KnarrSent: Wednesday, October 08, 2008

To: Joe Rosentritt-Rav Roe-Woody McMahon

Subject: File review

Joe, Ray and Woody,

I just sent you a blind copy of my response to one of the IA firms, We are creating more work for ourselves by nit picking at these lo Ms under

25.000.00 A glance at the statement of loss to make sure deductilbles have been applied and a quick overview and unless something jumps out as

being drastically wrong, pay it and go on. Please get this word out to our supervisors. They have been here long enough for a learning curve. Yes,

%NC are going to miss some things, but we have approaching 90,000 claims to review and get paid. These flood vs %xindstorni and larger losses will

need our time more than these smaller losses. Thanks,


FPLAINTIF


From: Jeff KaiserSent: Saturday, November 15, 2008 03:37 PM

To: Reggie Warren

Subject: RE: Supplements and Reopens / IKE / TWIA

Reggie.

I believe that we think alike in many ways. My intent is feedback on our problems and what I hear on the street. While you may not beseeing

problems with the reopens yet, you will. Adiusten; are giving back their inventories ofelaims and going home. T agree with your cornment on quality

issues. I have been doing this many years and never has the quality been so poor. Man), senior people am leaving the industry because of age and the

lack of consistent work. We are a Citizens of Florida trainer but the number of quality candidates is diminishing. We have to pretty much "idiot

proof' the process. Because of three storm deployments going on at once, many of our senior folk's grabbed at ]-@av and Gustav deployments that Nvere

available as the@ had not %korked in two years.

At this point, we arc going to see how many of the reopens we can handle from the desk. I expect that as the holidays arrivc we will lose most who

have hung around, even if the reopen fees haven't driven them off. We have not received a single new assignment since 10-23-08 so we don't even

have anv fresh claims to attract a4justers back. At this point, you are probably better off continuing to send them to your core firms. At least you will

have those firms to back you when the reopens get out ofcontrol. I do understand the economics of this business.

Reggie, we have woiled hard to make things as s7nooth as we can. I do riot necessarily agree with you entirely on the reopens. Of course there are

many that have not been handled perfectly the first time around but everyone thought the losses were coming fast and furious so we were trying to

move them along as fast as we could so we would have capacity. In hindsight, we could have all taken our time, at least my firm We have also seen

the typical policyholder survival patterns and arc starting to receive contractor estimates, PAs, etc... I don't care how thorough the adjuster was on the

first go, when the contractors & PAs start getting involved, that is a step of the process that cannot be avoided. To deny at least a remspection on even

the most well done file is the groundwork for a bad faith claim, That is why I have asked for consideration on the billing. I do not want to set up

TWIA nor do I want to excercise my E& 0 carrier for the litigation that wih certainly come. At the risk of making you angry, I again ask you to

consider allowing us to bill from the bottom of the schedule of these very necessary reinspections. Before you answer this request, I urge you to take

the temperature on the street. I cannot think of a firm or adjuster out there who would want a $200 ($130 to the adjuster) reopen file considering the

work, difficulty and their overhead cost to stay in the area. AU of these are being handled by different adjusters than the original and I don't believe

there are enough local people to handle them if all the adjusters in the area leave. The time to address this issue is growing short, mainly because the

approaching holidays are causing the adjusicis to make decisions.

As ulwuv i it is d pleasure to communicate with you. I likW the comment aboul the length of my last email and I apologize for the 1mg(b of this one,

However, I believe this issue is at critical mass and I do not believe I can stress that enough. I am hopeful that we can work with you again but

VA(uldn't blame you if that did not happen. I hope you understand that I am trying to head off what I perceive to he a disaster and please do not think

I am a troublemaker, I really intend this lo be my attempt to protect your interest. This is not a greed move as the incremental increase is not worth

that,

Thank you,

Jeffrey A. KaiserPresidentSpecialty Group, Inc.

--Original Message----From ReggieWw7rnininilio-.REGGlEaTWIA.-OR.GIC_Sent: Sat II/] 5/2008 9:00 AMTo: Jeff KaiserCc:Subject: RE: Supplements and Reopens / IKE / TWIA

Jeff, I made some comments below at the end of some of your paragraphs.

--Original Message -----From: Jeff Kaiser [maillo@lkaiscr@skeciallygrc)W-in-c.comI

Sent: Fridav. November 14.2008 6:21 PM

To: Reggie WarTenSubject. RE: Supplements and Reopens I IKE / TWIA

Reggie,

I have attached a copy of the email I sent you yesterday. I received no response or indication that you received the email. I am hoping this email

is not your response as this is a problem we do need to address, Please let me know your thoughts.

SsAMFPLTWIA Instit 00016737EXHI

Aside from that, for reopens where the adjuster has to change measurements or unit prices, the easiest way to figure the supp is to rewrite the

estimate and plug in the new pricing then deduct the original estimate amount. I know this doesn't seem to be well received by your examiners but I

am fighting a losing battle with the adjusters to get these done.

Thank you,

Jeffrey A. Kdisci

President

Specialty Grotip, Inc.

Dear Mr, Warren,

In response to your recent message about reopened riles, I have decided to send you a response and a request. I will start Nvith an explanation of

our current status and mine is a message of economics.

When we received your request to deploy for JVIA, we responded with substantial resources. Along the way many things happened which were

beyond the control of any ofus, namely, a couple ofother storms. We were requested to submit a list ol'First responders and we sent a list of 80

adjusters before we were told that was enough. Some of them ended up taking other deployments before they got to Texas because of the old "bird in

the hand" syndrome. We successfully deployed adjusters every day and at the end of almost every day, all claims received up to that point had been

assigned out, all while we limited the adjusters to no more than 50 losses, cvcn for the most experienced ones. That drew some criticism from the

greedy ones but we stuck to our plan as we have learned that lesson in the past. Then suddenly the flow of losses to our firm stopped even though we

lead only deployed about 65 ad@iusters. We could have put out 150 withiii the incinth if we had the volurne of losses, even with all of the other storni

deployments that were going on at the time. Now we could probably put out 250 as many have finished other deployments.

Diring our initial deployment, I sent you a request for an estimate of losses- You were always very good in responding and told me we would

get all we wanted. So we continued to move people toward Texas, guaranteeing them work and standby money, even though we submittedvery few

standby daily fees to FWI A for reimbursement. We had many adjusters arrive to find that we bad no work for them and we helped many to find work

elsewhere, As I told you carly on. %ve committed to handle TWIA and did not accept losses from other clients because we all expected many losses.

While I know that no one ran see into the future and there is no way to predict the number oflosses, a huge number of firms and adjusters were

deployed by TWIA. When the flow of losses stopped completely and not even a slight flow continued, I had no way to feed those who were en route.

I also had no way to keep the pood adjusters in Texas after their losses were scoped out or to mix with the reopens. Most left because they could not

sustain die additiorail expense of living in a trailei or hotel room and incurring $200 a day to live, while also having to Puy foi a home Somewhere

else, after the flow of claims stopped.

As such, most of the adjusters have gone home and very few are left to handle the reopening files. Most of those have said that the (65% of)

$200 fee is not enough to pay them to review the original report & estimate, travel to the loss location, re-inspect, negotiate with the insured and/or

contractor, write an estimate, report, bill and close the file. They are now starting to reject these assignments because they only get S 1 30 plus mileage

for all this work. I do not like this response from them at all! I have said to clients in the past that it really doesn't matter to me what the fee schedule

is, it matters to the adjusters because if it isn't enough to attract them, it is a setup for failure since Ac all draw from the surric gene pool of storm

adjusters. At d-iis point, I am hard pressed to move this matter toward success and away from failure. However- I have a proposal that I ask you to

consider.

I am setting up a triage unit to determine whether the reopen can be done from the desk or if it needs to be re-inspected. We are also looking to

see if the original ndjusteT has done their job property. If not, we will pay the new adjuster front the original adjuster's proceeds. If there is a price

difference issne, we should be able to handle it from The desk. If it is measurements or missed items, we may be able to handle it from the inside but

many will have to go outside. We are seeing a wave ofhuge contents claims where the insured is saving the original adjuster told them to dispose of

the items and they want to he paid. We have seen this before and the adjuster will tell you it is not so. You and I both know the only way to deal with

these aggressive claims is to go and sit with the insured and ask them to start justifying their claim. This is very time consuming and it is difficult to

get adjusters, who feel they are underpaid, to properly work fluough this process. However, it is also difficult to pay some of these claims when the

insured showed the original ad@juster one item during the initial inspection and we get an inventory for 30 items. Please also keep in mind that these

TVVIA-Instit-00016738

reopen claims are being handled by different adjusters who almost Always do not have much good to say about the original adjuster simply because

they have to handle the reopen. It gets worse when thc@v feel like they Are losing money doing it. Jetf, I am not buying this. I think in most cases the

adjuster didn't do their job initially on these large PP claims. Adjusters are not interviewing the insureds. They are not create . ve in adjusting a claim

The hun) through and their product illustrates it.

I am asking for authority to commit to these adjusters. who have to go out and work through some very difficult claims, that thev call bill die

ddjustei fee from the bottom of flieseliedule Lis if it were a new claims We will not bill any of the surelituges, just the udjustei fee. additional mileage,

additional photos and exam fee. The only change would be the adjuster fee. The ones we can handle from the desk will be billed at the $200

minimum based on the difference in fee amounts and the ones we find to be deficient, we will not bill TIMM. Jeff. we cannot treat you differently

than the other-, and I have not had tbeqe comments from any other firm.

My logic is that if we even had a trickle of claims coming through instead of a total shutoff,i would be able to keep a group of adjusters

sufficient to spread them out and get the reopens handled. I would also be able to mix the reopens with the new losses as we went along, to keep the

adjusters interested. With the isolated crew we now have it is even more difficult because many are traveling longer distances. With all of the other

demons we arc facing as we try to move this Cat to a conclusion, this one is looming large and@wc arc trying vcry hard to succeed for TWI A, the

policyholders in Texas and for you. You have been fair and evenhanded to deal with so I am hoping that we can figure out some resolution to this

problem as I expect our firm and adjusters are not the otily ones who are facing this. I also believe that we may be able to attract some adjusters back

if there is at filluncial incentive to do so because I believe the claims will continue to reopen for wine tirne to come. Jeff. claims ale coming ill slowal

this time. Our initial predictions were based on information we had at the time, No one can predict numbers early in it storm. I feel we will continue

to get losses for months and will initially got as many as I first thought, but they are not coming in at a pace to keep any one firm particularly busy. I

think most firms are hanging on to the real adjusters that want to work and those adjusters can handle the reopens. T wish there weren't so many and

there wouldn't be if the adjusters handled the claims to start with. I think adjusters are accustomed lo having clean lip crews come arotmd And clean

up their mess, but we are not at that point We expect the firms to handle the claims on a full adjustment basis and that means reopens.

Jeff there are some good adjusters out there but many more that are inexperienced and that are not getting the job done. That is across the

board. FZ was promised qualified adjusters from the beginning and quite frankly, got very few. I am not trying to beat up all the adjusters, but

the general consensus is that the products are bad. I know there is a leaming curve, but many of the adjustment procedures are not that much

diffcrcnt than any other state.

I am sure I am not addressing your issues and needs, but most of this involves issues that need to be managed by an IA finu that considers itself

to be a "cat" firm.

If you have individual suppIrrients that require an inordinate amount of time, let us know and we will consider different billing. We don't want

you are the adjusters to go broke, hut we don't want quality from the beginning.

No one is perfect including TWIA. We have our issues too. We are all doing our best but if I decide to be a "cat" adjuster I will have to

understand that there are no Teal guarantees on numbers of claims and how fast they will come in.

Thank Vou for Your consideration.

Jeffrey A. Kaiser

President

Specialty Group, Inc.

----- Original Message -----From: Reggie Warren [email protected])

Sent: Fri 1 1 11 4/2008 1:1 9 PMTo: Reggie WarrenCc: Reggie WarrenSubject. Supplements Lind Reopens / IKE / TWIA

This is going to all IA firms handling IKE claims for TWIA

We are getting supplements in various form s.

We do not want the original estimate to be rewritten to include the supplemental items. This takes a lot of time to figure out.


Co

4)

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9:6

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Reggie Warren

rom: Jeff Kaiser [email protected]]

ant: Saturday, October 18, 2008 11:03 AM

ro: Reggie WarrenSubject: RE: Status of things

Reggie,I will hit you with the quirky billing issues as they come up. As far as the generalissues, we were originally told to bill Bid & Conts & APS under Item 1, ALE under Item 2

and Displacement under Item 3. Then we were told to bill Bid & Conts & APS & Displacementtinder Item I and all other ALE under Item 2. HerentJy we were told to bill everythingunder Item I which obviously reduces the fee amounts substantially. The adjust are a

little crazy over it but our Billing Department has been making the changes to get thefiles done and in. However, that causes their records to be different than ours forCUNIPaLi5Un Idtei on and when it results in a lower fee, they do not like it.On Commercial, which we are now starting to see more of, there are questions about how to

bill different locations, multiple buildings at one location and the schedule is reallyconfusing when it talks about the first 5 Items, etc... I do not know as we can nail thatwording down and we have seen more than one interpretation from different examiners. I

guess we take it case by case. 1 think we will bill diferent locations as completelydifferent items because we do not want to hold up any of the payments to the Insured forsome of the locations if all of the locations have not been finished.

I do want to ruji our reupen/reirispection procedure by you to nake sure you are OK with it.We are starting to get policyholders calling us after receiving their estimate and check.Most who call think the check is low and want more money. Some cite 5pecifics such as thedjuster didn't look at everything, they missed something that the Insured has now found,

he Policyholder just remembered something or they suddenly don't like the adjuster and

don't thirk the adjuster did a thorough job.

We are pulling the estimate and report to address each call. The other day we had a

policyholder call and ask for a reinspection. I looked at the report and it was one of the

best I have seen. The insured had a Tiki hut and there wasn't one piece of straw out of

place. There were excellent pictures and the file was well handled and well presented.After looking at all of this we advised the insured that if they had some evidence ordocumentation to show the adjuster did an incomplete job or that they missed something or

their pricing was off, we would come back out. Short of that, our expert had done theirinspection, in their presence, and we find no reason to indicate they did anything but a

thorough job. We leave it at that and refer them to their policy. We do not tell them tocall TWIA. However, I expect they will eventually find their way to you. Essentially, we

feel we have made a good faith effort and that the burden is now shifted to the insured.

We had another one where the policyholder was on a tear so we looked at the report. I,:

looked pretty good but we thought there might be some holes in it so we sent the adjusterback out to take another look. After a second inspection the insured was still not happy

so we sent another adjuster. It has been resolved but I must say the third adjuster saw

something different. 1 actually have a couple of great mop up adjusters coming off otherdeployments. I would like to bring them here because I think the volume of these problems

is going to reacli a fever pitch. if you think you can use them, pledge let me know.

Question is: If we feel the adjuster did a good job, are we OK to stand on the report and

gently tell the insured that we need some credible evidence from them in order to come

back out? We usually suggest that when they get a contractor involved, any shortages or

inconsistencies will get worked out.T was going to keep this email short but I must have gotten too much sleep last night.

,rhank you.

Jeff Kaiser

PLAIPMFPS:.H IT TWIA Instit 00000296113

From: Bill KnarrSent: Monday. October 13, 2008

To: TPRODEO(a,)aol.com

Subject: RE: Adjuster

Troy,

Thank you for your interest in TWIA. We do not have any adjusters tri The field We use independent ad.,-tistment firms whom turn hire the adjusters

to handle our claims. At the present time we are using 40+ firms. Suggest you contact some of them. We are using all the major IA fums and then

somelocalTexast'irms. Therearejusttoornanytolist. Wereallyarcrftappro-,,ingELnN,additional4ustersioTthefir7nsnphtnoNvasx@,-ethinkthe

adjuster resorce for our claims is adequate. Check with some of the IA's, thcy may have a need for some other customer.

Bill KnarrCatastrophe Office Manager512-637-2901.

----0rigITI4l MCSI-a9C----From. TPRODEO@W@aulzoni [mailIo.TPRODE0('&aol.corn1

Sent: Sunday, October 12, 2008 6:09 PMTn: Bill KnerrSubject: Adjuster

13ill'I currently have mv nonresident all lines adjuster license for Texas. I am training in Dallas for property adjusting and Xactimate, and have

completed Auto/ RV training as Nvell as CCC pathwavs, earlier this veaT.

My proper-ty instructor recommended thal I contact you in regards to -working as an adjuster. as You may be able to put me to v,,ork,

Flcasc let mc know what I can do.

Troy Peterson

New MapQuest Local shows what's happening at your destination, Dining, Movies, Events, News & more. Try it oull

PLAINTIFFS:@EXHIBrr-41 TWIA Instit 00014578

From: Reggie WarrenSent: Thursday, October 30, 2008

To: Reggie Warren

Cc: Reggie Warren-,

Subject: Customer Service / IKE and Dolly Claims / TWIA

All,

Thanks to you and yotr adjusters for all the hard work.

That being said, I must tell you we are getting a ton of calls from upset insureds, agents and others. So manv. that x%v cannot get our job done in

Austin.

It is highly importunt that we are professional, rice and understanding of each person's issues with their individual claim.

An appropriate amount of time should be spent with each insured to explain the adjustment process. This includes intervicwing the insured and

collecting all the information available to assess and adjust the claim.

Based on the calls we are getting, this is not being done much of the time.

The ones that are doing the professional job know who they are and this is not meant for them, but we all need reminders- ftoTn June to time@

our goal is to avoid getting calls and complaints which later turn into lawsuits. We all must do our job better to achieve this goal.

It is apparent to me and others in this off ice that our emails with instructions and directions for adjusters are going unread and that is unfortunate.

I feel that yout- firm is one that wants a continued relationship with TWIA beyond IKE and DOLLY, and if that is the case, it is imperative that you

follow our instructions.

LdLer toda) or toinonow, I will be sending an inforinaitional ernail to you that should help with sonic of die iecurring issues in the adjustments.

Thank you again,

Reggie WarrenTWIA Austin

TWIA-instit-DO016509

Thousands still awaiting windstorm payouts Page I of 5

Thousands still awaiting windstorm payouts

By Laura ElderThe Daily News

Published February 15, 2009

Five months after Hurricane Ike struck the upper Texas coast, thousands offrustrated policyholders still are awaiting payouts, or are negotiating larger

settlements from the state-backed windstorm insurer.

The Texas Windstorm Insurance Association has received go,656 reported losses andpaid $905 million in claims from the Sept. 13 storm. But 10,500 claims are

unresolved either because they involve very large and complicated commercial casesor are mired in the murky question of whether wind or storm surge caused the

damage.

in some cases, policyholders contend the association hasn't given them enoughmoney to cover repairs to damage caused by a Category 2 storm packing 11o mph

winds but which left a legacy of deadly and destructive flooding.

Throw in a vast number of claims, battles about whether entire roofs or just a fewshingles need replacing, the work of a few inexperienced adjusters, some

policyholders who want something they don't have coming, unsubstantiated reportsof tornadoes and you have a process bound to bog down, officials say.

"I would prefer, obviously, that we had no open cases and everyone was paid andhappy, but there are so many complicated issues," said Jim Oliver, windstorm

association manager.

"I'm not bursting with pride; I'd like it to be better."

Whatever the reasons for unresolved claims, some county residents and businessowners say they can't plan their futures or rebuild until they know exactly how much

money to expect from the association, also known as the windstorm pool.

'Pending, Pending, Pending'

About 3,000 windstorm pool claims were for total losses. Nothing was left ofinsured dwelling but slabs or sticks.

@--,.PLAINTIFFSEXHIBIT',

Those are some of the toughest cases to resolve, Oliver said.

Some of those come from the hard-hit Bolivar Peninsula, where Paul Ray Heinri

http://www.galvnews.com/story.lasso?tool=print&ewcd=38e69dI fl 20cbbfl 11/5/09

Thousands still awaiting windstorm payouts Page 2 of 5

and wife Donna lost their Gilchrist home Of 17 years.

Nothing was left but the slab.

Hurricane Ike pushed unimpeded storm surge as high as 20 feet over the peninsula,wiping out almost all the houses in the tightknit Gilchrist community.

The windstorm pool doesn't cover storm surge.

The Heinrichs, who were insured for windstorm but not flood damage, are living in atrailer in Hitchcock courtesy of the Federal Emergency Management Agency.

The windstorm pool has given the Heinrichs some insurance money - lo percent oftheir policy's limit and 5 percent of the contents'value.

But the couple is in limbo until they know how much more insurance money they'llreceive, they say.

'We feel we're still entitled to the full value," Paul Ray Heinrich said.

Paul Ray Heinrich describes the status of his claim as "pending, pending, pending."

Each week he calls a special number, only to be advised to check in another week, hesaid.

"This has been very frustrating for me and my wife because we cannot make anyrealistic future plans until we receive final settlement from windstorm," he said.

Tornado vs. Surge

One bone of contention between some policyholders and the windstorm pool iswhether tornadoes or storm surge flattened houses on Bolivar Peninsula, Oliver said.

Pool officials consulted with the National Oceanographic and AtmosphericAdministration and other federal meteorological resources, but could find no

evidence that tornadoes caused the mass destruction on the peninsula, Oliver said.

Without a property left to assess, the windstorm pool is forced to rely on complicatedcomputer modeling - based on information experts collected on houses still standing

- to decide how much damage was caused by wind.

In cases in which the house no longer exists, some delays can be blamed on lack ofphotographs or video showing what the house looked like and contained.

Some policyholders lost those photographs and videos in the storm.

"And that's what's taking so long," Oliver said.

Roof Rage

http:Hwww.galvnews.com/story.lasso?tool=print&ewcd=38e69dI fl2Ocbbfl 11/5/09

i nousancis still awaiting windstorm payouts Page 3 ot.@

One of the most common windstorm insurance disputes involves roof damage.

"They're not paying enough money," roofer Michael J. Leonpacher said.

About 20 percent of Leonpacher's clients have big problems with their roofs and theirinsurance, he said. Leonpacher accuses the windstorm pool of changing the rules as it

goes along.

"Last year, significant wind lift of shingles was considered damaged shingles; thisyear's it's not," he said.

"The goal post has been moved."

But the pool hasn't changed rules, Oliver said.

Buildings are assessed case by case, and each case is different, Oliver said.

In most cases, shingles lifted by hurricane winds will settle back in place, Oliver said.

If shingles are cracked or split, the pool will pay to replace them on an insuredproperty, he said.

Almost every shingle in areas hit by Hurricane Ike was lifted by wind, Oliver said.

"We can't replace every single roof in Chambers, Galveston and Jefferson counties,"Oliver said.

Unless the shingles are damaged, they don't need replacing, Oliver said.

"You'd be surprised by how many we see - the shingles they claim are raised. There'sno real good evidence that they need to be replaced."

If an entire roof needs to be replaced, the windstorm pool will pay for it, Oliver said.

Costly Delays

Island businessman Craig Brown knows how costly the slow claims process can be.

Brown owns numerous Galveston properties, including the building at 2126Postoffice St. that was home to Mod Coffee House on the bottom level and lofts

above.

A windstorm pool adjuster asserted damage to the building's roof occurred before the

storm and wasn't covered, Brown said. Brown didn't agree. Shortly after, a rainstormcaused water to pour into the building, which never happened before the storm,

Brown said.

Brown called the adjuster, but the two could never agree. Finally, Brown hired apublic adjuster.

http://www.galvnews.com/story.lasso?tool=print&ewcd=38e69dI f`1 20cbbfl 11/5/09

I tiousands still awaiting windstonn payouts Page 4 ot'5

After much back and forth, the windstorm pool settled.

The public adjuster got an 8 percent cut.

During all the negotiations, Brown was forced to pay out of his own pocket to makerepairs to the building so he wouldn't lose his loft tenants.

Not everyone has the financial resources to wait insurers out, he said.

"If I was someone who didn't have those resource at that time, I'd just be dead in thewater," Brown said.

"It would have kept my tenants from getting back in, so it could have turned intoquite a financial concern for ine.'

Brown blames part of the problem on inexperienced adjusters hired by thewindstorm pool.

"I think some adjusters are very seasoned and are from this area, and others didn'thave that much experience," Brown said.

Typically, the windstorm pool has about 30o adjusters on a semi-retainer. Thoseadjusters are trained in windstorm pool policies. After Ike hit, the windstorm pool

dispatched 1,5oo adjusters to disaster areas, Oliver said. Some didn't have windstormpool training, Oliver said.

"There's a learning curve," Oliver said. "Some of them were not the greatest - they'renot terrible - and when that happens you end up with a second and even a third look

at the property."

Complaint Files

As of Feb. 9, policyholders had filed with the Texas Department of Insurance 1,007complaints against the windstorm pool - the highest of any Texas insurer. Of those,the insurance department deemed 382 "justified," resulting in the return Of $5.9

million to consumers.

The top reason for all insurance complaints after Hurricane Ike was slow settlement,regulators say.

Windstorm pool officials argue the number of justified complaints was a smallfraction of the claims.

Although the pool had the most complaints of any insurer, it also is the largest writerof windstorm insurance along the Texas Gulf Coast as private companies flee the risk.

The windstorm pool, with more than 200,000 policyholders, is insurer of last resortin 14 coastal counties private insurers consider too risky.

http://www.galvnews.com/story.lasso?tool=print&ewcd=38e69dI fl 20cbbfl 11/5/09

lbousands still awaiting windstorm payouts Page 5 ol'5

As it attempts to resolve existing claims, new ones keep coming. It continues toaverage about 15o new claims a week, Oliver said.

The windstorm pool, made of all casualty and property insurers in Texas, had about$2A billion available to pay claims from Hurricane Ike.

Because it's backed by the state, the windstorm pool has money to pay all claims,officials say.

"The claims that are remaining are larger or more complicated," Oliver said. "If thereare loose ends to tie, trust me, we're going to tie them, but it takes a little longer."

Copyright @ 2009 The Galveston County Daily News

http://www.gaivnews.com/story.lasso?tool=print&ewcd=38e69dI fl 20cbbfl 11/5/09

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From: Reggie WarrenSent: Monday, September 29, 2008To: Reggie Warren

Subject: REVISED Price Guidelines / Hurricane IKE / TVIA and TFPA

Attachments:Tx Coastal Repair Cost Guide.x1s Sept 29 08-0.xis

Attached is a spreadsheet or our latest revisions. The market has driven the prices higher, mostly in the area of petroleum based roofing materials.

We al-A) added B few items.

Please begiii usnig this new guideline immediately. NOTE: There are two (2) columns of prices, iidand and seaward of the uitracoastal canal.

It will he up to your firm to get this new information into your adjuster s software.

This guideline does not coverall items, so if it is not on this list, it is ok to use the prices in your particular adjuster software program

It is important Im each adjuster to review this guideline and pay particular attention to the asterisks (****) throughout the guide and on the bottom of

the last page.

We expect good judgment,@A,hen preparing estimates and adjusters should not tell anyone this is TWIA pricing_11111,1111it is a guideline only.

Most of the prices include all thc'add-ons'cte so please point this out to adjusters.

If there is a variance in the prices, up or down. flie adjusters should explain in theit report to TWI A.

We appreriate your compliance with these instructions.

Thank you,

Reggie Wan-enTWIA ClaimsAustin, TX

PLAMMOS.


From: Bill KnarrSent: Thursday, June 19, 2008

To: Reggie IWTarren

Subject: RE: Price Guidelines

Reggic,

I have Steve VincentS TepOrt from BRW-0 JIlSt 8few remmmendations Richard has report requests out Cotton said they could live with what we

had',"I We should put something together Monday.

B

Going to lunch, buy weed cater, and pick up Sherlock. Should be back about 3 or so,

----Original Message -----Froin: Reggie WaneiiSent: Thursdav. June 19, 2008 11:50 AM

To: Bill KnwTSubject: Price Guidelines

Sieve Perry sent me another price sheet from an Austin roofer, Lon Smith.

We need to get all this tied up fairly quickly. We need to figure just what prices we want to include on our guideline sheet.......

we obviously cannot

be as comprehensive as Glenco and Lon Smith and we obviously need pricing for other items in addition to roofing.

I think we aretvaiting on information from:

1.) Steve V inceni and Dasco (Gene getting info from Steve too)

2.) Mfflin Orr, Corpus area3.) xactilliate4.) MSB5.) We have Glenco Roofing, Fort Worth6.) We have Lon Smith Roofing, Austin

PLAINTIFFS,I


Hurricane IKE, Adiuster Post-Storm Orientation

Remote office location(s)• TBD

• Don Turner, Gene Latham, Bill Hooper and others TBD

Office hours8 Seven days a week until notified otherwise0 7:30 to 6:00 most days, weekends 8:00 to TBD (exceptions to be approved by

Reggie, Kevin or Bill Knarr)a Goal to get all losses received entered and assigned the sarric day, possible

TWIA Claims Handbook (revi 'd July 08 edition on the web-http:J/wwW.twia.org0St009 Password for handb Jk IREDACTED

REVIEW FOR DETAILS BEFORE H"DLING TWIA CLAIMS

Dedicated Adjusters

Issues-dedicated to TWIA, expected to fully resolve claims assigned to you

Adjusters prohibited from switching to another Ded. Adj. Firm unless permissionreceived by TWIA (Reggie Warren or Bill Knarr)

We must have your contact info, email, license #s and cell phone

Keep good records of your arrival and departure dates (principals)

Identification Access

• Texas does not have a badging system• Local officials haye authority on entering the storm area• Make sure you have appropriate ID i.e. Copy of adjuster's license, business

card, information about the company you work for

Assignments• Assigned as geographically as possible via your principal

• Handle your claims, no subcontracting out to other firms beyond your company• Watch for excluded items, such as APS, on your assignment sheets

Contact• Quickly as possible, preferably within 24 to 48 hours• Drive by, door hangers supplied to principals or at mobile office

• TDI Building Code brochures, I have supply-give to insureds at initial meeting

• Work weekends as dictated by work load

• Return your calls. Keep your appointments. Communicate!!!!

Temporary Repairs

• Upon initial contact, inform insured

• Keep receipts, take photos, make lists

• Only temporary, not permanent• You must be able to see the damage to determine causation, coverage and arnount

• If permanently covered up, submit question, ROR may be needed

Humberto guidelines, 9-15-07

PLAINTIFF'SEXHIBIT TWIA Instit 00000229,Choy'.

Advances• It is important that once liability / coverage is reasonably determined we look into

making early advances, especially for clean-up. Possibly up to 20% of the

potential loss with appropriate follow-up documentation• Email the requests to your assigned adjuster mailbox at TWIA or call if a big loss

• If over $1 OOK, some explanation for the need of an advance• Multiple advances, let us know which Item of Insurance is involved in the

advance• Who do we pay• Where do we send the check• How do we send, regular or overnight

Inspections• Prioritize by degree of damage• Review loss notice, investigate fully, consider all coverages• Full adjustments needed• Take sufficient number of photos, dwelling, building, personal property• Photos, diagrams (roof, perimeter as needed)

• Ladder rental, get permission from your principal, send invoice to TWIA separate,not part of the gross loss

• Make inspection under temporary repairs. Must confirm wind damage v.

deterioration etc.• Secure documentation, invoices, photos, estimates etc. from the insured. We want

to consider all evidence/infDrmation available to make a final determination on

the claim.

• If insured asks you to talk to their contractor, you need to do it or make a good

effort to do it, Document your file on these issues.

• Be careful in all aspects of the physical inspection especially climbing roofs, etc.

If you feel it is too dangerous to access part of a building, etc, notify your

principal supervisor and determine the best idea for inspecting and establishingthe covered loss. Supervisors at TWIA can be contacted about this issue as well

Coverage/ PoliciesDwelling, Commercial and Mobile Home policiesDirect physical loss caused solely by windstorm and/or hail

Loss from general power outage not coveredAll policies and endorsements on TWIA website httP://www.twia.org

Concurrent causation (rot, deterioration, other perils) not covered

• Commercial, no wind-driven rain -

• Dwelling wind-driven rain only with 320 endorsement

• L&.aks not covered• Important to consider if there is a "physical" loss due to windstorm

Deductibles• In most cases, each item (building, personal property, gag poles, whatever) has a

deductible shown on the assignment sheet.

• Watch commercial deductible, some by item and some by occurrence

• No need to prorate occurrence deductibles any longer

Humbtrto guidtlines, 9-15-072


Major Endorsements* 400-ACV Roof-watch for closely* 320-ALE, wind-driven rain, Consequential loss0 431 and 432, ICC (additional insurance, incurred, % of coverage per loss notice)0 164-RC for commercial (some items excluded from RC such as carpet)0 365-PP RC coverage, dwelling0 17-Business Income, Extra Expense0 280 and 282, Condo Forms

Condo Losses

• See separate paper to follow

• See Section 7 of Adjuster's Handbook• Identify the trustee or president of the association, document and work with that

individual.

• Make certain we can pay the association and the trustee on the loss instead ofincluding all the mortgagees

• Watch for duplicate coverage with unit-owners policies

Tree/Debris Removal

• Reasonable cost to remove off covered property, this means off the premises i.e.

cut up and haul tree off premises. Good needed here on expense etc.

• Not additional insurance above stated policy limit• Tree values are not covered• No lawn clean up. Can consider lawn repair if damaged in tree removal efforts.

Generators and Chain saws

• Use good judgment when making a reasonable allowance. Consideration forthese expenses incurred by the insured should be given, but specifically the

purchase of these items should have reduced the loss before considering.

• Example: If insured saves $2000 worth of food with a $600 generator, maybeallow half of the generator and let them keep it.

Reserves• Confidential to TWIA and the adjuster• Must notify us immediately if $1 0,000 paid claim Or over• Can submit in list format with Claim #s, your follow up report should document

• Email to your assigned TWIA mailbox or call TWIA if urgent

Copies of estimate (A MUST)• To insured• To agent• Do not send your reports to anyone other than TWIA unless directed by TWIA to

do so.• Do not mail estimates to insured or agent if loss is not covered

Price Guide

0 If you work in MSB IntegriClaim, and desire a download of prices, please advise

us. Call Bill Knarr at 512-637-2902.

Hurnbeft guidelines, 9-15-073


• Ernailed to principals I.last week-let us know if issues with pricing

• One guide for seaward of Intracoastal and one for inland of Intracoastal, revised in

July 08

• Guideline only, any deviations need to be explained by the adjuster

• Will advise when to change to reflect price increases, if necessary• Apply depreciation as warranted, tax on materials, oh and p (except roofs, fences,

flooring and single trades)--always consider oh and p, if questions, ask

• Use good judgment (is oh & p likely to be incurred)• Is it a complex loss requiring a general contractor to coordinate?• Flexible, changes if necessary, explain why

• No oh and p on temporary repairs or on incurred expenses of the insured i.e.

water extraction, debris removal, tree removal

Adjuster software

• MSB IntegriClaim preferred• Others accepted if all needed information is provided• Make certain your firm's name is in the letterhead of your estimates and reports

Roof tear off/depreciationa The entire process of roof replacement is depreciated, incl labor for tear off

ALE (Primary Dwellings of the insured ONLY)

• Use good judgment, especially on total losses to Primary Dwellings.• If home is unlivable due to storm surge/flooding, technically no ALE

coverage. Submit this question to TWIA.• Provide documentation including the ALE Worksheet in the adjuster's handbook

• Must have 320 Endorsement on 'a Primary Dwelling• Again, must have direct physical windstorm damage to dwelling

• Consider ALE and sensitive issues.

• We will make advances, need documentation backup, reconcile the ALE claim

• Additional insurance above policy hinit, usually 20%

Displacement Payments• If insureds were mandatorily evacuated by government order from their

Primary Dwelling due to Hurricane IKE, we will consider $100 per day up to

25 days for displacement.• Displacement payment is limited to the days the insureds are not permitted

to return to their home. FOR IKE THIS VVILL BE CONSIDERED PART

OF THE ALE CLAIM AND SHOULDBE CODED THIS WAY. Typically

no written documentation is needed for the evacuation expenses. It is

predicated on the number of days they were away front home due to the

storm and evacuation.• It is possible that when the insured returns home they will have a true ALE

claim. This should be handled on based on the language in the 320

endorsement. Incurred, reasonable, necessary increase, normal standard of

living, partially or fully unlivable.• If you adjust this portion of the claim, ok to include in the gross loss when

billing.• If we advance from office, do not include in gross loss for billing purposes.

Hurnbeno guidelines, 9-15-074


• if the insured returns home.9"d rinds no windstorm damage and we have notpaid displacement prior to your inspection, no displacement for evacuationexpenses are to be paid. We pay displacement for Primary Dwellings whereevacuation was mandatory and where it is expected there is a coveredwindstorm loss to the dwelling. We may accidentally make an advancepayment and then rind there was no damage and that is ok. But, we do notpay displacement money when it is known there is no windstorm loss.

• Commercial losses are not covered for displacement.

Replacement Cost Claims• Dwelling have RC coverage if comply with 80%

• PP has RC coverage with '365 endorsement• Commercial Bldgs and BPP have RC coverage with 164 endorsement in

compliance with 80%

• No Coinsurance penalties will be applied, unless you have a reason to do so.• Apply appropriate % of depr• Watch for non-recoverable items

• Determine holdback amounts, if applicable• Explain properly to insured. They must do the work and spend the money to

get RCC. They have to document the repairs. It is CRUCIAL that youexplain this process to the insured to reduce phone calls to Austin.

• We handle RCC claims presented by insured.

• Watch what you tell the insured about this!

Building Code0 431 and 432 endorsements, watch for need in ICC, work must be done and

expense incurred* We do not pay engineer fees for certifications of repairs0 Engineer fees for design of reconstruction will be considered, no commitments

until reviewed by TWIA

Reporting* Acknowledgment via PDF and will be dropped in file for supv to review. ID

adjuster, our claim number, insured, adjuster's phone number. Cc agent withacknowledgement that is mailed to insured.

e First report, 30 days

0 Every 30 days thereafter0 Short form, unless something unusual9 Date assignment reed, date of contact, date of inspection, who did you inspect

with* Email PDF [email protected] or each firm has its own TWIA

mailboxa Individual PDFs, no zips* If file is too large, may need to break it up in multiple PI)Fs.a Label the PDFs with correct TWIA Claim # and insured's name.

Humberto guidelines, 9-15-075

TWIA-instR-00000233

Underwriting Risk Reports• Not required on IKE claims• But, if you see a risk that you feel is underinsured, include the comment in

your adjuster report

Consequential losses0 310, 320 endorsementsa no deductible under A. 1.

a Under A. 2. of endorsement, $500 off premises, not automatic0 Personal Property deductible under A. 2.

0 Reffigerators and freezers, need some doe, lists etc.0 Not covered under the Commercial Policy unless there is physical windstorm

damage to the power, heating or cooling equipment located on the describedpremises. Must be physical damage, not surge.

Contractors9 Make sure they are aware there is a required building codea Be cautious of inflation, price gouging

0 Large losses, paid estimates if necessary (must by approved by TWIA)

o Make sure you know who you are working with0 Where are they from, local or out of state0 Knowledge of codeo Years in business, reputation

Public Adjusters

• Read about PAs on TDI website http:/1www.tdi.st9te.tx.us1

• Try to work with, but if not, calculate loss and we can pay undisputed amount• Public Adjuster has to prove loss above undisputed amount

• We need their Texas Adjuster License and contract with the insured if they wanttheir name on the checks

Mold

• Not covered• Will pay to remove mold damaged materials to get to covered loss

• No testing• No remediation• If necessary, we can write ROR

Proofs

• Waive Proofs up to $25,000 paid claim.• IA firm principals have authority up to $25,000 paid claim.

• Any potential paid claim over $25,000 must be submitted for approval.

• Provide proofs if not closed in 60 days, blank and/or filled in with your numbers

• DO NOT FORGET to do this.

WPI-8s and Building Code

• Pamphlet to insured with policy, adjusters hand out another at time of inspection

• Reemphasize to insured the importance of the building code

Humberto guiddines, 9-1 "76


0 431 and 432 ICC endonernents

0 Make sure you know who you are Working with0 Where are they from, local or out of state* Knowledge of code0 Years in business, reputation

Reservation of Rights/Non-waivers• Identify the need for-late report of claim, repairs already made, outside policy

period, loss not covered (i.e. mold)• If someone pushes mold claim

• Permanent repairs with no supporting documentation

• If insured will not sign non-waiver, go ahead and investigate. We can send RORlater. No commitments.

Engineers/Experts

• You are experts, don't always need to hire

• Contact TWIA for authority to hire engineers, experts• Watch for engineers doing 'drive by' type inspections, no detai I

• Get engineers out early• Make clear assignment to engineer. Do not direct their findings in any way.

• Don't dictate to the expert on how to word his/her report.

• Can't use the same one every time.

Business Income Losses0 Form 17

0 Must be direct physical windstorm damage to building0 No civil authority or contingent coveragea No BI for loss of power, without the direct physical windstorm damage to insured

building* Confirm loss of business income0 168 hour deductible0 Daily Tate pre-determineda Will get accountant involved on complex claims

Flood/surge vs. wind

• Position paper to TDI, pre-storm• Discuss--could be an issue with IKE.

• Flood and storm surge not covered by TWIA policy.

• ID if this is an issue and investigate thoroughly and provide report withrecommendations.

• Texas different laws, concurrent causation etc.

• Some Single Adjuster, USAA and State Farm and Farm Bureau

• Could be working with flood adjuster

• "Slab Methodology'@-if there is extensive damage from windstorm and flood

storm surge and there is an issue on segregation, contact TWIA for direction

Humberto pidefines, 9-15-077


• Segregate windstorm damage from flood damage as best you can. Hopefully,weather reports post-storm will have Windstorm v surge timelines that willhelp.

• Be sure to ID the flood carrier and adjuster and report that information toUS.

• We provided you a pamphlet at the meeting to use when investigating "slab"claims.

• Do not say we -won't pay.• Do not commit to the insured.• Gather all the info you can. Submit and we will decide theVvindstorm claim

if any.

Asbestos/Slate roofs• Pay attention to pre-loss condition, old damage and patches

• If more than 2 squares directly damaged by Dolly, allow for complete asbestosroof and depreciate accordingly

• RCC will catch actual expenditure• Will have to allow more for tear off .. see price guideline

• Plank decking should suffice for new roof if no gaps more than I inch

• Otherwise will have to fill gaps or Te-deck and felt

• Brass fasteners rusted loose• Remember, we are looking for direct windstorm damage and not maintenance or

long-term problcms• We do not cover rernediation of asbestos

Checks to insured• We issue all checks from Austin, mail directly to insured usually

• Good addresses needed• May need to send to adjusters to deliver

• Document advances with partial proofs or advance pay receipts

• Check mortgage company accuracy.... let us know the new information ifapplicable

• Recommend payees if different than what policy indicates, get documentation of

mortgagee change

Mail

• Regular• Overnight, U. S. Mail (we may have to overnight things occasionally)

Reopens and Supplements• We expect a full adjustment, reasonably thorough investigation

• Address all coverages afforded under the policy

• Make every effort to finalize and agree• Do not tell insured to simply call TWIA if they find something else. You are to

handle.• We expect you or your firm to handle reopens. No one likes reopens. Button up

these claims. Communicate. Consider all factors. Listen to insured. Make good

judgments. Document. Secure needed docs. Contact insured experts if

Humbeno guidelines, 9-15-078

TWIA-instft-00000236

necessary. May need to leave at least one experienced adjuster per firm at the

storm site to wrap tip lingering claims of other adjusters

Salvage/Subrogation• Always consider, use good judgment• Leave salvage, take credit in the adjustment when you can• Commercial losses could allow for considerable salvage recovery• If necessary, we can use USA Salvage, Tom Shore (972-243-341 1) also Lee

Shore 800-229-0578• Call us first if you feel we need to involve USA Salvage

Reinspections• Random losses will likely be reinspected by TWIA personnel or others early in

the storm• It is very important that you provide accurate information to TWIA about the loss

TWIA Fee Schedale• Revised effective 9-11-08 to clarify "no claim" and "no coverage" billing.• Added special billing for "slab" claims

Dress Code

• Be professional• Consider how you look when someone opens the door• Casual, comfortable• Do not want to make a definite code• Any complaints about the way you look, will result in a drastic dress code

Media• Do not talk to the media• Refer media inquiries to Reggie Warren• We have a media rep, Jerry Johns with SIIS in Austin. Jerry's cell number is

512-965-4001

File Audits• TDI• Date contacted, inspected, adjusted and closed documented• Document your files with narrative activity notes

Humbefto guidelines, 9-13-07 9


From: Reggie WarrenSent: Wednesday, Janum, 14, 2009To: Lopez, Ramon M,

Bill Knarr: Kevin McFarlin-1

Cc: Joe Rosentnitt: Bill Hooper-,

Rav Roe@ Don Turner@

Subject: RE: CONFIDENTIAL, TWIA Claim Issue Pricing guidelines

Ramon, ok to proceed with Xactimate although your highlights below do not support USAA doing so and I never verbally gave USAA the authority

to use Xactimate on TWTA losses.

I will advise our staff to not kick back your reports due to pricing as long as you are consistent with pricing at your end.

Please resubmit any reports that have been kicked back for pricing and make a notation of resubmission in the subject line.

This could create a problem at TWIA in the long run if it is discovered that USAA was allowed to do something different than the other 42 IA f=sused by TWIA.

Also,ltl-iilik-weshoLgdreviewtlieSAPfortliisyear(2009)eventlioughwerecentlysignedaiiewagreeli-ieiitwitl-iUSAA. Weneedtodetennineifthis program is feasible from an efficiency standpoint.

Thank you.

Reggie Warren

P. S, Joe, Arill you please advise the Fxaminers of this change via email or ask Ray to do it. 1hanks,

----- Criginal Message -----From: Lopez, Ramon M. [mailtoRarnon.Lopez(ausaa.com]Sent: Tuesday, January 13, 2009 3:12 PM

To: Reggie WarrenSubject: FW: CONFIDLNTIAL: TWIA Claim Issue

Reggie,

Here are two items based on your request for written documentation in reference to pricing guidelines.

A. 3.) Pricing guidelines (may need revisions as we go through the storm). Same as Dolly

B. Dolly correspondence statcs, "pricing guideline (scaward and inland) that we arc asking adjusters to use for TWIA losses. This is only a guideline

in an effort to achieve consistency, but can bc deviated from with appropriate explanations.

Approximately 90% of TIA71A USAA members have received compensation based on the Xactimate pricing guide, the estimates appear to be in line

@Nith TWIA expectations based on Lhis percentage of submitted claims paid. The estimates written in Xactimate/TWIA formaL are estimates only and

TWIA examiners must feel our estimates are sound based on the pay rate. I hereby requesL your consent to conLinue using our XaQtimate pricing

guide in an effort to not place further postponement on these claims. I am certain we will come to an amicable resolution as we have the same goal in

indemnifying our member- swiftly and accurately.

Kind Regards,

Ramon

PLAINTIFF'SEXHIBIT


From: Reggie Warren Jmailto:RE0GlE([email protected]: Sunday, September 14, 2008 12:48 PMTo: USAAClaimsO45, Louis Slovensky (E-mail), IvU-e Dugger (E-mail)Cc: Bill Knarr, Kevin McFarlin: Joe Rosentritt@ Ray RoeSubject: Hurricane IKE Info / SAP / TWÌA

Gentlemen, I am attaching surrie docs that I failed to send earlier. I know this is a lo[ Lo Lake in during a busy Lime@

1.) TWIA Fee Schedule with slight revision beginning 9-11-08. Deals with the billing of "no claims" and "no coverage" claims. Please review,

closely.

2.) Outline to adjusters about various issues, to be covered in the orientations when we have them (not scheduled yet).

3.) Pricing guidelines (may need revisions as we go through the storm). Same as Dolly

4.) Website wivw.tA-ia.org

Policies and Endorsements arc under "Downloads"

TIA71A Claims Handbook is under "Claims" password REDACTEJ

<<Fee Schedule 3 eff 09 1 1 091 -doc- <<adjuster meeting outline SEPT 08 I.doc>> <<Tx Coastal Repair Cost Guide.x1s July 22 08.x1s--

THE MAIN THINGS TO POINT OUT ARE THATIATE HAVE STREAMLINED THE ADJUSTER'S WORK AS FOLLOWS FOR HURRICANE

IKE CLAIMS:

1.) Waive Proofs of Loss for paid losses under $25,000.

2.) Evaluations risks are not required. We would like a comment in the adjuster's report if it appears risks are wainsurable and are way underinsured.

3) No coinsurance or replacement cost penalties are Lo be applied,

4.) We do still need diagrams of roofs and structure, along with calculations.

5) The remainder of the requirements are still in place. Please look over the outline and get a copy to your adjusters

Thanks,

Reggie

From: Reggie Warren [mailtoRFQTCTlF([email protected]]

Sent- Wednesday, July 23, 2008 11:37 AMTo: Louis Slovensky @E-mail); USAAClaisO45Cc: Bill Knarr; Kevin McFarlinSubject: Hurricane Dolly, Single Adjuster Program (SAP)

Good morning Louis and Martin,

With the potential of having flood losses, it is my request that we handle Dolly under the SAP. This means if youi insured has a flood loss and policy

with your company along with a T'WIA policy.......

you would keep and handle the TWIA loss and report to us as in the past.

We will he using our Fee Schedule 3 attached and of course you bill 95%.

Also, attached is a pricing guideline (seaward and inland) that we are asking adjusters to use forTWIA losses. This is only a guideline in an effort to

achieve consistency, but can be deviated from with appropriate explanations.


Reporting LossesYou will only need to email us a list of TWIA losses daily.

Email to Bill Knarr at bknarr(2i%1a.org

Bill's phone is 512-637-2902

We will need the TWIA policy nuniber, insured's nante, insured property location for each loss.

We will set up the file and email or fax the assignment sheet to you.

PLFASR PROWDETHE FOI,I,OWTNC, INFORMATION TO US ASAP1.) Email you wish us to use to send your assi . griment confirmation on losses2.) Fax number3.) Phvsical mailing address for Dolh

Adjuster ReportsPlease PDF your adjuster reports to TWIAadjusterrepts6@@twia.org

-Tx Coastal Repair Cost Guide.x1s July 22 08.xIs- -Fuel surcharge memo June 08.doc- -Fee Schedule 3 eff 04-01-08.doc-

Frorn@ Reggie Warren [mai1to:RFCTCTTF([email protected]

Senti Monday, January 12, 2009 10:24 AMTo: Lopez, Ramon M.Subject: RE: Pricing

Ramon, there must be some misunderstanding if you are saying that I said it is ok to use Xactimate pricing. I may have said it is ok to use Xactimatebut no Xactimate pricing. As a matter of fact, I specifically remember talking to various adjusters in Santa Fe about this very issue. The reason is

this........

we personally went through an extensive project prior to the storms to deternime fair pricing for various and many repair processes. We

came up with our own price guidelir@e for adjusters to use when handling TWIA claims. The purpose was so we could attempt to achieve consistencyin pricing because we use many lAs and they are allowed to use various software. I would not have given anyone permission to use Xactirnateprices.

Ifyou have a written directive from me or the TWIA Claims Department regarding this matter, please provide it to me. Othenvise, our position is

that we have always instructed adjusters to follow our pricing guidelines in every storm, including Dolly and Ike. There may be occasion when yourestimate with Xactimate pricing slips by an Examiner and we pay the claim. If that happens, so be it. But, if a TWIA Examiner catches this and

returns it to you or your adjuster, the estimate should be revised accordingly.

If we allow adjusters to use pricing with each software, the pricing would be very inconsistent LliroughouL the Llaims and I perceive that as a

problem. That is why we consciously we researched and prepared our own guideline.

If the adjuster needs to deviate from our guideline for good reason, that should be explained in the narrative report to I WIA

Also, I have been recently advised that you have one adjuster handle the Dwelling and another handle Personal Property on the same claim file and


send us two separate bills. This is not the way we want it. We want one report and one invoice based on the distributed fee schedules.

We cannot allow ourselves to be overly conecrnedwith what USAA does on their o,,vri claims and flood claims @,Nhcn it comes to pricing. Based onRCC statements and invoices received from man), TWIA policyholders, our pricing, especially roofing, is very close in line withwhat insureds arcactually expending on their repairs.

I am not sure why this issue is being presented to me this late in the storms, but the above stated is our position on these matters and the way it hasbeen since inception.

I am sorrv for the confusion but we at TWIA have to manage the claims process in the best possible manner for TWIA and its policyholders

Thank you.

Reggie Warren

(Reggie Warren]

----- Original Message -----From: Impez, Ramon M. [inailto:Ramon.T,oT?e7,([email protected]]

Sent: Monday, January 12, 2009 t 0: 02 AMl'o: Reggie WarrenSubJect: Pricing

Good Morning Reggie,

Please provide pricing direction to USAA and vour staff, as some TWIA staff members are not allowing USAA to use the Xactiniate price guide.USAA is writing claims for NFIP, USAA arid TWIA policies, and we undeISLOL)d Xactimate is an acceptable means to wriLe an rstimaLe for this

slonn. This agreement was provided at the TWIA town hall meeting in Santa Fe. The bulk of the USAA claims submitted have been paid based on

the Xactimate pricing guide and we would like to maintain handling to finality. Please clarify TWIA's initial agreement to utilize the Xactimate priceguide as this will expedite many claim payments.

Thank you,

Ramon Lopez

210-315-7190


From: Reggie WarrenSent: Sunday, December 14, 2008

To:Wiley LeBrun (E-mail). mlebrun'Ouhrhinc.corn;[email protected]

Cc: Bill Knarr,

Subject: All-Tecli File quality / Ile / TWIA

Wilev and Matthew.

It was brought to my attention that several of your files arc being kicked back because of poor a4justincrits. I asked one of the supervisors reviewing

your Files to give me a brief wrile tip of the issues and I lAill surninarize in bullet formal:

Estimating to replace roofss that are not a total loss from windstormPaving for roofs %vith ']tried" shingles when there is no physical damage or loss

,I;t,glingthing.sinvotirTepoTithalaTenotreprmntedinihephoto% i.e. 40@/cinfshinglesmiq,.;inghtitpholo,.;,;howno-,hinglesTnisging

No evidence to support the adjuster got on the roof Photos being taken with telephoto lenses or at least it appears that way.

Roof diagrams created from ground level measurementsInflating the RC estimate to generate a substantial fee bill

Failing to consider repair v replacementEstimating tree removalwith no documentation or photo of the tree or stump or evidence it damaged covered property

Not segrega-ing windstorm v flood/surge damage Including flood darnagc in the wind estimate.C- stimating damage for inherent defects that are not related to -,xindstorm damage

There are some mliei issues, but you stimuli geL aic point will, atis list. The last thing we waill Lo do is kick ti filu buck Lo un IA. especittily dftei the

insured's expectations have been set.

We want lo pay every cent owed under the TWTA policy cAmtrad on each claim kind it is critical that we do not overpay or pay rOT iterns not damaged

or covered

Your term has a substantial number of I-iles still open. Please improve the quality ofthe adjustments and have each file supervised by quality control

before submission to TWIA.

We arc doing our best to get claims paid and closed and if wc have to return Files, it obviously bogs down the prorcss.

Thank you for your attention to this cmail.

Reggic lv@lvxrezt

TWIA ClaimsAustin, TY

'PLAIN'nFF-S.,EXHISff TWIA Instit 00016527

From: Bill KnarrSent: -Mursday. September 25, 2008 10:24 PM

To: bicketts,a)gabrobins.com

Cc: Hart Hubbard (E-mail);

Subject: RE: Pricing

Shawn,

We are working on die revised price guide, hopefully we will distribute tom=

nrrow. I Ail] have a download available that I willsend you to -hare with=

the ackiiisters using Integra. Our efforts lo have a price guide is to hA,,,e=

consistentev among all finns and adjusters. Sheetrock is one of the items=

including interior and exterior point that all soffivare vanes greatly. W=

hat we have is higher uint cost for one line item and not the PA add ons Of=

remove and replace light switch plates, ceiling light fixtures, mask here,=

cover up here etc. We don't want diat. I want the pricing for regular it=

ems on our price guide to be the same SO Our 3UPCIV)SOTS don't have to run

to me with every file. Integn is our Software of choice. If aolustcrs wa=nt to use something else, use our prices. If they don't we get roopcncrs o-n top of reopeners when neightKirs compare tlicir estimates.

Bill

--Original Message----From: bickettsoagabrobitis.corn [niaillo:bicketts,4?gabrobins.com]Sent:'lhursday, September 25, 2008 3:40 PMTo: Bill KnorrSubject: Pricing

Bill.

At the meeting on Monday Reggie discussed the fact that the current pricinglikely would be revised due to increases Do you know if a new price guideis coming out

Secondly, nN most of the adjusters are using Xacliniste or something other

then IntegriClaim how important is it that the pricing be exactly the same.I know for shingles, decking, siding and the big items we want consistencybut what about drywall, paint and things like that. Is it going to be a

problem if adjusters use Xactimate pricing on Some of thi-stuff.

I know you arc busy and I hate to bother you but let me know your thoughtson it it you have a minute.

Thdnks

QShawn BickettCieneral Adjuster - SupervisorGAB Robins North America, Inc.8700 Commerce Park DrSuite 235

Houston TX 77036T: 713-272-3321F: 713-270-3800C: 281-384-1165

P 1k1NT1FF&:-'--

TWIA Instit 0001W2

DATE: October 11, 2008

TO: Adjusting Firms and Adjusters andTWIA Claims Staff

FROM: Reggie WarrenVice President - Claims (TWIA and TFPA)

RE: Misc. Claims Issues--Hurricane IKE

> All roofs are not total losses. We owe for direct windstorm damage. If more than 50% of the

roof is damaged and requires replacement, give consideration to the whole roof> Our pricing guideline previously submitted includes 014 & P for roofing prices. Do not allow

OH & P again at the end of your estimate, unless the repairs on the particular loss require a

General Contractor to manage.> The complete process or replacing a roof is depreciable, including tear off.> The other prices in our guideline are unit prices that include labor and material. These unit

prices are depreciated when applicable.> We do not depreciate minimum charges, debris removal, temporary cover up and other similar

items.> Depreciation is usually derived from "benerment". Is the insured considered better off with the

particular repair procedure such as a partial replacement or a repair? Maybe and maybe not.

Adjusters should use good judgment in regard to depreciation and consideration of

"betterment".> Check your loss assignment for prior losses. Identify if repairs have been made. If not, you

may need to get the information from us or the prior carrier about the prior loss, cspccially if itis a large loss with unrepaired damage. This is part of adjusting a loss.

> APS is actually part of the dwelling and the 10% is not additional insurance to the policy limit.

Your estimate should reflect this accordingly. This may make a difference if you are usingsoftware other than MSB IntegriClaim.

> "Slab" Claims with storm suEge/flood:

• "Slab" claims are where the risk is completely gone or with only pilings remaining in

the case of an elevated structure.

• There seems to be confusion as to what the adjuster is to do.

• As discussed at the orientation meetings along with emails to the firm principals, the

adjusters are basically on a fact-gathering mission on these losses.

• The adjuster is not to commit on coverage oneway or another.

• Meet with the insured at each risk. Provide them the letter, Proof and Inventory formsattached. Ask them for their help ......

photos, diagrams, anything they may have.

• Use the attached checklist to develop your investigation. Be creative to find ouL

everything you can about the risk.o Deten-nine if there are -witnesses. Interview.

Texas Windstorm Insurance Association5700 South h4oPac Expressway, Building E, Sifile 530, Austin, Texas 79749 * P.O. Box 99090, Austirk Texas 78709-9090

512-8"-4900 / Fax 512-199-4950

PLAINT


o Find out if insured evacuated. To where.o Where are they living? Get a good current mailing address of the insured.o ID the flood carrier and adjuster.

o Inter-view flood adjuster and determine their assessment of the situation. Are theypaying the flood loss and how much? Phone nurnbers, policy numbers needed.

o Plenty of photos of slab and surrounding area, other structures still standing.o How far is the risk from the Gulf or body of water where surge came from?o How high did water rise at the risk?o Elevated structure or on grade?o Go to CAD (County Appraisal District) site to see if there is information?o Determine how high the structure is above sea level if you can,o If the insured provides you with completed Proof and inventory, send in with your

report. We will respond in writing.o We do not need your reserve recommendations.o Explain to the insured that TWIA is developing all the facts via various experts

pertaining to the winds and storin surge and will deternihie what portion of the loss maybe covered under the TWIA policy.

o TWIA will communicate with the policyholder after we have the adjuster's completereport.

> Going forward, we do not need reserve reports on losses under $25,000 paid claim.> Do not report just for the sake of reporting. We need meaningful reports.> We expect the 1A firms to have QC to make sure files are handled timely and within the Texas

Insurance Code.> Half the cost of a generator can be allowed if there is ALE coverage and the use of the

generator has helped mitigate and reduce the loss.

Allow for a chain saw and some labor if the insured removed the tree/debris from the damagedinsured item. Use good judgment on what to allow and make sure it is something reasonable.

> ALE Displacement payments:a. Considered for PrimM Dwellings only.b. Must have evacuated their property and area.c. Must have filed a claim for windstorm damage to their covered property Or at least

expect they have windstorm damage.d. Can be considered when damage is known but cannot return to home due to

infi-astructurc loss (even if a "slab" claim where the investigation is not final).e. $I 00 per day up to 25 days max.f. Not necessary to document expenses for displacement.g. Should be coded ALE on payment.h. Could be a legitimate ALE claim once a4Iuster inspects and determines windstorm

damage. Then, the adjuster should handle as usual.i. Get good mailing address before issuing checkj. If no evacuation and no windstorm damage are determined, no ALE or displacement

should be paid.k. If the adjuster determines flood is the sole cause of the risk being uninhabitable, we

would not owe ALE.

Texas Windstorm Insurance ASSMiStion 25700 South MoPac Expressway, Building E, Suite 530, Austin, Texas 78749 * P.O. Box 99090, Austin, Texas 787D9-9090

512-R"-49M / Fax 512-999-4950


ho"rd Immywim AgcmyF A R M E R S 1111411 6SdnLU FM M10(409)921AM2(40f))316-14()) - MeftFax #-. (40%) I(i- 1391

October 4, 2008

Texas Windstorm lasuraixx AbsociationAttn: CallLstrophe MajuSer

FaxAl: 1-512-899-4953

Re:: Rirrivnw-. Mu- - Rmf%g Estimates

'ro Whom it May Concc in:

I hope thiS letter will gel %ontenne's, atten(ion and look at this situation carefully. In

this arca since'Hurricane Ike, there has been a shortage of roofing contramrs vW mutcriu)s.

I 0-0 )@-L- ...d q"14'r Y 'ro' . WM_-Jsn=--X Tbeflw-t@%,,-niotdi-P-bft,--rlieht!aproofandninetifnoroutoften,thavoorwiiinotposs

ILnqp6ohon uhd the inwrod doen not got their WPI-8.

Several local roofing contractors have advi%ed me they cannot put a new roof on in

this am for less than $22042251coTwlett square. M hwludes lear-off, re-roof, WPI-8,of snateriale-and-supplien have --timont 4,rahledsince Norticanc Ike. Also

rc7at t= Galtuot and Will

not deliver any Material. TIM CaTitrAC(E)T must send at least two emplaymR with a truck andLrdiler to pick up the materials and deliver to the site. This Is additional fuel and labor com

Le the coninwtor. The good rooft contractors have all the work fty can handle and arecompletinSjohq they can malke Et deccul profit. on. 71c others they put aside. FIM and

foremost I do not want my customers to receive a bad roof at a cheaper price, Pat quadiry fin

a WPI-9 and have to incur additional expenses as a result.

1 -arn U Fuvrmers A,-Lnt tnd have di!tcunnd thi3 ziwation -nth aur C"laiin: DrpartaKint,DOW.-.41CUbt RUbv".t dir. rmirnca& oxed if itlis in linc. with ourrQnt

prims and there is nO gaugjng, tricy will issue a supplement. Plea-4c have a reprMritativecantacet mo o;- conic. by my office. Lo adams% thit; problem us won as powi

Sint.wel

Trut.1; howrwow Exduuqw Firv inSUMOM Eitchbap

Mid ranwry I@i mm (Company Parma Ncw World Life lnurwt= CoRTany rarmers Group, Inc.

20uw.Jn*uI PJ*mOH:wOJ_:l W:72 NW-62-9rb

QWZ/tJo L 'WV01r: I I e POA t OnalPLAINTIFPEXHIBIT-


From: Bill KnaffSent: Tuesdav, July 29, 2008To: Ravrnond SteNvart (E-mail)

Bee: Bill Knarr;

Subject: SAMPLE OF ESTIMATE AND REPORTS IN XACTIMATE FORMAT

Ravmond,

I am not fond of Xactimate because I cadt ever tmd how much to pay. Your sample report is acceptable however.

Reggie will have a supple of the brochures at the meeting Thursday. If your adjusters have any mailings such as the estimate or proofs etc, the) can

enclose them at that time.

The answer is Yes to #1 The answer to #2 is that it includes Felt as stated on the price guide as well as drip edge, valleys, turde vents, startcr strips,

etc. Tear off is a separate item per laver. #3 They can use Xactimate prices if they are the same as our price guide. #4 no price per slate tile.

Probably fall in the minimuni charge'allowance. The last thing you mention is the hail damage. It wasn't from this storm. If there was a prior loss

unthen:sk,itwiUshowon)ouriussaissigrunentshool. LrlincknowifyouhavcfurthorquesLionstriflhtivevonrusedyou.

Thanks, Bill

----Original Message-From: Raymond Stewart [mailto:rstcMAg.'alRgcesetterclairns.comj

Sent: Monday, July 28,2008 3:14 PMTo: Bill KnarrSubject: SAMPLE OF ESTIMATE AND REPORTS IN XACTIMATE FORMATImportance: High

Bill. huro's d copy of the Sample Estimate vx put together Lhe Xactimatt users, please review dad us know if iL'S OK or of duy Lbangos you would

like made.

TDI Handout brochures - The Claims Handbook say's TWIA mails them and our adjuster verbally tell the insured's. The pre orientation letter that we

just received say's the adjuster should hand them outY We have already inspected a lot of the claims using the instruction from the Claims Handbook,

is this a problem?

Roofing

1. If the repair of a slope exceeds 50% is it acceptable to replace the entire slope on a comp. roof?

2. The roof pricing only has the replacement cost. Is tear off and felt included?

3 If tear off and felt are separate can we w; the xactimate prices,

4. Do you have pet tile price for repairs on S tile Or do we figure it to the Sq.?

Does TWIA have an opening statement they wont used on the cover page of the adjusters estimate?

I just had an adjuster tell me he seen hail damage to a roof, this is the only report I have had from any of the adjusters regarding hail damage. Who

do we call or find out if there was a prior loss on this risk?

PLM"Frs 71


Thanks

Raymond Stewart

Pacesetter Claims Services Inc.

830-305-2461

rstewartla_)pacesetteTclaims.cc)m

Rdymund Stewart

830-305-2461

rstewart&acesetterclaims.com


From: Bill KnarrSent: Tuesday, December 16, 2008

To: Bob Stump

Subject: RE: PH-RE: ROOF REPAIR

Bob.

High. We are in the 20.00 range plus steep. I guess we could consider a tetabjob at X number dollars I have never figured it that way. Too many

variables. lhis crap all started in Florida and prices for reroot'sligs are about double in Florida compared toTexas. 400.00 to 500.00 per sq. If you

have a situation that merits authority above this range, let me know and we can discuss. Thanks

Bill

--Original Message----From: Bob Stump [mailto:[email protected]: Tuesday, December 16, 2008 9:09 AMTo: Bill Knarra-: jW200240mol.cornSubject: Fw: Phil-RE: ROOF REPAIR

Bill:

1 sent you an email the other day concerning retab charges and estimated $1085 for a standard roof. A bit more on double steep and larger roofs. I ran

those numbers by several roofers- who have also worked as adjusters over the years-

Here is a response from a FloridalTexas licensed adjuster...who is also a certified roofer for residential and commercial roofs in Florida.. He confirms

the bottom line number, although he gets a bit more detailed in his approach.I f igurod. on time and material, he is suggesting a $30-S40 per SQUARE

charge for regular roofs plus the steep charge added on for tougher ones. That sounds like a reasonable approach If we are going to take the position

the tabs can be rescalodhepaired, then we need a consistent price to write up and sell to the insurcd/roofers.

I would like to send a memo to my people on S30440 per square plus steep if needed. How do these numbers sound to you and your staM

Thanks

Bob Stump

---- Original MessageFrom: phil coutuTo: Bob Stump cjw

Sent: Monday, December 15, 2008 8:13 FMSubject: Phil-RE: ROOF REPAIR

Hi Bob, regarding your hand tabbing charge, your overall total number is exactly on at S I 000.

Be careful of the hourly charges of $30.oo per general labor and Exactimate $80.oo for a roofer.

2 roofers can hand tab about 5-7 sq an hour easily on a walkable roof, 6J12 and less. cut it down 70% for a steep.Steep roof;2 guys will do 2-3 square

an hour because of safety planks orone guy holding a rope. U might want to consider $30 to $40 a square for walks and give them the steep charge

for steeps. I would do all inclusive of materials and labor. Because as a roofer, i can argue all day and justify all kinds of extra charges like material

pick-up charges, taxes, additional mm charges, safety rope harness charge as per oshalxactimatc, ladder and plank charges, hicght charges, trip

charges, difficult access and base service charges to name a few. I would do the height and steep charge as one and note it. What u. could get is the

roofer dropping u with incurred charges due to extra hours, etc. Then you are stuck reimbursing the instired, thats how i would hammer the

insurance, are they going to f ight over an extra grand? Tougher to fight over a per square all inclusive cost.

Good luck. let me know when you decide because i have a supplenint done up wiLh hand tabbing a 40 a square ready to go?

Phillip CoutuRooftop Roofing, IncI Miled States l3wqineqs Development561-541-2242

PLAIN71FFIS-1.11V


From. [email protected]: phil7Ocoutu@hotmail-comSubject: Fw: ROOF REPAIRDate: Mon, 15 Dec 2008 16:34:56 -0500

Phil:

Put on your roofer hat, what do you think of these numbers?

'Ibanks,

Bob

---- Original Mcssagc ---From: Bob StumpTo: Bill KnarrCL: john hinzSent: Monday, December 15,2008 4:34 PM

Subject: ROOF REPAIR

Bill:

PerTWIA memo received last week, we have broadcast your requirements regarding roof repairsvs. replacements to all our adjusters.

Concerning labor and material costs to reset/reseal shingles that have allegedly been wind lifted and the seals broken, our adjusters are asking what

allowances they should make for this ty.pe of repair.

I have played Nvith some numbers and figured we could allot a crew of (4) for an (8) hour day at $30 per hr. That would include all supervisory labor,

ctc. Thatcomesoutto$960. Addingon$125forroofingmaterial,tarorroofsealan@applieators,cleanup,ete,thatwouldconleto$1085,

If we are going to repair this type of damage rather Than replacing, we've got to give our adjusters some consistent numbers. The above would be for

a standard size roof, they ad@juster could allot more lits if the roof was really large.

I'm running these past some roofer contacts, but thought I'd get your input,

'Ibanks,

Bob Stamp

You live life online. go we put Windows on the web. Learn more about Windows Live


FAX

Date: October 4, 2008

Number of pages including cover sheet: I

To: From:Nelson Howard Reggie Warren

Howard Insurance Agency Vice President - Claims

Phone: Direct Phone: (512) 899-4902

Fax Phone: 409-316-1391 Fax Phone: (512) 899-4953

CC:

Re: Roofing Prices-IKE

Mr. Howard, your fax was referred to me. We addressed the increase in roofing prices this pastweek and distributed a new guideline to all adjusters handling TWIA claims. While there is

much more to pricing than saying $220-$225 per square,, our new guidelines reflects numbers in

this range when including all the add-ons you mention. There are many types of roofingmaterials out there and we have considered the majority of them in our guideline, especially the

ones that contain petroleum products. We are certainly concerned with the price gouging aspectand the possibility of "fly by night" roofers as you mention, but all we can do is allow a fair pricefor the damage covered by the policy, which is our goal to do, We are not Farmers as you know.Our efforts will be geared to allow the right amount of money from the beginning and we do note to reopen every file and pay a supplement based on a contractor that possibly overchargedI

txpV

d. Phe roper review of pricing will be considered when the insured's file their RCC claim

if withheld depreciation.

I e s a44resses some of your concerns.

512-899-4902

Texas Windstorm Insurance Association570D South MoPac Expressway, Building E, Suhc 530, Austin, Texas 78749 9 P.O. Box 99090, Austin, Texas 79709-9M

5 12-89949DO I Fax 5 12-8"4950

TIFF,.TWIA-instit-DO000287

From: Rzv Roo

Sent: Thursday, November 13, 2009Amelia Key; Bill Aslin;Bill Hooper, Bill Jones"Bill Tassin; Bob lnmn-IBob Latta; Bob Pw-rish;

Brad Short, Carl Brown.Cathy Weidner, Charlene Coker,Christina Turner, Christopher White;CoTv Kendrick- Dan McGuire-David Dicks; Dean White;Demian Kolb; Diana Ortal-

Don Fielder; Don Turner,Gene Latham-, Greg Briers-I

Helen Frank; Hugh Meloche;James McRae.@ Janie Garcia-,

Jason Garren; Jennifer Armstrong,Jerry Dickerson; Jerry Lerma,Jim Coggin-, John Hilliard;

To: John Wright; Josie Fielder:Ken Colestock, Kenneth Robbins:Kevin McFarlin, Kris Weidenfellerl-Lance Cooke-- Lou Skinner-,

Marie Merida: Michael Cortese-,

Miguel Riveros; Mike Calvin:Paula Srnith- Ralph Frank-Ray Drury: Rai, Lang'.Sam Jones-, Sam Wellman:SatoriSochanda-mandou; Shane Gulley I-

SheldonMaxwell; Sonny Jenkins;Steve Frye, Susan Herrmi;

Tamri Morgan; Terry Partlow;Thomas Christiansen; Tom Glow;Von Watson; WD Scott--

Wendy Scarborough- Wesley Wertieking;Willi,@Maygood, Wilson Dunn:Woodv McMahon

Cc: Joe Rosentriu.-

Subject: Roof Prices

There are ittinicrous questions coming in as to bids on re-roofing that are higher than the adiaster's allowances-

BCfOfCrOfVITiIIg dieni bulk totlicadjuiter inure or letis uutuntutically, check to SUO if die adj", et used dic Current pri" on hisestimate. Also check to

seeifthein-,;uredisgettinganupgrade. lfhedidusethecurrentpriceorit'anupgradeisinvolved,teiltheinsuredorcontractororagenithatouTpncesaresufficientinmostinstances"theyjusineedtosboparoundsomemorctorindaroofer,A,[email protected] iq a difference in the nurnhet of squares, or %nme tither isque that Teqiitire@ that the adjuster he involved, then doso.

Ray


From; Bill KnarrSent: Monday., August 18, 2008

To: Ravrnond Stewart

Cc: Joe Rosentrin.-Rav Roe;

Subjcct: RE: Quesbons re: Unavailable Roofing Product

Raymond,

One other firm had a similar question and it turns out theywere able to use some shingles from one of the otherroofs that was being replaced that had

major roof damage. Would this be possible" Matter of fact, the roofer that was giving them R hard time finale), admitted he had a supply of shingles

to repair. I am not read), to lay over and play dead yet. Check around the neighborhood for a possible solution. I bet not all the root's a re being

replaced. Sometimes we alloA for a small slope with a laminated shingle and then salvage the shingles that are tom off it to make repairs on the other

slopes. I don't think suhrrigation is worth pursuing.

Bill

--Origiria) Message----From: Raymond StewartSent: Monday, August 18,2008 11:27 AMTo: Bill Knarr

Cc:'Barrv Coleman'Subject: Questions re: Unavailable Rwfmg Product

Bill, we have an insured who has roof damage. The roof has a Masonite product called Woodruff shingles. They resemble a wood shingle, but they

are a hardboard material. The product is no longer available and is in a class action law suit. You M,'s mayh@ve already ran into the problem since

Ws a large subdivision in Port Isabelle. Are you ok mith us replacing the rool'since the product is no longer available?

If so can we use a 30 yew laminaw for replacement?

Also %ke wasn't sure if there could be subrogation potential due the company is in a class action law suit?

Thanks

Raymond Stewart

Pauescaur Claims Service Inc.

930-305-2461

rstewart@q@)paceselterc-laims corn

PF-1

TVVIA Instit 00014041

From: Courtney FrerichSent: Wednesdav, March 19,2008 09:06 PM

Cc: Kevin McFarlin-Gene Kounse-Alan Renshaw

Subject: TWIA Announcement

To Adjusting Finns and Adjusters:

It is an increasing concern that evaluations of risks, commercial and residential, are very inconsistent arnong the firms handling TVIIA claims.

(-ioingf-onvard,pleaseusetheMSBReplacementCostCalculatora,,,ailableontheTWIAwebsite -.Aww.txvia.org You can tinc it on the home

page, lefl column. This is the same mechanism used by the agents in establishing values of risks.

Avearorsoago,weprovidedyourfirins%@iththecapabilityofusingthecalciAator. Eachfirm,.NusissueditsoA%,nUserlDandPass%,NoTdthatc@inbeusedbyeachadjLS(CT. lfyouhavcqucsLionsaboWacecss,contactBil)KnarTat5l2-6.,7-2902orbknarr(&twia.orp,

In addition wc havc noticcJ iliat Undc-i-writing Risk Reports aic oftcu incomplete. Plcasc inak-c certain dicsc forms ai c fully witiplctcd %&ith accuratcinformation. NoteddeflCienCiCS llk%,C IWO) inCon-MI HgCS Of TOON, COTidiliOn of nx)rs and ape-s of structures,

Finally,overheadandprofitoflOandlOshouldbeaddedtotheappropriatepartsoftheestimatecumulativelv,makingthetota]21%, The"SampleFile" in the handbook unfortunately shows this mentrectiv, although in Section 7 the in%truclions are stated correctly. This has been confusing, so W's

get on the right track and be consistent

Fhank you for your attention to these important details. I trust that you Aill review this email with your adjusters and that NA e will quickly notice a

significant improvement in quality

nmnks,

Reggie Warren

UN


From: Reggie WarrenSent: Friday, June 06, 2009

To: Kevin McFarlin

Subject: RE: OH & P possible revisions

Let's discuss. A=rding to I DI, that doesn't matter........

we need to add OH & P to arrive at the appropriate repair/replaceinent cost, regardless, if a

contractor is involved.

-----Original Message----From: Kevin McFarlinSent: Friday, June 06: 2008 12:32 PMTo: Reggie WarrenSubject: RE: OH & P possible revisions

Reggie:

This looks f,.ne, but we inaY want it) stitNs trial a general cAmltaeltn is viemkd in oider it) include the O&P.

Kevin

---original Mesqage---From: Reggie Won-enSent: I'liursday, June U5, 2008 3:48 PM

fo: Kevin McFarlinSubject: 013 & P possible revisions

Kevin, let me know -whot You think. Thanks

<< File: June 08 Overhead and Profit rev doc >>

PLAI FPS'ITEY 6@',tHL

TWIA-Instit-OOOi3822

From: Joe RosentrittSent: Saturday, November 08, 2008

To: Rav Roe

Subject: FW: Over and profit

--Original Me-.;gage----From: adlusterk(-@aolzom [mailwadjusterkiiPaol.com]@q

Sent: Friday, No,@ember 07, 2008 11:21 PMTo: Joe RosentrittSubject: Over and profit

Hello,According lo the TWIA Claim Handling guidelines 0 4 P should not be applied to roofing items in most cases. However, it states the obvious that 0+ P can be added when a GC is required to oversee and -schedule, coordinate with other repairs, etc... on a roof. Lspeciallywhen roof framing,sheathing, overhang rebuilds, etc.. are involved.I do not understand how 0 + P cmi be denied on a complex nmfmg repair with d CTC 13v not adding n + 1) you dre asking the contideLor to do the

roofing portion fur free (because he will have to be involved and ooordinate and schedule with framing, etc-and will likely even be the purchaset ofroofing materials.). The homeowner, in these more complex cases, cannot be expected to hire a roofer and coordinate the roofer seperate from the

contractor.

I was hopmg ),ou could explain the times when o + p could be added, and not on cases such as the above.

lbank you!

Kevin Phillips832-483-2611

Instant access to the latest & most popular FREE games while.you browse with the Games Toolbar - Download Now'.


From: Joe RosentritlSent: Saturdav, November 08, 2008To: Ray Roe

Subject: FW.- Over and profit

----- Original Message -----From: adjusterkCa-aol.corn [maiIto:adJusterk(a--aoI.comlSent: Friday, November 07, 2008 11:21 PMTo: Joe RosentrittSubject: Over and profit

Hello.According to the TVAA Claim Handling guidelines 0 + P should not be applied to roofing items in most cases. however, it states the obvious that 0+ P can be added when a GC is required to oversee and schedule, coordinate with other repairs, etc... on a roof. Especially when roof framing,sheathing, overhang rebuilds, etc.. are involved.I do not understarW how 0 + P can be denied on a complex roofing repair with a GC. By not adding o + p you are asking the contractor to do theroofing portion for free (because he will have to be involved and coordinate and schedule with framing, etc..and will likely even be the purchaser ofroofing materials). The homeowner, in these more complex cases, carmol he expected to hire Li roofeTand coordinate the roofer seperate from the

contractor.

I was hoping you could explain the tunes when o + p could be added, and not on cases such as the aboveThank you!

Kevin ]Phillips832-483-2611

Instant access to the latest & most popular FREE games while vou browse with the Games Toolla r - Download Now!

PLAI NTIFIEXH

0000663TWIA Instit 0

Pre-Storm Dwelling/Structure Details:

Yeu built or agePurchase price and yearCondition of Dwelling/StructureRoof age and typeType of construction - ranch split level or if comm. type of businessKind of construction - frame, frame/brick veneer, concrete block,steelFloor plan, layout, dimensionsNumber of stories and heightBreak-away wall enclosures and contentsRoof type and age - (gable, hip, etc), kind (comp., metal, wood, etc.)

Exterior walls - type for each elevationInterior walls - type and finish for each roomFlooring - type and age for each roomUnique features identified by insured

Any existing damage before IkeRepairs completed from Hurricanes Rita/Humberto

ALE benefits requested? (IF APPLICABLE)Living arrangements made, cost incurred, receipts.

Do you have any other information Dr supporting documents that you cari provide us in

establishing what happened to your property and how much you claim under yourT.W.I.A. policy'?

Rev. 9/2 V2008Page 4 of 4

NTIFrsTWIA Instit 00000266

Hurricane IKE, Ad*uster Post-Storm Orientation

Remote office location(s)

• TBD

• Don Turner, Gene Latham, Dill Hooper and others T13D

Office hours0 Seven days a week until notified otherwise0 7:30 to 6:00 most days, weekends 8:00 to TBD (exceptions to be approved by

Reggie, Kevin or Bill Knaff)& Goal to get all losses received entered and assigned the same day, possible

TWIA Claims Handbook (revised July 08 edition on the web-http://www.twia.org/)Password for handbook

REVIEW FOR DETAILS BEFORE HANDLING TWIA CLAINTS

Dedicated Adjusters

• Issues-dedicated to T%9A, expected to fully resolve claims assigned lo you

• Adjusters prohibited from switching to another Ded. Adj. Firm unless permissionreceived by TWIA (Reggie Warren or Bill Knarr)

• We must have your contact info, email, license 4s and cell phone

• Keep good records of your arrival and departure dates (principals)

Identification Access

• Texas does not have a badging system

• Local officials have authority on entering the storm area

• Make sure you have appropriate ID i.e. Copy of adjuster's license, businesscard, information about the company you work for

Assignments• Assigned as geographically as possible via your principal

• Handle your claims, no subcontracting out to other firms beyond your company

• Watch for excluded items, such as APS, on your assignment sheets

Contact

• Quickly as possible, preferably within 24 to 48 hours

• Drive by, dooT hangers supplied to principals or at mobile office

• TDI Building Code brochures, I have supply-give to insureds at initial meeting

• Work weekends as dictated by work load

• Return your calls. Keep your appointments, Communicate!!!!

Temporary Repairs

• Upon initial contact, inform insured

• Keep receipts, take photos, make lists

• Only temporary, not permanent• You must be able to see the damage to determine causation, coverage and amount• If permanently covered up, submit question, ROR may be needed

Humberto guidtlineg. 9.15-07

PLAINTIFFS


Advances

• It is important that once liability / coverage is reasonably determined we look intomaking early advances, especially for clean-up. Possibly up to 20% of thepotential loss with appropriate follow-up documentation

• Email the requests to your assigned adjuster mailbox at TAIVIA or call if a big loss

• If over $I OOK, some explanation for the need of an advance• Multiple advances, let us know which Item of Insurance is involved in the

advance• Who do we pay• Where do we send the check• How do we send, regular or overnight

Inspections• Prioritize by degree of damage• Review loss notice, investigate fully, consider all coverages

• Full adjustments needed

• Take sufficient number of photos, dwelling, building, personal property

• Photos. diagrams (root perimeter as needed)

• Ladder rental, get permission from your principal, send invoice to TVIA separate,

not part of the gross loss

• Make inspection under temporary repairs. Must confirm wind damage v.

deterioration etc.• Secure documentation, invoices, photos, estimates etc. ftom the insured. We want

to consider all evidence/information available to make a final determination on

the claim.

• If insured asks you to talk to their contractor, you need to do it or make a goodeffort to do it. Document your file on these issues.

• Be careful in all aspects of the physical inspection especially climbing roofs, etc.If you feel it is too dangerous to access part of a building, etc, notify yourprincipal supervisor and determine the best idea for inspecting and establishingthe covered loss. Supervisors at TWIA can be contacted about this issue as well

Coverage/ PO] iCies

• Dwelling, Commercial and Mobile Home policies

• Direct physical loss caused solely by windstorm and/or hall

• Loss from general power outage not covered

• All policies and endorsements on TWIA website http:1J*ww.twi9.ork

• Concurrent causation (rot, deterioration., other perils) not covered

• Commercial, no wind-driven rain

• Dwelling wind-drlvcn rain only with 320 endorsement

• Leaks not covered

• Important to consider if there is a "physical" loss due to windstorm

Deductibles• In most cases, each item (building, personal property, flag poles, whatever) has a

deductible shown on the assignment sheet.

• Watch commercial deductible, some by item and some by occurrence

Humberto guidelines, 9-15 -07 2


a No need to prorate occurrence deductibles any longer

Major Endorsements* 400-ACV Roof-watch for closely* 320-ALE. wind-driven rain, consequential loss

* 431 and 432, ICC (additional insurance, incurred, % of coverage per loss notice)

* 164-RC for commercial (some items excluded from RC such as carpet)

* 365-PP RC coverage, dwelling* 17-Business Income, Extra Expense* 280 and 282, Condo Forms

Condo Losses• See separate paper to follow

• See Section 7 of Adjuster's Handbook• Identify the trustee or president of the association, document and work with that

individual.

• Make certain we can pay the association and the trustee on the loss instead ofincluding all the mortgagees

• Watch for duplicate coverage with unit-owners policies

Tree/Debris Removal

• Reasonable cost to remove off covered property, this means off the premises i.e.

cut up and haul tree off premises. Good judgment needed here on expense etc.

• Not additional insurance above stated policy limit

• Tree values are not covered• No lawn clean up. Can consider lawn repair if damaged in tree removal efforts.

Generators and Chain saws• Use good iudgment when making a reasonable allowance. Consideration for

these expenses incurred by the insured should be given, but specifically the

purchase of these items should haic reduced the loss before considering,

• Example: If insured saves $2000 worth of food with a $600 generator, maybeallow half of the generator and let them keep it.

Reserves• Confidential to TWIA and the adjuster• Must notify us immediately if $ 1 0,000 paid claim or over

• Can submit in list format with Claim Os, your follow up report should document

• Email to your assigned TWIA mailbox or call TWIA if urgent

Copies of estimate (A MUST)• To insured

• To agent• Do not send your reports to anyone other than TWIA unless directed by TWIA to

do so.

• Do not malI estimates to insured or agent if loss is not covered

Humboto guidelinci, 9-15-07 3


Price Guide

• If you work in MSB IntegriClaim and desire a download of prices, please advise

us. Call Bill Knarr at 512-637-2902.

• Emailed to principals last week-let us know if issues with pricing

• One guide for seaward of Intracoastal and one for inland of Intracoastal, revised in

July 08

• Guideline only, any deviations need to be explained by the adjuster

• Will advise when to change to reflect price increases, if necessary• Apply depreciation as warranted, tax on materials, oh and p (except roofs, fences,

flooring and single trades@-always consider oh and p, if questions, ask

• Use good 'udgment (is oh & p likely to be incurred)

• Is it a complex loss requiring a general contractor to coordinate?

• Flexible, changes if necessary, explain why

• No oh and p on temporary repairs or on incurred expenses of the insured i.e.

water extraction, debris removal, tree removal

Adjuster software

• MSB IntegriClaim preferred

• Others accepted if all needed information is provided

• Make certain your firm's name is in the letterhead of your estimates and reports

Roof tear off/depreciationa The entire process of roof replacement is depreciated, incl labor for tear off

ALE (Primary Dwellings of the insured ONLY)

• Use good judgment, especially on total losses to Primary Dwellings.• If home is unlivable due to storm surgelflooding, technically no A-LE

coverage. Submit this question to TWIA.• Provide documentation including the ALE Worksheet in the adjuster's handbook

• Must have 320 Endorsement on a PrimarI y Dwelling

• Again, must have direct physical windstorm damage to dwelling

• Consider ALE and sensitive issues.

• We vAll make advances, need documentation backup, reconcile the ALE claim

• Additional insurance above policy limit, usually 20%

Displacement Payments• If insureds were mandatorilly evacuated by government order from their

Primary Dwelling due to Hurricane IKE, we will consider S100 per day up to25 days for displacement.

• Displacement payment is limited to the days the insureds are not permittedto return to their home. FOR IKE THIS WILL BE CONSIDERED PARTOF THE ALE CLAIM AND SHOULD BE CODED TMS WAY. Typicallyno written documentation is needed for the evacuation expenses. It is

predicated on the number of days they were away from home due to the

storm and evacuation.• It is possible that when the insured returns home they will have a true ALE

claim. This should be handled on based on the language in the 320

Humbato guidelines, 9-1 M7 4


endorsement. Incurred, reasonable, necessary increase, normal standard of

living, partially or fully unlivable.• If you adjust this portion of the claim, ok to include in the gross loss when

billing.• If we advance from office, do not include in gro-vs loss for billing purposes.• If the insured returns home and finds no windstorm damage and we have not

paid displacement prior to your inspection, no displacement for evacuation

expenses are to be paid. We pay displacement for Primary Dwellings where

evacuation was mandatory and where it is expected there is a covered

windstorm loss to the dwelling. We may accidentally make in advance

payment and then find there was no damage and that is ok. But, we do not

pay displacement money when it is known there is no windstorm loss.

• Commercial losses are not covered for displacement.

Replacement Cost Claims

• Dwelling have RC coverage if comply *with 80%

• PP has RC coverage with 365 endorsement• Commercial Bldgs and BPP have RC coverage with 164 endorsement in

compliance with 80%

• No Coinsurance penalties will be applied, unless you have a reason to do so.

• Apply appropriate % of depr• Watch for non-recoverable items• Determine holdback amounts, if applicable

• Explain property to insured. They must do the work and spend the money to

get RCC. They have to document the repairs. It is CRUCIAL that youexplain this process to the insured to reduce phone calls to Austin.

• We handle RCC claims presented by insured.

• Watch what you tell the insured about this!

Building Code0 431 and 432 endorsements, watch for need in ICC, work must be done and

expense incurreda We do not pay engineer fees fbr certifications of repairs

9 Engineer fees for design of reconstruction %%III be considered, no commitments

until reviewed by TWIA

Reporting9 Acknowledgment via PDF and will be dropped in file for supv to review. ID

adjusters our claim number, insured, a4justers phone number. Cc agent with

acknowledgement that is mailed to insured.

9 First report, 30 days9 Every 30 days thereafter

* Short form, unless something unusual

* Date assignment recd, date of contact, date of inspection, who did you inspect

with9 Email PDF TWIAadjusterrepts(@,twin.org or each firm has its own TWIA

mailbox9 Individual PDFs, no zips

Humberto guidelines. 9-1 M7 5


• If file is too large, may need to break it up in multiple PDFs.• Label the PDFs with correct TWIA Claim # and insured's name.

Underwriting Risk Reports

• Not required on IKE claims• But,ifyouseeniiskthatyoufeelisunderinsured,includethecommentin

your adjuster report.

Consequential losses0 310, 320 endorsements* no deductible under A. 1.

& Under -k 2. of endorsement, $500 off premises, not automatic9 Personal Property deductible under,6L2.* Refrigerators and freezers, need some doc, lists etc.a Not covered under the Commercial Policy unless there is physical windstorm

damage to the power, beating or cooling equipment located on the describedpremises. Must be physical damage, not surge.

Contractors• Make sure they are aware there is a required building code

• Be cautious of inflation, price gouging• Large losses, paid estimates if necessary (must by approved by TWIA)

• Make sure you know who you are working with

• Where are they from, local or out of state

• Knowledge of code• Years in business, reputafion

Public Adjusters

• Read about PAs on TDI website http://www.tdi.state.txus/• Trv to work with, but if not, calculate loss and we can pay undisputed amount

• Public Adjuster has to prove loss above undisputed amount

• We need their Texas Adjuster License and contract with the insured if they wanttheir name on the checks

Mold• Not covered

• Will pay to remove mold damaged materials to get to covered loss

• No tesfing

• No remediation• If necessary, we can write ROR

Proofs

• Waive Proofs tip to $25,000 paid claim.• 1A firm principals have authority up to $25,000 paid claim.

Humberto guidelines, 9-15 -0 7 6


Any potential paid claim over $25,000 must be submitted for approval.

Provideproofsifnotclosedin6Odays,blankand/orfilledinwithyournumbersDO NOT FORGET to do this.

WPI-8s and Building Codea Pamphlet to insured with policy, adjusters hand out another at time of inspection0 Reemphasize to 'insured the importance of the building code

0 431 and 432 ICC endorsements

0 Make sure you know who you are working with

* Where are they from, local or out of state0 Knowledge of code0 Years in business, reputation

Reservation of RightsiNon-waivers• Identifv the need for-late report of claim, repairs already made, outside policy

period, loss not- covered (i.e. mold)

• If someone pushes mold claim

• Permanent repairs with no supporting documentation

• If insured will not sign non-waiver, go ahead and investigate. We can send RORlater. No commitments.

Engineers/Experts

• You are experts, don't always need to hire

• Contact TWI A for authority to hire engineers, experts• Watch for engineers doing 'drive by' type inspections, no detail

• Get engineers out early

• Make clear assignment to engineer. Do not direct their findings in any way.

• Don't dictate to the expert on how to word his/her report.

• Can't use the same one every time,

Business Income LossesForm 17

Must be direct physical windstorm damage to building

No civil authority or contingent coverageNo BI for loss of power, without the direct physical mindstorm damage to insuredbuildingConfirm loss of business income168 hour deductibleDaily rate pre-determinedWill get accountant involved on complex claims

Flood/surge v s. Min d

• Posit-ion paper to TDI, pre-storm• Discuss--could be an issue with IK.E@

Humberto guicielines, 9.15-07 7


• Flood and storm surge not covered by TWIA policy.

• ID if this is an issue and investigate thoroughly and provide report withrecommendations.

• Texas different laws, concurrent causation etc.• Some Single Adjuster, USA.A and State Farm and Farm Bureau• Could be working with flood adjuster

• "Slab Methodology"-If there is extensive damage from windstorm and flood

storm surge and there is an issue on segregation, contact TWIA for direction

• Segregate windstorm damage from flood damage as best you can. Hoperully,weather reports post-storm will have windstorm v surge timelines that will

help.• Be sure to ID the flood carrier and adjuster and report that information to

US.

• We provided you a pamphlet at the meeting to usewhen investigating "slab"claims.

• Do not say we won't pay.• Do not commit to the insured.• Gather all the info you can. Submit and we will decide the windstorm claim

if any.

Asbestos/Slate roofs

• Pay attention to pre-loss condition, old damage and patches• If more than 2 squares directly damaged by Dolly, allow for complete asbestos

roof and depreciate accordingly

• RCC will catch actual expenditure• Will have to allow more for tear off.. see price guideline

• Plank decking should suffice for new roof if no gaps more than I inch

• Otherwise will have to fill gaps or re-deck and felt

• Brass fasteners rusted loose

• Remember, we are looking for direct windstorm damage and not maintenance Or

long-term problems

• We do not cover remediation of asbestos

Checks to insured

• We issue all checks from Austin, mail directly to insured usually• Good addresses needed

• May need to send to adjusters to deliveris Docurnent advances with paAlal proofs or advance pay receipts

• Check mortgage company accuracy ....let us know the new information if

applicable

• Recommend payees if different than what policy indicates, get documentation ofmortgagee change

Mail

• Regular

• Overnight, U. S. Mail (we may have to overnight things occasionally)

Reopens and Supplements

Humberto guidelines, 9-15-07 8


• We expect a full adjustment, reasonably thorough investigation

• Address all coverages affOTded under the policy

• Make every effort to Finalize and agree

• Do not tell insured to simply call TWIA if they find something else. You are to

handle.

• We expect you or your firm to handle reopens. No one likes reopens. Button up

these claims. Communicate. Consider all factors. Listen to insured, Make good

judgments. Document. Secure needed docs. Contact insured experts if

necessary. May need to leave at least one experienced adjuster per firm at the

storm site to wrap up lingering claims of other adjusters

Salvage/Subrogation• Always consider, use good judgment• Leave salvage, take credit in the adjustment when you can• Commercial losses could allow for considerable salvage recovery• If necessary, we can use USA Salvage, Tom Shore (972-243-341 1) also Lee

Shore 800-229-0578

• Call us first if you feel we need to involve USA Salvage

Reinspections• Random losses will likely be reinspected by TWIA personnel or others early in

the storm• It is very important that you provide accurate information to TWIA about the loss

TWIA Fee Schedule9 Revised effective 9-11-08 to clarify "no claim" and "no coverage" billing.9 Added special billing for "slab" claims

Dress Code• Be professional

• Consider how you look when someone opens the door

• Casual. comfortable

• Do not want to make a definite code• Any complaints about the way you look, will result in a drastic dress code

Media• Do not talk to the media

• Refer media inquiries to Reggie Warren• We have a media rep, Jerry Johns with SUS in Austin. Jeny's cell number is

512-965-4001

File Audits• TDI

• Date contacted, inspected, adjusted and closed documented

• Documentyourfiles%vithnartativeactivitynotes

Humbefto guidefiric%, 9-15-07 9


Overhead and Pi-ofit (OII & P):

OH & P should be considers on each estimate you write on a dwelling or b 'Id'I I w ingstructure for TWIA. To determine the true repair/replacement figure, OH & P must be

added where appropriate. This is the only way to establish the correct actual cash value

(ACV) loss because ACV is defined as 'mplacerticni cost less dcprcciation @.

OH & P should be added as separate line items at the bottom of your estimate and should

be figured cumulatively which means IO% overhead and I 01/6 profit which computes to

21 % overall. See sample claim rile in this handbook.

Some items such as:-roofing-fencing-flooring-temporary repairs-tree removal/debris removal

-water extracfion-possibly other items

are normally handled by a specialty or subcontractor. If this is the case, the subcontractor

will figure OH & P in his/her estimatelinvoice which means that you should not add it

again at the bottom of your estimate, in most cases. These would typically be "lump

sum" type bids or invoices that already include OH & P for the subcontractor. Most

adjusting software programs give you the ability to omit OH & P on certain line items ofthe estimate when appropriate. This should be shown an the estimate.

If it is necessary for a general contractor to be involved to coordinate all trades necessary

to make repairs, then it may be necessary to add OH & P to the above listed items at the

bottom of your estimate, especially if there are multiple additional trades (Le. painting,

sheetrock, carpentry, plumbing etc.) involved. If you do this, please explain why in your

report to TWIA.

OH & P is considered pan of the Tepair/replacement cost and is depreciable.

Our goal is to allow the appropriate amount of OH & P to all claims, but not to add it in

twice unnecessarily.


From: Reggie WarrenSent: Saturday, November 29, 2008

James Harp: Mark Chancellor;MikeGuidry; Randy- Stone,Rav Sims- Sandy BootheWilliams

@ritton- Michael'Boyer;

Alan Renshaw; Amelia Key-,Bill Astin, Bill Hooper,Bill Jones; Bill Knarr;Bill Tassin; Bob Inmon,Bob Latta; Bob Parrish;Brad Short-, Carl Bro%knI-

Cathy Weidner-, Charlene Coker;Charlotte Phifer; Christina Turner,Christopher White, Cory Kendrick;Dan McGuire; David Dicks;Dean While; Dernian Kolb,,

Diana Orta; Don Fielder;Don Turner-. Eric Turner;Gene Latham-, Gilda Downev.Greg Briers: Helen Frank;Hugh Melochel James McRae-,

To: Janie Garcia; Jason Garrett;Jennifer Armstrong.- JerryDickerson.-Jerry Lerma; Jim Coggin,Joe Rosentritt; John Hilliard:John Jenkins-, John Wright;Josie Fielder; Ken Cannon,Ken Colestock, Kenneth Robbins;

' denfeller,Kevin McFarlin; Kris WeiLance Cooke- Lou Skinner;Marie Merida: Marshall Clark:Michael Cortese-, Miguel Riveros,Mike Calvin; Paula Smith;Ralph Frank; Ray Drury;Rav Lang- Ray Roe;ReggieWaffen; Richard White-Sam Jones: Sam Wellman-,

Satori Sochandamandou; Shane GulleN;Sheldon Maxwell-, Sonnv Jenkins,Steve Frve- Susan Herrin,Tamri Morgan; Terry Partlow;Thomas Christiansen; Tom:

Cc: Reggie Warren-,

Subject: Depreciation Holdback UPDATE

Beginning iininediattly, plewse do not hold back rucovcrdble doprmidtion less thdn $3,000 unless there is justification to do so.

This is for any loss.....

Dolly. Ike or wrinal.

Thanks.


Kevin McFarlin

rorn: Ray Roeant: Tuesday, December 09, 2008 2:08 PM

ro: Amelia Key-, Bill Astin; Bill Hooper; Bill Jones; Bill Tessin; Bob Inmon; Bob Latta; Bob Parrish;Brad Short-, Carl Brown; Cathy Weidner, Charlene Coker, Charlotte Phifer: Christina Turner,Christopher White; Cory Kendrick; Dan McGuire; David Dicks; Dean White; Demlan Kolb,

Diana Orta; Don Fielder-, Don Turner; Gene Latham; Glide Downey- Greg Briers: Helen Frank-Hugh Meioche; James Harp; James McRae; Janie Garcia; Jason Garrett; Jennifer Armstrong;Jerry Dickerson; Jerry Lerma; Jim Coggin; John Hilliard; John Wright; Josie Fielder; Ken

Colestock; Kenneth Robbins; Kevin McFarlin: Kris Weidenfeller, Lance Cooke; Lou Skinner,Marie Merida; Mark Chancellor; Marshall Clack-, Mellissa Richardson; Michael Boyer-, MichaelCortese; Miguel Riveros; Mike Calvin; Mike Guidry; Paula Smith; Ralph Frank; Randy Stone;Ray Drury; Ray Lang- Ray Sims; Rhonda Cole; Richard White; Roger Christie; Sam Jones;Sam Wellman; Sandy Boothe; Satorl Sochandamandou; Sheldon Maxwell; Sonny Jenkins;Steve Frye; Tamd Morgan; Terry Partlow; Thomas Christiansen; Tom Holbrook; VernonCooper', Von Watson- WD Scott Wendy Scarborough; Wesley Werneking: William Britton-William Haygood;

Wiis@n Dunn-,'Woody McMahonCc: Joe Rosentiritt

Subject: File Ownership

A couple of things:With the exception of the slab group, we do not own files.If you get a telephone call with an inquiry on a particular file, other than a slab claim, it

is your call to handle. There will be few exceptions to this. There are a few files wherepeople have claimed ownership for some reason and in that case, you should forward

le call to the file owner. In all other cases I can think of, when the call comes to you,it is yours to handle.

Also, there is no need to discuss our rules outside the building. The fact that we no

longer opt to hold back depreciation when the amount is $3,000 or less is notsomething to discuss with insureds or even adjusters. The next thing that happensafter that word spreads is that insureds will be calling in wanting their depreciationamounts released prematurely.

Ray

PMNTI-FFSTWIA Instit 00000428

January 14, 2009

RCC Processing-TWIA

This is a directive of how TWIA wants RCC claims handled. There could becircumstances with RCC claims not considered in this document, so if you have aquestion see a Supervisor.

We process most all RCC. claims without the adjuster becoming involved. When theACV payment is issued and we have withheld depreciation, we send a document to theinsured with instructions on how to file their RCC claim. Many times this document goesunread.

Basically, we ask the insured to provide us with documentation that repairs have beencompleted. This can include paid invoices, cancelled checks, photos and any otherdocument or information that supports repairs were done.

Once this information is received, we convert to a PDF and it is referred to an Examiner

to handle and pay if appropriate. This information should be dropped into the electronicclaim file.

"le the policies say repairs must the "completed" before RCC can be collected, it is

our decision that we ran pay RCC claims on a piecemeal basis with the appropriatedocumentation. In other words, if the insured has multiple trades to contend with on therepairs and they have the roof replaced first and prior to completing the other repairs, we

can pay the roof holdback only. The insured can then follow-up to collect any other

depreciation available in RCC reserves.

The insured technically has 365 days from the date of loss to complete repairs in order to

recover depreciation. They can receive a 180-day extension if requested in writing.

Normally, we allow the full time period, which is about a year and a half or 545 days.

After a cat event, there could be the possibility of extending the 545 days for variousvalid reasons.

Commercial policies with the 164 RC Endorsement have two(2) years from the date ofloss to complete repairs.

Receiving a WPI-8 certificate is not sufficient enough evidence to support paying the

RCC. We need documentation of incurred costs. We are not required to have the

WPI-8(s) Rrior to makiLig a RQC yMMent.

FuH RCC Payment (letter to insured with ipayment not needed)

Much of the time, documentation received includes only the repair invoice for the full

repairs and is either equal to or greater than the adjuster's gross estimate. In these

Jun 14, 2009, RCC promsing I

PLAINn F?&@"`FTWIA Instit 00000376EXHIBIT-@---'

situations, if everything appears in Order, it is appropriate to pay the full amount of

recoverable depreciation and close the file. There is no need to send a letter with the

estimate, just make some "Comments" on the check to support what you are paying and

document the claim file.

If you have questions or concerns about the documentation, it is acceptable to contact the

insured for clarification oi maybe even the contractor that performed the repairs. If you

still have questions, you can consider having the adjuster make an inspection of the

repairs.Partial or No RCC Payment (letter of explanation to insured needed)

There are occasions when the insured completes the repairs and provides invoices that are

less than the gross amount of the adjuster's estimate. This means that the full amount of

withheld depreciation is not owed. We have a letter in Notus that you can use to explain

to the insured why they did not receive full payment. This letter should go with the

additional check if there in fact is an additional payment. It could be that their invoices

do not justify any additional payment and, if so, we send the letter explaining why. You

are not required to use this letter in Notus verbatim ......you can amend it to fit the

situation.

Piecemeal RCC Payment

If we receive documentation about repairs to one or maybe two items on the estimate and

the insured is requesting RCC, we can consider and pay if appropriate. You would need

to compare the invoices and documentation to the adjuster's estimate to deten-nine the

amount owed per trade item. Many software products provide a Trade Summary as to the

exact amount of depreciation withheld on each trade item. If you do not pay the full

amount of RCC per the trade item, a letter needs to be sent to the insured explaining how

you aff ived at full payment, partial payment or no payment. The RCC letter in Notus

s not aDD You may be able to amend the letter and make it work,

but if not, send youT own simple letter of explanation with the check if payment is made.

If there is not a Trade Summary, you may have to refer to the line items on the estimate

to determine how much depreciation is owed. We would only owe up to the amount

allowed in the adjuster's estimate. We do not allow for the amount actually expended

unless the insured first contacted us for approval to exceed the adjuster's estimate. If you

feel it is appropriate to deviate from this instruction, please contact a TWIA Claims

Supervisor foT authority.

In other words, if the insured spends more than allowed for a trade item on the adjuster's

estimate, we would only pay the depreciation based on the A uster's estimate. If the

insured spent less, the amount of depreciation paid would be reduced by the difference in

the invoice and the adjuster's allowance. There are at least a couple of ways to determine

the amount owed but they usually come up with the same amount owed.

Jan 14,2009, RCC proettdog2

TWIA-insfit-00000377

Invoice $10,600Less depress_ 1,000L)ifference 600

Pay full depreciation withheld of $1,000 since the invoice is equal to or greater than the

amount allowed on the roof

MuLt.ration #.4-Roof est $10,000

Deprec 1,000ACV $ 9,000

Invoice S 9,400Less ACV 9,000Difference $ 400

Pay $400 RCC since insured spent $600 less than allowed on the roof.

Finally, if you are working in a file that is in RCC status or has a RCC reserve, do notarbitrarily pay the RCC when it is less than the $3,000 holdback threshold. Leave the

reserve and let it be processed if and when appropriate documentation is received and

policy conditions have been met. If you feel the RCC should be paid in these situations,

please see a Supervisor for approval.

ha 14,2009, RCC promsing 4


From: Bill KnarrSent: Monday. November 17, 2008To: Ron Garrison

Subject: RE: Roof Help

----L)riginal Message----From: Ron Garrison Imailtc,:rqnR'a)catcsi.comJ

Sent: Monday, November 17, 2(X)S 1:08 PMTo: Bill Knart,-;iibjcct: Roof Help

Bill,

I I heard Gene Koimse is not with us anymore. Who do you recommend I contrict for any questions or issues we may rtin into. I don't want to bother

you all the time.[Bill Knarr] me or Reggie Yes Uene is gone and had surgery on his neck. He is doing some review work for an IA at home.

2, Bill I just had a Roof-ing Contract call and wanted to replace a roof due to Lifted Shingles. The shingles have debris under them and he states they

will not scal down. He says they cover 75% of the roof. [Bill Knarr] those shingles had debris under them on Labor Day and the Fourth of July.

We paid a Minimum Charge due Lo a few missing shingles. [Bill Knarr] Probably the right call. Ir roofer gets pushy, tell them to get a caulk gun With

some roofing stickurn in it and go along all the lifted shingles and restick them and they will stav stuck til the end of their life TWIA does not

a lifted shingle direct damage firomwindqtorm. We can remember several ye s back, the 2354 3 tab shingle that had no sea] down and tbeyconidi atnapped in The A%ind like a hirds wings and then they cnrne oul with the 2404 1-1 shingle, which was the same qhinLyle,jiuzi had seal ClOwn Material on

die backing.

He also states he would like a reinspection., since he has had at least 5 roofs overturned and paid for by TWIA due to Lifted Shingles.[Bill Knarr] I

would ask for names and claim numbers. I would be interested to know. Don't believe it is true. I don't see everything. but I hope our message is

c1carwith our supervisors.

We just need to kno%& if your stance on Lifted Shingles has changed or riot. [Bill Knarr] No change

We are willing to serve in an), way,

RonGaTrison

CS1 Supervisor

'AIN71FPSPL


From: Tony L. EllisSent: Wednesday, December 10, 2008

To: Bill Knarr

Joe Rosentritt, Reggie Warren;Cc: Kevin McFarlin, Bill Hooper'.

Ray Roe, Woodv McMahon.

Subject: RE'. Roof issue -Aind lift

Bill:

I totally agree with you. We have also suggested Your solution to our field people.

I just wanted Your take.

Thanks for the prompt and detailed reply - and I hope you guys art doing well.

Regards,

l'ony

From: Bill Kivu [Msi1tcrbknqrr-a TIAIIA.ORG-j

Sent: Wednesday, December 10, 2008 3:23 PM

To: Tony Ellis (E-mail)Cc: Joe Rosentritt, Reggie Warren: Kevin McFarfin: Bill Hooper: Ray Roe-, Woody McMahon

Subject: FW: Roof issue - wind lift

Tony

Joe gave me your quesLion it) answer. We don't put any credence in Lhm two page driveby engineer repurtb. If we paid the claim because of lifted

shingles, I didn't know about it and it should not have been done. You understand our Position. If the shingle is not damaged and it doesn't adhere

anylongerhecaiL-edebTi-isiinderilprobablywaqthalwaviongbeforeTke. Solution, ifptL-hedbythein@,@tiredtopayforanewroofbecaiL%enfthfltc,ondition,x%eN,villpayloptitadabofmastict)TtarU-cmatenalimderthelabsthatareiooseandiheyNvilislavadheredforlherestoftheirlife ltwe

paid for new roofs because ofloose shingles we would buy every roof that had a claim. Roofs in Austin,'l X, have lifted or loose shingles with debris

under them.

Bill

----- Origiiial mcswe -----From: Tony L. Ellis [iiiDit@otellisla-Ae @acvcla@:nisnetSent: Wednesdav, December 10, 2008 2:02 FIM

To: Joe RosentrittSubject! Roofissuc -mind bll


From: Rav Roo

Sent: Thursday. December 11, 2008Amelia Key-. Bill Aslin;Bill Hooper. Bill Jones"Bill Tassin; Bob Inmon;Bob Latta, Bob Parrish;Brad Short; Carl BroiwCadi), Weidner, Charlene Coker,Charlotte Phifer; Christina Turner,Christopher White-, Clky Tinnell;Corv Kendrick; Dan McGuire;David Dicks-, Dean White;Demian Kolb- Diana Ortal-

Don Fielder, Don Turner.Gene Latham; Gilda Dovvnev:

Gradv McClure; Greg Briers"Helen Frank; Hugh Meloche;James Harp. James McRae;Janie Garcia; Jason Garrett;Jean Burke; Jennifer Armstrong"JeM, Dickerson; Jerry Lerma;Jim Coggin-, Jim Harman,

To: John Hilliard; John Wright;Josie Fielder, Judi Rosenblat.-Ken Colestock; Kenneth Robbins;Kevin McFarlin.- Kris Weidenfeller.-Lance Cooke; Lillian Saldivar;Linda Jones; Lou Skinner;Marie Avalon-, Marie Merida;Mark Chancellor; Marshall Clack-,

Melissa Richardson- Michael Boyer;Michael Cortese; Miguel Riveros;Mike Calvin. Mike Elvington;Mike Guldrv; Mike Jav;Pam Bo,%ve; Paula Smith;Ralph Frank- Randy Stone;Rav Drurv. Rav Lang'.Rav sims@ Rhonda Cole.Richard White; Rick Olivere;Robert Campbell-. Roger Ball.-

Roger Christie; Sam Jones"Sam Wellman; Sandy Boothe.Satori Sochandamandou; Se;

Cc: Bill Knarr;Joe Rosentrilt;Alan Renshaw;

Subject: Lifted Tabs

What follolAs is an excerpt from a recent email in response to a question posed to Reggie Warren. It deals %xith this subject that has been much

discussed lately. I believe this furflier asserts the company position regal dilig this subject.

Ray

ISiihject: RF Rwf-There must be physical windstorm damage. Loose shingles in place are not necessarily Windstorm damaged. Our opinion is that the shingle must be

blo,%Nm off or if it is blo"m back, that it causes some damage to the shingles, usually a visible crease in the top ofthe shingle. Our investigation reveals

PLAIPMFFSTWIA Instit 00016500

many shingles are not sealed prior to the storm Shingles used to be mant"etured without the sealant. The sealant is not necessary for the rooftorepel water. There are many adjusters out there taking their hand and raising up shingles and taking a picture. When we Bel the report, x%.e can see no

%kindstorm damage but the adjuster has figured to replace the roof. This all being mid, good judgment is needed from the a4justcT but we need

evidence of direct (means it happened during the storm), physical (means you can see the damage) loss (damage) due to the windstorm.


04

CD

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From: Richard MyersSent: Wednesday, January 21, 2009

To: Bill Knarr

Subject: RE: Lifted Tabs

Thanks for the quick response

Richard

From: Bill Knarr [maiIto:bknarr-@a)TIAIlA.ORG]

Sent: Wednesday, Januai-y 21, 2009 5:41 PMTo: Richard MvcrsSubjecL: RE ].Varied Tabs

Richfird,

You got the idea, it is a, --enue of last resort. But I guarantee, if a person has it done, he'll never have another lifted shingle during the life of that roofThe shingles are stuck down not sealed do%va

Bill

----C)riginW Message-----From: Richard Myers Imailto:Richardmd

[email protected]

Sent: Wednesday, January 21, 2009 5:30 PMTo: Bill KnarrSubjcrt; RE. Liftcd Tabs

I understand all 9 this and I have done this a lot in the past Ijust did not want to put it out to the world. We will handle as instructed.

From: Bill Knarr [mailto:bknarr-'a)T)krlA.ORC7

Sent: Wednesday, January 21, 2009 5:32 PMTo- Richard MyersSubject: RE LiftedTabs

Richard,

Thih is nothing new. It is not excessive labor These instructions are the last resort when no (air will LAc no For an unswta. We will allow 20 to

25.00/sq to reseal the tabs. This is done by a long handle caulk gun with a flat nozzle sticking out wih a tube of mastic in the gun. Applicator

goes shingle persbingle that is not stuck down andshmits a dab under it hit-, thesbingle %Oth his boot and goes to the next one. This use to be done

all the time when the 2.15 3-1 .;hg,.; came out and theywanted them in seal like the 240 H that was the same shingle vnth seal down on their backs. T

don't care if you doM want to offer it, if the shingle is stuck down in this matter it is snick tintil they are tom off lo be replaced I his is not lo be

offerred on every loss as an option. Chily after all other discussions have failed. I f you want to continue to deny the lifted shingles with no

alternatives, okay. 800.00 on a 40 sq roof settlement is better than going to a hearing.

IFF S:,:r,


William Haygood; Wilson Dunn'.

Reggie Warren' Kevin McFarlin;

Cc:Joe Rosentrift: DonTurner;Bill Hooper: Ray Roe,Russell Stout: Alan Renshaw,

Subject: Roofrepali firm

ALL,

I have had a conversation vith an individuad by the name of Don Tarantola who is in business to repair roofs. I inquired his theory of liftud sl-@nglcs

and if they were dainaged shingles He said that a lifted sWngle was not damaged if it were not cracked where it might have been folded back, He

said most Unsealed Shh*les Were unsealed prior Lo Lhe hwiicant.difficulty finding someone to repair their roof he would be anxious io do so and lie was acceptable to ow initunimn charges allowance. He attended

a meeting "ere Mr. Oliver spoke or he called and he gave Mr. Oliver the same message. I am passing his name and phone along so when you get

inquHes that insured has had -several different roofers out and all say the roof has to he TeplflCod, give them this mans phone numbers.

Don TarantolaSpring,TX (suburb of Houston)281-202-5361Company name is 'A"


PL AINTIFF SIIT


From: Bill KnarrSent: Thursday, March 26, 2009To: Russell Stout,-Reggie Warren

Subject: RE: Supplements"*Emphasis on Roofs*** Dolly and Ike

Russell,

No change. We have had a hearing involvirip unsealed shingles, but have not gotten the results yet. We still contend they are not damaged unless the

shingle is broken.

Bill----Original Message-_-From: Russell StoutSent: Thirsday,March26,20098:51AMYo: Reggie Wanciia-: Bill KnanS ubj CCL. FW. SupplumeriLs"'Emphusis un Roofs... Dolly and Ike

Has TWIA unchanged in ibis regard? TAs fell us There is talk of class action intentions brewing in Harns countv. So far we have held our position,Mth exceptions being with good renson on individual basis.

---Original Message--From: Russ DavisSent: Thurs&y,March26,20098:46AMTo: Russell StoutSubject: FW:Supplcmcnts*'*EmphasisonRoofs"* DollyandIkc

Is our position on lifted shingles still unchanged?

--Origind) Message--From: Russell StoutScriv Thur%day,February05,2(K)92A5PMTo:

RiliT..qcy-.Cnre),Tlnlder-.T)avidlyrieq@(TregReqnick--,JeffRech-,JerTyPtacek-,JiTnMntgan-KevinMyer.,-,IAM,('[email protected]@--'hiFin-,

Marshall Jones; Maurice Green h-&cliael Cambre; Richard Beasley; Roosevelt Johnson; Sarah Ryan; Shelley O'Brien; Steplimne Rafield, Vedia

Jackson@ Wendy Palomo; Russ@avis;

Shauna Mcginnis; Kristin Jahren; Gavlee Garcia; Nancv Stout

Subject: Supplements***EmphasisonRoofs**$ Dollvandlke

That which follows shoud be followed by all involved with handling ot'TFPA claims Thanks in advance for your close attention to these desired

procedures.

--Ongitud Message----From: Reggic WarrenSent: Wednesday, February 04, 2009 3:22 PM

Cc: Reggie WarrenSubject: Siipplements***EmphasisonRoofs*00 Dollyandlke

Ibs memo goes out to all IA firms, adjusters and internal I WIA Examiners and Supervisors handling Dolly and Ike clauns.

We hope this add.:; some clarity to handling supplements, especially, in relation to roofs.

Please begin complying with these new procedures in=cdiatcly.

TWink you.

-Filc.Fcb 09 Supplernerm joufrniphasi:s5.doc-

PLAINTIFPS..WOW TWIA Instit 00013435

From: Bill KnarrSent: Saturday, December 13, 2008To: David Ellis (E-mail)

Cc: Joe Rosentritt'Bill Hooper-Ray Roe-Don Turner,

Subject: RE@ fogged windows

David,

Joe forwarded your question to me to answer. So here is TWIA's position. As a rule, fogged windows are not a direct result from damage bN

windsionit. ApossibleexceptionrnighibeifonewindoA@aolhitwithflyingdebTisnndbmkethesealoniisingtheiA-indtiw lo fog If entire than

one, then very unlikely the damage was the result of windstorm and as you say the result of failed defective seals.

Bill

--Original Message---From: David L. Ellis [iiiailto:dcllis([email protected]]

Sent: Friday, December 12, '11008 2:51 PMTo. Jne RocentritiSubject: fogged windows

Hi Joe. I have kicked back adjuster filos for -he last 75 daysfOTwindows that the seals failed. To me, and all of us at Legacy Claim Services,

know that this is a result of failed defective seals on double paric windows and not a result of wind damage,

However, we are getting swnmped %kith re omens on this subject. My question is: Does TWIA have any written directives on this?

I am having the adjusters suggest to Insurod's'to go through their H 0 carriers if they havc a glass endorsement.

Your comment,, are welcome

Regards.

David L. Ellis

Legacy Claim Service-s, Ll,C

866.461.1770 (office)

REDACTED

PLAINIFPSEX


Reggie Warren

,Om: Reggie WarrenSunday, November 30, 2008 i 0: 34 AM

To: Reggie WarrenCc: Reggie WarrenSubject: Supplement Billing / Dolly and Ike / TWIA

We have enhanced our supplement billing per the revised "Supplement Fee Schedule" attached, effective for Dolly and Ike

supplements worked on or after December 1, 2008.

Please fully read this document and understand our position on reopens and supplements. We do not like them and aregetting way too many because the job was not done properly the first time.

While we understand that reopens and supplements are part of the business, adjusters need to strive to handle the claim

fully in an effort to avoid supplements.

We have not bought into the idea of having "clean up" or "supplement"teams to go behind and handle supplements and

reopens. We expect the adjuster and adjusting firm who handled the original adjustment to also handle any qualified

supplement.

We hope that this revised fee schedule for wOl aid in getting supplements handled efficiently.

Thanks for your continued efforts.

Reggie Warren

T--JSupplement FeeSChedu le. Dolly...

FFS.ff TWIA Instit 00000348

DATE@ December 27, 2008

TO: TWIA Claims Staff

FROM: Reggie Warren

RE: File Review Issues / Ike and Dolly

Writtep CorrespondeDee to Adjusters and IA firms:Recently, I have noticed some outgoing documents (faxes, letters, emails) that appear unprofessional.We do not want to communicate, especially in writing, with any derogatory cornments. Although at

times we feel the adjustment product is )acking, it is ok to point out needed corrections,revisions but do

not demean or criticize the adjusters. We all know the rule...........

do not put anything in writing that

you do not want read back to you in a courtroom.

Publilic Adeusters and Reopens:Just because a Public Adjuster writes us and asks us to reopen a file, especially a closed file, does not

mcanwe reopen the file. If the cWm file is docurnented well by the adjuster and appears to have beenhandled correctly, it is ok to write a brief letter or fax to the Public Adjuster advising that we aTe notreopening the file unless they submit supporfing, credible evidence that warrants reopening the file.

Their estimate is not necessarily enough information to support reopening the file. You can ask them

for pictures or engineer's reports or whatever information they have the supports reopening the file.

If they send a written request for Appraisal, please get with Kevin McFarlin to discuss how we want to

proceed.

Always require them to produce their valid Texas Public Adjuster's license and the signed contractthey have with the insured.

Ordinarily, we do not provide copies of anydiing but our estimate to Public Adjusters. I noticed they

usually ask for information from our Claim and/or Underwriting files. That is our %vork product and

we do not provide that to them unless approved by TWIA Claims Management.

Claim Payments:December 27 will be sixteen weeks since Ike made landfall. If you receive an adjuster's report that

documents windstorm damage although the report needs to be sent back for corrections/rcvisions and if

you can establish an amount to pay, issue a partial payment and send a brief letter to the insuredexplaining that it is partial and that any additional amount owed will be paid once we receive the

revised adjuster's report. This is especially true if we have the adjuster's estimate and the insured calls

about their claim payment. Try to make some sort of payment at that time to ease the insured's tension

about their claim, As we have said during the storm, many times a file is not acceptable to pay and it is

Texas Windstorm Insurance Amociation5700 South Moftz ExpTessway, Building E, Suite 530, Austii@ Texas 76749 * P.O. Box 99090, Ausun. Texas 78709-9000

5 12-P9-4900 /Fax 512-899A950

P LAI NTI Frr.


hard to get over that. As much as we want to handle claims properly, we did give $25K atithority to

the principals of the IA firms. Their supervision and quality review is sometimes lacking, but On

claims with a payment of less than S25K, try to find a way to get it paid and closed. If you absolutely,cannot pay based on thCiT recommendations, see Knarr before you return the file.

ALE Claims:We technically only owe ALE on primary dwellings when the direct windstorm damage causes the

home to be wholly or partially uninhabitable. It is also tecluiticafly owed once the insured incurs the

expense to continue a similar lifestyle as to prior to the storm and then only for the increased expense.We have all issued advances based on the projected ALE and that usually is not supported by invoicesor any reconciliation by the adjuster. Before any additionally ALE is paid after the initial advance, weshould require the appropriate documentation.

Use good judgment on primary homes that sustained flood and windstorm damage. Maybe a portionof the ALE is owed, depending on the amount of windstorm damage sustained.

Displacement Payments:These payments were basically to aid those that had to evacuate their primary dwelling from the storm.Prior to us knowing if there was covered windstorm damage to the insured property, these paymentswere made by our mobile office or us OR recommended by the adjuster. Our average payment for

displacement for Ike has been about $1,500, although we set a limit of $100 a day for 25 days fromevacuation.

Later in the storm, we decided that if the insured reported their loss or we inspected it afterNovember 1, we would not make any displacement allowances. Please watch the adjuster's reportsclosely as to when the loss was reported and when they made their inspection. I see some files being

kicked back where the adjuster inspected prior to November 1, 2008, found no windstorm damage, but

made a tentative commitment to the insured that displacement would be allowed. We should not kickthose back.

Also, if the adjuster figured thirteen days or $1,300 and you feel its should have been nine days and

$900, do not kick that back. We relied on the adjuster in the field to make that call and due to the

nominal amount; it is not appropriate to return the file to the adjuster. Remember, you are to see Bill

Knarr before you reject or return an adjuster's report.

Expense Fayments:We expect the adjustors to complete their work per our instructions before we pay their service

invoice. I noticed that many IA firms send a bill with every report. I am not sure why they do that,

other than it may be system-generated. It is confusing to get multiple bills for multiple amountsthroughout the handling of the file. If the adjuster is not finished with the file, it is ok to send a fax or

einail to the LA firm and advise them we are not paying their bill until the work is complete.

On more complex files that are expected to be open for a while, it is ok for the TA firm to interim bill at

60 days from the assignment, but they should get our permission to do so.

If you plan to revise the adjuster's bi II in any way, see Bill Knarr for approval.

Engineer and other expert bills should be paid timely. Occasionally, we will be interim billed by an

engineer that is working on an extensive and complex project. Ok to pay unless you have a question.Texas Windstorm Insurance Association 2

57DC South MoP&c Expressway, Building E, Suite 530, Austin, Texas 78749 9 P.O. Box 99D90, Austin, Texas 79709-9090

512-999-49DO I Fax 512-899-4950


Check Issuance and Mailing- Addresses:When entering a check, always verify that the payce(s) Is correct which of course includes the

mortgagee. If the adjuster does not determine the correct mortgagee, many times the one on the policyis incorrect. While it doesn't make sense to call each insured before you issue their check, pay closeattention to the adjuster's report and the file comments to see if someone ahead of you has determinedif the mortgagee has changed. If you determine there has been a change, notify the proper person in

Underwriting so they can amend the policy accordingly. Unless you have a reason to suspectinaccuracy on a mortgagee change, you can take the adjuster's or insured's word on the change.Otherwise, you should require the necessary paperwork from the insured or mortgagee before issuingor reissuing a check.

On supplemental checks to insureds, verify as best you can that you are issuing the check to the correctparties. It is embarrassing to include an old, incorrect mortgagee on a supplemental check or a re-issued check.

Mailing addresses should be verified too. Many times, the insured has a new mailing address or

temporary address. Check your comments to make sure the checks are mailed to the newest and

preferred address, especially and follow up or supplemental checks.

Proofs of Loss:We are receiving Proofs of Loss, some directly from the insured, which are unsupported. I am sureyou all know we have to promptly react to a Proof of Loss when received. Please do not drop it in the

file and forget about it, even if you are waiting on a corrected estimate from adjuster. We need to

either accept and pay it or send a letter to the insured or sender that we do not have enough informationto accept or reject at this time. Proofs can be invalid and unacceptable for various reasons. It could be

incomplete, be for the wrong amount, be unsigned, etc.

Attorney letters. Demand Letters, Appmisal Requests. Lifleation:REDACTED

TDI Complaints, Appeals, Lecislative Complaints and Complaints to the Governor.REDACTED

Texas Windstorm Insurance Association 3

5700 South MoPoo Expressway, Buitding F, Suite 530, Austin, Texas 78749 a P.O. Box 99090. Austin, Texas 787D9-9090

5 12-8994900 / Fax 5 12-M-4950

TWIA-Inslit-00000363

From: Jeff KaiserSent: Saturday, November 15, 2008 03:3 7 PM

To: Reggie Warren

Subject: RE: Supplements and Reopens / IKE / T`WlA

Reggie,

I believe that we think alike in many ways. My intent is feedback on our problems and what I hear on the street. While you may not be seeing

problems with the reopens yet, you will. Ad@justcrs are giving hack their inventories of claims and going home. I agree with yox it comment on quality

issues. I have been doing tlus many years and never has the quality been so poor, Many semor people are leaving the industry because ofage and the

lack of consistent work. We are a Citizens of Flonda trainer but ft number of quality candidates is diminishing. We have to pretty much "idiotpToot" the process. Because ofthree storm deployments gotrig on at once, many ofour senior fielks Stabbed at Fay and Gustav deployments thatwereavailable as they had not worked in two years.

At this point, we are going to see how many of the reopens we can handle from the desk. I expect that as the holidays urrivc we %ill lose most who


have anv fresh claims to attract adjusters bark. Al this point, you are probably better off continuing to send them lo your core firms. At least voil Ail]

have those firms to backyou when the reopens get out of control. I do understand the economics of this business.

Reggie, we have worked hard to make things as smooth as we can. I do not necessarilv agree vvith You entirely on the reopcm. Of course there are

many that have not been handled perfectly the first time around but everyone thought the losses were, coming fast and furious so wa were trying to

move them along as fino.9.3 we could sowe would have capacily In hindsight, we could brave all l8ken nur firne,at least my Firm We have also scen

the typical policyholder siLn,ival patterns and are starting to receive contractor estimates, PAs, etc... I don't care how thorough the adjuster was on tl-c

first go, when the contractors & PAs start getting involved, that is a step of the process that cannot be avoided. To deny at least a remspection on even

the most well done file is the groundwork for a bad faith claim That is why I have asked for consideration on the billing. I do not want to set up

TWIA nor do I want to excercise my E& 0 carrier for the litigation that will certainiv come. At the risk of making you angry, I again ask you to

consider allowing us to bill from the bottom of the schedule ofthese very necessary reinspcctions. Before you answer this requ", I urge you to take

the temperature on the street- I cannot think of a firm or adjuster out there %Yho would want a S2DO ($1 30 to the adjuster) reopen file considering the

work. diff icultv and their overhead cost to stay in the area. All of these arc being handled by different adjusters than the original and I don't believe

there are enouib local people to handle them if all the adjusters in the areii leave. The time to address this issue is growing short, mainly because the

approaclung bolidays are causing the adjusters to make decisions.

Ai, ulways i( is a pleasure Lo c;ummunicutr, with You. I liked the uornment about the length of my last email and I apologize for the length or this one.

However. I believe this issue is at critical mass and I do not believe I can stress that enough. I am hopeful that we can work with you again but

,mwldn't blame you if that did not happen. I hope you Lindenstand that I am trying to head off what I perceive to be a diaster and pleas& do not (hint

I am a troublemaker. I really intend thi., to he my attempt to protect your interest. This is not a greed move as the incremental increase is not ivoTth

that.

Thank you,

Jeffrey A. KaiserPrcsidcntSpecialty Group, Inc.

--Originid Message---From: Reggie Warren 1mail(o:REQGIEQTWlA.0RQ]Sent: Sat II il 5/2008 9:00 AMTo: Jeff KaiserCe:Subject: RE: Supplements and Reopens I IKE / TWIA

Jeff. I made some comments below at the end of some of your paragraphs.

--Original Mc%.Wc-----From: Jeff Kaiser [MdiltO:ikaiser(a)specidlivyroupinc.c4oniI

Sent: Friday, November 14, 2008 6:21 PMTo: Reggie WarrenSubjml: RE: Supplements and Reopens I IKE / TWÌA

Reggie,

I have attached a copy of the email I sent you yesterday. I received no response or indication that you received the email I am hoping this emafl

is not your response as this is a problem we do need to address. Please let me know your thoughts.

PLAINTiFF Wit-TWIA Instit D0016737

Aside from that. for reopens where the adjuster has to change measurements or unit prices, the easiest way to figure the supp is to rewrite the

estimate and plug in the new pricing then deduct the original estimate amount. I know this doesn't seem to be well received bv Vour examiners but I


Thank you,

Jeffrev A. Kdisei

Presidcrit


Dear Mr, Warren,

In response lo your recent message .4botit reopened files, I have decided to send you a re%ponse aml a request. I will start with an explanation of


When we received your request to deploy for IVIA, we responded with substantial resources. Along the way many things happened which were

beyond the control ofany ofus, namely, a couple ofother storms. We vvere requested to subnut a list ofFirst responders and we sent a list 01`80adjusters before we xvere toldthattvas enough. Some ofthern ended up taking other deployments before they gotto Texas because ofthe old "bird in

the hand" syndrome. We successfully deployed adjusters every day and at the end of almost even- day, all claims received up to that point had been

assigned out, all while we limited the adjusters to no more ffim 50 losses, cvcn for the most experienced ones. That drew some criticism from the

greedy ones but we stuck to our plan as we have learned that Icsson in the past. I'hen suddenly the flow of Imes to our firm stopped even though we

had onl@ deployed about 65 ad ustcrs. We could have put out 150 xvitlim the month if Nvc had the volume of losses, even with all of the other storin

deployments that were gonig on at the time. Now we could probably put out 250 as many have finished other deployments.

During our initial deployment, I sent you a request for an estimate of)osses. You were always very good in responding and told me we would

get all we wanted So we continued to move people toward Texas, guarAnteeing them work and standby money, even though we submitted very few

standby daily fees toTWlA for rcimbursement. We had many, adjusters arrive to find that we had no work for them and we helped many to find work

elsewhere. As I told you early on, we committed to handle TWIA and did not accept losses from other clients because we all expected many losses.

%lifle I know that no one cim see into the future and there is no way to predict the nuniber of losses, a huge number of finns and adjusteis were

deployed by TWIA. When the flow of losses stopped completely and not even a slight flow continued, I had no way to feed those who were cn route.

I also had no waV to keep the, good adjusters iii Texas after their losses were scoped out or to mix with the reopens. Most left because they could not

Sustain the additional expense of living in a Intiler or hotel room Lind ineuning $200 a day lo live, while also having to pay for a Home somewhere


As such, most of the adjusters have gone home and every few are left to handle the reopening files. Most of those have said that the (65% of)

$200 fee is not enough to pay them to review the original report & estimate, traNel to the loss location, re-inspect, negotiate with the insured and/or

contractor, write an estimate, report, bill and close the file. They are now starting to reject these assignments because they only get $130 plus mileage

for all this work. I do not like this response from them it all! I have said to clients in the past that it really doesn't matter to me what the fee schedule

is, it matters to tho adjusters becausc if it isn't criough to attract them, it is a setup for failure sinec wc all draw from the samc gcnc pool of storm

adjusters. At this point, I am hard pressod to move this matter toward success and away from failure Howevcr, I have a proposal that I ask you to

consider.

I am setting up a triage unit to determine whether the reopen can be done from The desk or if it needs to be re-inspected, We are also looking to

gm if the original .9djw1eT h" done theil'Job properly. If not, we will pay the new adjuster from the original a4justeT's proceeds. I f there is a price

difference issue. we should he oble to handle it frorn the desk. If it is measurements or missed items, we may be able to handle it from the inside but

many will have to go outside. We are seeing a wave of huge contents claims where the insured is saying the original adjuster told them to dispose of

the items and thev want to be paid. We have seen this before and the adjuster will tell you it is not so. You and I both know the only wail to deal with

these aggressive @lairns is to go and sit with the insured and ask them to start justifying their claim. This is very time consuming arid it i's difficult to

get adjusters, who feel they axe underpaid, to properly work through this process. However, it is also difficult to pay some of these claims when the

insured showed the original adjuster one item during the initial inspection and @Ne get an inventory for 30 items. Please also keep in mind that these


reopen claims are being handled by different adjusters who almost always do not have much good to say about the original adjustersimply because

they have to handle the reopen. It gets %worse when they feel like they are losing money doing it. Jetf, I am not buying ths. I think in most cases the

adjuster didn't do theirjob initially on these large PP ciaims. Adjusters are not interviewing the insureds. They are not creative in adjusting a claim.

The hum through and their product illustrates it.

I am asking for authority to commit to these adjusters. who have to go out and work- through sonic very difficult claims. that they can bill theddjusLel fee from the bottom of the schedule as if it well a link cluila. We will ik)t bill anyorthe surchwgvs, just the ddjustei fm, additional inileage,

additional photos and exam fec. The only change would be the adjuster fee. The ones we can handle from the desk will be billed at the $200

minimum based on the difference in fee amounts and the ones we find to be deficient. we will not bill TAIIA. Jeff, we cannot treat you differentlythan the other-, and I have not had the-e comments from anv other firm.

My logic is that if we even had a trickle of claims coming through instead of a total shutoff, I would be able to keep a group of adjusterssufficient to spread them out and get the reopens handled. I would also be able to mix the reopens with the new losses as we went along, to keep the


demons we arc facing as we ", to move this Cat to a conclusion, this onc is looming large and we are trying very hard to suceccd for TWIA, the

policyholders in Texas and for you You have been fair and evenhanded to deal with so I am hoping that we can figure out some resolution to this

problem as I expect our firm and adjusters are not the onl'y ones who are facing this. I also believe that we may be able to attract sonic adjusters back

if there is a financial incentive it) do So because I believe the claims will contimm to jeopon fui sonic time to conie. Jeff, Claims are wining it) slow M

this time. Our initial predictions were based on information we had at [he time. No one can predict numbers early in a storm, I feel we will continue

to gel losses for 11101191S dild will initilifly get as many as I first thought, but they are not coming in at a pacc; to keep any one film particularly buoy. I

think most firms are hanging on to the real adjusters that want to work and those adjusters can handle the reopens. I wish there weren't so many and

there @Aunldn'l he if the adjusters handled the claims to start uith I think adjusters are accustomed to having clean tip crews come firourid and clean

Liptheirmess,btitwcarenotatthatpoint WeexpeetthefirmstohandlethcelaimsonafLilla4justmentbasisandthatmeansreopens.

JefT, there are sonic good adjusters out there but many more that are inexperienced and that are not getting the job done. -17hat is across the

board. TAIlAwaspromisedqualifiedadjustersfronithebeginriingandqtutefi7anklv,L?,oti,eryfew. larnnottn.-ingtobeatupalltheackiusters,butthe general consensus is that the products are bad. I know there is a leaming curve, but many of the adjustment procedures are not that muchdffcrcnt than any other statc.

I ant surc I am not addressing your issucs mid necds, but most of this involvcs issues that riecd to be managed by an IA firm that misiders itself

to be a 'eat" firm.

Ifyouhavcindividualsupplmentsthatrequireaninordinateamountoftime,letasknowand\ve%villconsiderdifferentbilling. Wedon'twantyou are the adjusters to go broke, but we don't want quality from the beginning.

Noone-isperfectincindingTWIA Wehaveourissnestoo. Wearegildoingourt"biitifIde(-.idetobea"c,.91"atljiisteTIwilih.9veinunderstand that there are no real guarantees on numbers of claims and bow fast they will come in.

Thank you for your consideration.

Jeffrey A. Kaiser

ftesiden(


----Original Message----From: Reggie Warren (nuiiltoREGQIE(a)TW1A.ORG1Sent: Fri I 1/1 4/2008 1:1 9 PMTo: Reggie WarrenCc; Reggie WarrenSubject: Sul)pIernenu and Reopens / IKE / TVA

This is going to all IA firms handling IKE claims for TYv'IA.

We are gettinE supplements in various forms.

We do not want the original estimate to be Te-written to include the supplemental items. This takes a lot oftime to figure out.


We only want an estimate for the supplemental items with a brief report as to the reason for the supplement.

Please send us any neA evidence vou secure regarding the supplemental claim.

We do not need all the photos re-sent to us..... .......

just the new ones, if any.

And, make sawyou bill dppropriatuly bused on the TMA Fee Scheduic.

ThanI vou.

Reggie Warren


From: Rav RoeSent: Thursday. November 13,2008

Amelia Key; Bill Astin;Bill Hooper: Bill Jones;Bill Tassin; Bob Inmon-IBob Latta- Bob Parrish;Brad

Sho@; Carl Bro%Nm.-

Cadiy Weidner, Charlene Coker,Christina Tw-ner-- Christopher'White;Corv Kendrick: Dan McGuire;DaN'd Dicks-, Dean White;Demian Kolb- Diana Orta;

I

Don Fielder, Don Turner,Gene Latharn-I Greg Briers;Helen Frank-, Hugh Meloche;James McRae. Janie Garcia;Jason Garrett; Jennifer Armstrong,Jerry Dickerson; Jerry Lerma.,

Jim Coggin--, John Hilliard;To: John Wright-, Josie Fielder.-

Ken Colestock,- Kenneth Robbins:Kevin McFarlin; Kris Weidenfeller;Lance Cooke- Lou Skinner;Marie Merida: Michael Cortese:Miguel Riveros; Mike Calvin.Paula Smith, Ralph Frank:Rav Drurv. Ray Lang',

Sam Jones: Sam Wellman;SatoriSochandamandou; Shane Gulley"

SheldonMaxwell; Sonny Jenkins-,

Steve Frve; Susan HerrimTamri Morgan; Terry Partlow;Thomas Christiansen; Tom Glow;Von Watson; WD Scott:

Wendy Scarborough.- Wesley Werrieking;Williaml-laygood; Wilson Dunn;Woodv McMahon

Cc: Joe Rosentriu-

Subject: RCC Payments

rhere are quite a few RCC documents coming it) and there seems to be some confusion as to how to handle.

Hopefully. Ilie following will e1tw up soine of the wicxitainty.

1. We reserve RCC to the penny and this sets the ceiling as to recovery. They may spend more but they are limited to the reserve amount for

recovery.Wedonotneedtovilicitreopensorqiipplementalclaim%wheniheinvoice,[email protected]

Recount for the i ncrease. Review the documents and be sure they apply to the RCC. Do not allow items not part of the original RCC. such as fences,

v@,hole roofs rather than half roofs, etc.

2. Assuming the paid loss (ACV4RCQ exceeds the threshold of $500, the name of the mortgage holder must be included.

3. As to methodology, go to the documents tab and under- the Documents Package Creation hit the drop down and pick RCC Statement. This is a fill

in the blank tv c letter and the insured gets the original with a cop), to the agent..p

4. We do not ask an a4justci to reinspect for completion, we rely on paid invoices. On occasion it mav be wise to call the roofer to verify but rarely is

tiriv more than that necessary.

PLAINMIT . TWIA Instit 00016550

From: Reggie WarrenSent: Friday, September 12, 2008

To: Reggie Warren

Kevin McFarlin; Bill Knarr,JoeRosentritt, Ray RoeGayle Needham: Susan Schiller,Russell Stout

'Alan Renshaw.

Gene Kounse; Norm a Rosentrittl-Courtney Frerich; Nancy Hrin-Patty Knarr.- Wendy Scarborough-,

Cc: Terry Partlow, Ray Lang,Sam Jones. Michael Cortese-,

Tom Glow-, SheldonMaxwell.-Helen Frank; Ralph Frank:Carl Brown, Jim Coggin-,

Don Turner-, Bill Hooper'.LaJean Warren, WD Scott-,

Woodv McMahon.- -

Subject: Daily Adjuster Retainer Rates Hurricane IKE TWIA and TFPA

Slarti@ng today 9-12-08, we will pay $5(@) per day for adjusim handling TWIA claims beginning wheri diev "nive at a sfa&g area mid you have laid

eves on them AND ending when loss assignments have been made to the adjusting firm and reasonable access is possible to the sturin-affecLed arms.ihis retainer will he paid 7 days a week and may last for 7 to I 0 dayqt possibly a little longer in certain areas-

They must be committed to handling only TWIA or TFPA claims if asked. They cannot beworking for multiple carriers. If they decide to leave

your employment before they start handling I WIA orTFPA claims and we have made a payment to vou, we will expect reimbursement of thisretainer in full.

Use your good judgment on what portion of this fee is passed through to the adjuster.

Please keep accurate records of when your adjusters arrive and when they get assignments to work.

We will await your invoices by adjustere name and period covered.

We will be in touch via separate email with the TWIA Dedicated Adjusting finns on other issues.

If any questions, plane call me or 3i]] Knarr.

Thank you,

Reggie WarrenTWIA and TFPA ClaimsAustin512-899-4902

Bill KnarrCat Office Manager

S.2PLAMFTWIA Instit 00016441

SUPPLEMENT F E E S C H E D U L E

For Qualified Supplements Only-Hurricanes Dolly and Ik

Reopen / Supplement files:

• If the insured presents additional credible evidence that could lead TWIA to a differentconclusion on the claim, the file can be reopened. Just becausc a roofer wants to put on a

new roof does not necessarily justify a supplement.

• If the file reopens because the adjustment was clearly not performed properly to begin with,

no additional billing should be submitted toTWIA. If there is a question regarding this,TWIA will have the final say.

• Files can be reopened if the insured failed to identify damages, hidden damage is found,subsequent continuing damage occurs or valid repair invoices are presented after closing-

• U se good judgment when handling Supplements. It may be necessary to reinspect, but on

smaller amounts, consider handling by phone witb the insured. If there is a reinspection, we

want photographs of the damage involved with the supplement.

• We will need any printed, additional evidence provided by the insured that supports the

supplemental claim. Secure names and contact information of insured's contractors/experts

especially if an agreement on the supplement is not reached.

• The adjuster's supplemental report should clearly demonstrate the validity of the supplement.

• We do not reopen claims just because someone expresses disagreement or unhappiness withthe amount. We require morc evidence especially if the original claim docision/payment is

well documented.

• Until further notice, the gross amount of the supplemental loss regardless of the number of

Items of insurance involved will be billed per the schedule below.

• If the supplement appears to exceed $25,000, we will need a call from the IA firm supervisor

and will expect the supervisor to get involved to answer the reason for the large supplement.

• In the event of a second or additional supplement, refer to "Reopened Files" in'FWIA Fee

Schedule 3 for supplemental billing ($200).

Agreed Gross Supylerneptall Loss Dwellin Commercia$1 to $500 or telephone adjustment 172 181

$501 to $1000 221 254

S1001 to $2500 277 336

S2501 to $3SOO 331 412

33501 to $5000 404 492

$5001 to $7500 458 565

S7501 to $10,000 560 650

$10,001 to $12,500 622 706

S12,501 to $15,000 673 764

$15,001 to $17,500 724 820

S17,501 to $25,000 773 877

SUPPLEMENTAL ESTIMATES SHOULD INCLUDE ONLY ADDITIONAL

DAMAGES OVER AND ABOVE THE ORIGINAL ESTIMATE

For Reopens / Supplements worked on or after December 1, 2008

Reopens and Supplements 5ubmitted to TWIA prior to December 1, will not be affected by this schedule.

FFS TWIA Instit 00000349

Time and Exoense (T & E) Files on Supplements

If,pre-approved by Tevas Windstorm Insurance Association, riles can he billed Time and Expense whenadditional work is needed above The routine requirements andlor the Pross loss exceeds the fee scheduleabove. An itemization of rile activides and gxpenses is reguired with

T & E invoices. Hourly rates Dwellinz -- $105. 00 (or negotiated ratei Commercial -- $II S. 00 (0

nejeoliated role)

The following are the only additional charp-es allowed on Flat Fee or T & E files, unless there is someextra inary expense which must be pre-approved by TWIA:

'Supervision Chg for tiTM (NOT Adjuster) I 0% of Flat Fee (one time billing per file-max $87.70)Mileage $0.65 per mile (pro-rated when applicablePhotos/ 35mm/digital $2.00 each

Long Distance Phone/FaxJCell $5.00 per file (one time billing)Certified & Overnight Mail (when justified) Actual Cost

Met out of pocket expenses Actual Cost (receipts required)No photocopy charge Unless there is excessive copyingSalesTax.

'Note: Supervision is calculated at 10% of hourly amount total on T & E files.

For example, 4.0 hours @ $105.00 = $420.00. Supervision fee would be $42.00.

For Reopens / Supplements worked on or afler December 1, 2008 2

Reopens and Supplements submitted to TWIA prior to Decem ber 1, will not be affected by this schedule.

TWIA-Instft-00000350

Reggie Warren

,Om: Reggie Warren,ent: Sunday, November 30, 2008 10:34 AM

To: Reggie WarrenCc: Reggie WarrenSubject: Supplement Billing / Dolly and Ike / TWIA

We have enhanced our supplement billing per the revised "Supplement Fee Schedule" attached, effective for Dolly and Ikesupplements worked on or after December 1, 2008,

Please fully read this document and understand our position on reopens and supplements. We do not like them and aregetting way too many because the job was not done properly the first time.

While we understand that reopens and supplements are part of the business, adjusters need to strive to handle the claimfully in an effort to avoid supplements.

We have not bought into the idea of having "clean up" or "supplement" teams to go behind and handle supplements andreopens. We expect the adjuster and adjusting firm who handled the original adjustment to also handle any qualifiedsupplement.

We hope that this revised fee schedule for will aid in getting supplements handled efficiently.

Thanks for your continued efforts.

Reggie Warren

E- ASupplement FeeSchedule, Dolly...

PLAINTIFF'SEXHIBIT


From: Jeff KaiserSent: Saturday, November 15, 2008 0337 PNI

To: Reggie Warren


Reggic,

I believe that we think alike in many ways. My intent is feedback on our problems and what I hear on the street. While you may not be seeing

problems with the reoperic; yet, you will. A(tiusiers are giving back their inventories of claims and going home. I agree wiihY011Tcomment on quality

issues. I have been doing this many years and never has the quality been so poor. Man), senior people are leaving the industry because ofage and thelack of consistent work. We are a Citizens of Florida trainer but the number or qualit-, candidates is diminishing. We have to pretty much "idiotproof' the process, Because ofthree storm deployments going on at once, many of our senior folks grabbed at Fay and Gustav deployments that wereavailable as thev had not worked in two years.

At this point, we arc going to see how many of the rcopcns we can handle from the desk. I expect that as the holidays arrive WCNA,7111 lose Most Who

have hung around, even if the reopen fees @avcn't driven them off. We have not received a single new assignment since 10-23-08 so we don't evenhave anv fresh claims to attract a4juslers back. Ai this point, you arc probabl@ better off continuing to send them to your core firms. Al least Vol] "inhave those firms lo back you when the reopens get out of control. I do underswid the economics of this business.

Reggie, we have worked hard to make things as smooth as we can. I do not nmessanly agree wiLh you entirely on the reopem. Of course there are

many that havic not been handled Nrfectly the first time around but everyone thought the losses NA-ere coming fast and furious so we were trying to

move them alorigniq fagi as we. could so %Ae wriii1d have capacity In hindsight, we could hAVC all taken onr time, Pt least my firm We have alRowenthe typical policyholder survival patterns and are starting to receive contractor estimates, PAs, etc... I don't care how thorough the adjuster was on thefirst go, when the contractors & PAs start getting involved, that is a step of the process that cannot be avoided. To deny at least a reinspection on evenUw most Nvell done file is the groundwork for a bad faith claim. That is %vhv I have asked for consideration on the billing. I do not want to set up

TWIA nor do I want to excercise my E& 0 car-rier for the litigation that will certainly come. At the risk of making you angry, I again ask You toconsider allowing us to bill from the bottom of the schedule of these very necessary reinspections. Before you answer this request, I urge you to take

tIx temperature on the street. I cannot think of a firru or aqjuster out there who would wani a $200 ($130 to the adjuster) reopen file considering thework. difficulty and their overhead cost to slay in the areas AU of these are being handled by different adjusters than the original and I don't believe

there are enough local people to handle them if all the adjusters in the area leave. The time to address this issue is growing short, mainly because the

approaching holidays arc causing the adjusters to make decisions.

As- always it is a pleasure to communicate with you. I liked the commem about the length of mv last email and I apologi/e for the length of this one.However, I believe this issue is at critical mass and I do not believe I ran stress that enough. I am hopeful that we can work with you again but

,Aouldn' L blame you il' that did not happen. I hope you understand Lhat I am trying to head ofrwhat T perceive to he a disaster and please do not thinkI am a troublemater. I really intend thin.; to he my attempt it) project your interest. This is not a greed m(we as the incremental increase is not worth

that.

Thank you,

Jeffrey A. KaiserPresidentSpecialty Group, Inc.

--Originall Message--From: Reggie Warren [rnaiI1o:REGGIEnaTWIA-ORQSent: Sat I I il 5/2008 9: 00 AMTo: Jeff KaiserCc:Subject: RE! Supplements and Reopens I lKE / TIVIA


---Original Mcisagc--From: Jeffl(ijiscr rmailto:ikiiiscrasi)ccidltygroui)inc-comISent. Fi idav, November 14, 2008 6:21 PMTo: Reggie WarrenSubject: RE: Supplements and Reopens / IKE / TWIA

Reggie,

I have attached a copy ofthe email I sent you yesterday. I received no response or indication that you received the email I am hoping this email

is not your response as this is a problem we do need to address. Please let me know your thoughts.

Y, ETWIA Instit D0016737

w,

Aside from that. for re-opens where the adjuster has to change measurements or unit prices, the easiest way to figure the supp is to reNwite the

estimate and plug in the new pricing then deduct the original estimate amount. I know this doesn't seem to be well received by your examiners but I


Thank you,

Jeffi-ey A. Kaisci

President


Dear Mr. Warren,

Inresponse Iti your recent message about reopened files, I have decided to send.you a response antl a request. I will start with an explaruilion of

our current status and inine is a message of economics.

When we received your request to deploy for IVIA, we responded with substantial resources. Along the way many flungs happened which werebeyond the control of any of us, namely, a couple of other storms. We were requested to submit a list of First responders and we sent a list ot'80adjusters before we NA-ere told that was enough. Some of them ended up taking other deployments before they got to Texas because of the old "bird in

the hand" syndrome. We successfully deployed adjusters every day and at the end of almost every day, all claims received up to that point had been

assigned out, all while we limited the udjustcrs to no more than 50 losses. cvcn for the most experienced ones. That drcw some criticism from the

greedy ones but we stuck to our plan as we have learned that lesson in the past Then suddenly the flow of losses to our firm stopped even though %ve

had ord) deployed about 65 adjusters. Wc could have put out 150 within the month if we bad the volume of losses, even with all of the other stonn

deployments that Nvere poing on at the tinic. Now we could probably put out 250 as m&iy have finished other deployments

During our initial deployment, I sent you a request for an estimate of losses. You were always very good in responding and told me eve would

gel all we wanted So we continued to move people toward Texas, guaranteeing them work and standby money, even thotigh we submitted N,cry fewstandby daily fees toTWlA for reimbursement. We had man), adjusters arrive to find that we had no work for them and %Ae helped many to find workelsewl@crc. As I told you early on, we committed to handle TWIA and did not accept losses from other chents because we all expected many losses.

Whilc I know that no one can see into the future and there is no way to predict the number of losses, a huge nuniber of fimis and adjustcrs weredeployed by TWIA, When the flow of losses stopped completely and not even a slight flow continued, I had no way to feed those who were en route.I also had no way to keep the pood adjusters in Texas after their losses were scoped out or to mix with the reopens. Most left because they could not

sustain the additional expense of living in a iruiler or hotel room and incuriing $200 a day io live, while also litiviiig to pay for a ]ionic soineWhCrt

else. after the flow of claims stopped.

As such, most of the adjusters have gone home and very few are left to handle the reopening files. Most of those have said that the (65% of)

$200 tee is not enough to pay them to review the original report & estimate, travel to the loss location, re-inspect, negotiate with the insured and/or

contractor, Nvrite an estimate, report, bill and close the file. They are now starting to reject these assignments because they only get $130 plusmileaeefor all this work. I do not like this response from them at all! I have said to clients in the past that it recalls doesn't matter to me w1kit the fee scheduleis, it matters to the adjusters because if it isn't enough to attract them, it is a setup for failure since we all draw from the same gene pool of stormadjusters. At this point, I am hard pressed to move this matter toward success and away from failure. However, I have a proposal that I ask, you to

consider.

I am setting up a triage unit to determine whether the reopen can be done from the desk or if it needs to be reinspected. We are also looking to

see if the original adjimer has done their job properly. ir not, we will pay the new ad@iLnter from the original a4justet's procceds. if there is a pricedifference issue. we should he nble to handle it from the desk If it is measurements or missed items, we may he able to handle it from the inside but

many will have to go outside. We are seeing a wave offitige contents claims where the trisured is saying the original adjuster told them to dispose of

the items and they want to be paid. We have seen this before and the adjuster will tell you it is nots@.

You and I both know the only way to deal with

these aggressive claims is to go and sit uitli the instead and ask them to start justifying their claim. This is very time consuming and it is difficult to

get adjusiers, who feel they are underpaid, to properly work through this process. However, it is also difficult to pay some of these claims when the

insured showed the original adjuster one item during the initial inspection and we get an inventory for 30 items. Please also keep in mind that these


reopen claims are being handled by different adjusters who almost always do not halve Much good to say about the original adjuster simply because

they have to handle the reopen. It gets x,.orse when they feel like they are losing money doing it. Jeff, I am not buving this. I trunk in most cases the

adjuster didn't do their job initially on these large PP ciairris. Adjusters are not interviewing the insureds. They a're not creative in adjusting a claim.

The hurr@ through and their product illustrates it.

I am as "-ig for authority to commit to these adjusters. who have to go out and work through some .,cry difficult claims, that the), can bill die

ddjusier fee ftUIII die buttoill of die bc1irdule as if il %were a III:%& claim We V%ill not bill any of flic surchaitges, just the ddjLjsLci fee. additional miledge,

additional photos and exam fee The only changc would be the adjustcr fee. The ones we can handle from the desk will be billed at the $200

minimum based on the difference in fee amounts and the cities we find to be deficient. we will not bill TWIA. Jeff, we cannot treat you differently

than the others and I have not had these comments from anv other firm

My logic is that if we even had a trickle of claims coming through instead of a total shutoff, I would be able to keep a group of adjusterssufficient to spread them out and get the reopens handled. I would also be able to mix the reopens with the new losses as we went along, to keep the

adjusters interested. With the isolated cre,.v we now have it is even more difficult because many are traveling longer distances. With all of the other

demons we are facing as we try to move this Cat to a conclusion, this one is looming large and@xvc arc trying vcry hard to succeed for TWIA, the

policyholders in Texas and for you You have been fair and evenhanded to deal with so I am hoping Out we can figure out sorne resolution to this

problem as I expect our firm and adjusters arc not ft only ones who are facing tIms. I also believe that we may he able to attract sonie adjusters back

if there is a financial incentive IO 1.10 W because I believe II)e clauns will continue Lo reopen foi- souic time to come. Jcf@. clainis arc mining in slow atthis time Our initial predictions were based on inl5ormation we had at the time. No one can predict numbers early in a skirin I feel we will continue

to get losses for months and will initially get as many as I first thought, but they are not coming in at a pace to keep any one fault particularly busy. I

think man. I firms ate hanging on to the real adjusters. that want to work and those adjimters can handle the reopen,.;. I WIsh there weren't so many and

there %%couldn't be if the adjusters handled the claims lo start with I think adjusters are accustomed lo having clean tip crcv.-s come Firoiind and clean

Lip their mess, but we are not at that point. Wc expect the firms to handle the claims on a full adjustment basis and that mcans reopens.

Jeff, there are some good adjusters out there but marry more that are inexperienced and that are not getting the job done. That is across the

board. TWIA was promised qualified adjusters from the beginning and quite frankly, got very few. I am not trying to beat up all the adjusters, but

the general consensus is that the products are bad. I know there is a learning curve, but many of the adjwstment procedures am not that much

dlff=nt than anv oftr state.

I am sure I am not addressing your is5ucs and needs, but most of thi5 irivolves issues that need to be managed by an IA treat that considers itsclf

to be a "cat" firm.

Ifyouhaveindividualsupplmentsthatrequireaninordinateamountoftime,ictusknowandwexvillconsiderdifferentbilling. Wedon't'Amiat

you are the adjusters to go broke, but we don't want quality from the beginning.

No one is perfect including TWÌA. We have our iwies too We areall doing our best but if I dm. de to he a "cat" qdjuster I will have to

understand that there are no Teal guarantees on numbers of claims and how fast they will come in.


Jeffrey A. Kaiser

President

Specialty Ciroup. Inc.

---Original Message----From: Reggie Warren [mailtoREGGIEaTWIA.0RGSent: Fri I 1/1 4/2008 1:1 9 PMTo: Reggie WarrenCc: Reggie WarrenSubject: SupplemeTILI; and Reiiptms / IKE @ TWIA

This is going to all IA firms handling IKE claims for TWIA.

We are getting supplements in various forms.

We do not want the origiml estimate to be rewritten to include the supplemental items. This takes a lot of time to figure out.


From: Bill KnarrSent: Wednesday, August 20,2008To: Bill Knarr

Cc: Reggie Warren;

Subject: Quality Control Issues

ALL,

We are seeing a trend in closuigs which are coming in that do not address Personal Property or Business Personal Property, which is also an insumd

item on the policy and on the assignment. We do not want the file closed until the personal property has been addressed and resolved. We will send

the file back and it will have to be reopened and adjusted property %Nlien we get those calls from the insured's and agents. Today, we had three

insured's call inquiring when they would hear something from their adjuster on their personal property. We open the closed file and find nothing

mentioned about personal property, no photo's, no nothing. I immediately put a note in that firms Master File to review and evaluate at the end of the

storm. Some of your adjusters are too anxious to close the file to get theii commission and/or go to another assignment.

Our reinspector is telling us that 901/v of the insured's he has met so far, did not have a copy of their estimate. The insured's had their check- but had

no idea what was on the estimate. This is totally unacceptable. You must make sure that your adjusters are discussing the estimate with the

insured and then the insured and agent are getting a copy of the estimate.

lflhearonemoretimetbatsoandsoisftMectedout,youwiUhearmescreamaUthe@A,ayfromAustin. YouaUhavedoneagoodjobcontactingtheinsured's and keeping your appointment and we do appreciate that a great deal. We arestill getting new losses in and with the heavy rains along the

coast yesterday and today, we are getting a number of reopeners due to new or more severe leaks on closed files, plus new losses being reported from

these rains

PLEASE Make gm we do not get calls that the personal property or business personal property was overlooked.PLEASE Make double sure that the insured and agent are getting copies of the final estimate to match their loss payment.

Thanks.



Repairing My Roof After a Storm

MY ROOF WAS DAMAGED DURING THE STORM. WHA T

SHOULD I KNOW ABOUT REPAIRING MY ROOF17

Your roof covering and the deck beneath it are your home's first line ofdefense against high winds, rain, and hail. The following information will

help you with selecting a roofing contractor and installing a roof after a

storm.

Before Making Roof Repairs• If your home is located in the first raw of Texas counties bordering the Gulf of Mexico

or in one of the following cities in Harris County that is East of H\W 146: La Porte,Morgan's Point, Pasadena, Seabrook, or Shore Acres, contact your insurance agentto determine if your repairs need to comply with the Texas Windstorm Building Code(TWBC).

•It repairs need to comply with the TWBC, talk to your insurance agent or adjusterabout the Windstorm Inspection Program to maintain or obtain windstorm and hail

insurance coverage.• Repairs made and inspected to comply with the TWBC will receive a Certificate of

Compliance, Form WPI-8, from the Texas Department of Insurance (TDI).

• Additional information on the Windstorm Inspection Program is available atwww.tdi.s1lale.1x_ or by calling (800) 24MO32.

• Contact your local building official for building requirements in your area.• Contact your insurance agent to determine if certain roof covering products are

eligible for insurance discounts.

Selecting a Roofing ContractorHow do I go about selecting a contractor to install my now roof?

• Veirify the narne, address, telephone number, and references of your roofing

contractor.• Make sure that the contractor is insured or bonded.• Obtain and compare at least three written bids.

• Make sure that all agreements and terms of warranty are written and signed and thatyou have received copy.

• Make sure that the re-roof application is eligible for receiving a Certificate ofCompliance, Form VVPI-8, from the TDI it required by your insurance company.

• Final payment should not be made unfil all work is complete.• Avoid door-to-door solicitors for damage repair work.

Beware of a contractor .......• Who only wants cash.• Whose references are all out of state.

• Who wants money before materials are on site.

• Who is not established.

• Who is not bonded or insured.

• Who offers 'specials' or 'extra-cheap work'

Texas Department of Insurance Page 1 of 4

July2OO8

PDF created with pdfFactory trial version www.pdffactory.co

VsPLAINTIFF


Roof Installation Requirements to theTexas Windstorm Building Code

1. Whataretheroolproductchoicesformyhouse7Texas experiences two of the most severe weather conditions a roofing system canface: high winds and hail. Homeowners have several choices on roof covering materialtypes. The most common roof covering for residential structures in Texas is asphaltshingles. If you are using asphalt shingles on your roof, select shingles that have beentested to and the shingle wrapper indicates compliance with either ASTM D 3161 ClassF or ASTM D 7158 Class H. Asphalt shingle product and other roof covering productinformation is available at wwwAdi.state.tx.usor by calling (800) 248-6032.

2. Is my roof decking acceptable as it is or should it be reattached, or possiblyreplaced, while the existing roof covering has been removed?

Your roof deck should be Inspected and any deteriorated or damaged decking replacedprior to the installation of a new roof covering.

Older Deteriorated and Damaged Deck (Board Decking)

New Deck Application Using Oriented Strand Board (OSB)

Texas Department of Insurance Page 2 of 4

July 2008

PDF created vvith pdfFactory trial version wwwodffactory-co


3. What kind of underlayment should be installed?

AminimumofNo.15underlayment(feft)isrequiredforasphakshingleinstallations. Twolayer of felt are required for roof slopes from 2:12 up to 4:12. For roof slopes 4:12 andgreater, one layer of felt is required. Make sure the felt ins installed as required by theTexas Windstorm Building Code and the shingle manufacturer.

4. What kind of roofing nails should be used to Install the shingles?

Roofing nails shall be galvanized steel or stainless steel, minimum 12 gauge (0.105")shankwithaminimumX'diameterhead. Staplesarenotacceptablet

PROPERLY DRIVEN IMPROPERLY DRIVEN

UNDERDRIVEN OVERDRIVEN CROOKED

Properly and Improperly Driven Roofing Nails in Shingle

5. How should asphalt shingles be installed?

The asphalt shingles shall be installed in strict accordance with the manufacturersinstallation instrurtions on the shingle wrapper. Note: Asphalt shingles can only beinstalled on roofs with a roof slope of 212 or greater.

Standard Installation of a Three-tab Asphalt Shinglein High Wind Areas

3ir

17 A N A I\NAILS

I/ I \ ,AILS' NAJLS'

@-17-

Texas Department of insurance Page 3 of 4

July 2008

PDF created with pdfFactory Wal version www.odffactory.co


INSTALLPERTHEMANUFACTURER'SINSTALLATION

INSTRUCTIONS

ENT LOCATEDER EACH TAB

FASTENERS

Asphalt Shingle Installation

6. Whatiflhaveametalroofpanals.metalshingles,orconcreteroofingtiles?How should these products be installed?

Roof covering products shall be installed in strict accordance with the manufacturersinstallation instruchons and their tested high wind applications. The TDI has roof

covering product listings for many types of roof coverings by many manufacturers.Approved product information is available at www.tdi.state.b(. us or by calling (800) 248-

6032.

7. If I want to install or need to replace my skylights, roof vents or roof turbines,what do I need to know about getting the right product for my house?

Skyl@ghts. roof vents and roof turbines are vulnerable to high winds and hail. You needto choose products that have a published wind resistance rating. For hail prone and

hurricane prone regions, choose impact resistant skylights which are tested to ASTM E

1886 and E 1996. The TDI has skylight, roof vent, and roof turbine product listings for

many product manufacturers. Approved product information is available at

www.tdi.state.t:x. or call (800) 248-6032.

Texas Department oflneurance, Page 4 of 4

July 2008

PDF created with pdfFactory trial version www.Offactory.co


From: Reggie WarrenSent: Thursday, January 15, 2009To: Welch Watt (E-mail)

Subject: TDI Inspections, roof damage

Welch, good dav.

Just wanted to mention that we are running into cases where the, windstorm inspectors are letting the policyholders that roofs need to be replaced

when we have allowed for repairs or partial replacement due to windstorm damage

I was hoping we would not have any or much of this. We like to make the calls on causation and what we are going to pay for on the windston-n

claims. We hope the windstorm inspectors will only inspect the areas allowed by theadjuster and not make comments about what needs to be

replaced.

Let me know if you want to discuss.

T'hanks,

Reggie


Reggie Warren

,Om: Reggie Warren'Jent: Saturday, November 01, 2008 4:05 PM

To: Reggie WarrenSubject: Misc Issues for Adjusters / IKE I TWIA

This email and attachments are going to all A firms handling TWIA claims. This is the only way weknow how to communicate with all adjusters collectively-

Please review with your adiustws.I promised another email after the one issued on Oct 30 about "Customer Service".

• We are getting complaints from insureds and agents about when they call your main number or

adjuster's number and no one answers. They get a voice mail box and leave a message and no

call backs. Or, your mail box is full. Please have someone answer the phone or at least returnthe phone calls if a message is left.

• We expect you and your adjusters to handle the claims to completion (full ad*ustmtnt). If theinsured or agent calls you or your adjuster about something you missed, please handleregardless if the file is open or closed. Do not refer the insureds and agents to us .... reopen and-handle.

If you have done the proper investigation on a file and the insured or agent calls wanting anotherinspection, they must supply you with additional credible evidence that supports anotherinspection. Such as, roofer estimates, photos, other estimates, engineer report, etc. We do not

reopen files when the proper investigation and analysis has been performed and just becausesomeone is "unhappy'.

Point is, most of the time we cannot avoid reinspections especially if there is other information to

consider. We want to consider all available information on each claim. But, do not tell theinsured and/or agent that you cannot do anything and that they have to call 'TWIA for approvalwhen there is other information available or offered.

• We are getting many complaints from the Texas Del?artment of Insurance. Many have to do with

the adjuster. Think about that when you are out there. Do everything you can to resolve the

claim within the parameters of the policy contract, _te fair be courteous and be respectful. That

always helps, even if you have to deny the claim or a portion of the claim.

• Please ask the insured if there has been a mortgago change. If so, get the new information andadvise us accordingly so we can include the correct payee on the claim check.

• Please get accurate mailing addresses for where checks are to be mailed, if different than the

address on the policy.

• Please'mail copies of your estimate to the insured and agent. If it is over $25K paid claim, a

should be approved by TWIA before mailing.

• Before submitting a report to us for authority to take a Proof, at least have some tentative

agreement on the adjustment with the insured or their representative.

-PLM"FFSff TWIA-instit-0000031749-1T

From: Bill KnarrSent: Sunday., September 14, 2008 04:14 PM

To: LDUGGAN

Subject: RE: Ike photos

Mike,

Yes, Hart said you would be looking them over for GAB. We appreciate it. We are not going to be very stnck on any loss tinder 25K. There will be

no valuations on dwelling or commercial and no penalties. NO Underwriting Risk Report etc, Just good photo's. complete estimate. statement of'

loss and short coverTeport.. Ifyou have one that won't pass muster, have Tracy send it direct to me and I'll pass the thing on through. I do that for

all of Zack War-ren's. So, just make sure it comes direct to my email and not through regular channels. Please call me with any question and I will

help. I am kinda in a different chair this time and can help in a lot of ways Glai @ou arc helping out. We anticipate possibl@ 100-000 Ike losses.

Could be more. We have 27 ]A's that vve arc using and have about I 000 adjusters on their lists. We also have about 2000 Dolly losses pending.Makes time go fast. Call me when you get started.

Bill

Direct line 512-637-2902

---Original Message----From: L DI-IGGAN [mnilticr.)T

Sent: Sunday, September 14, 2008 9:20 AMl'o: Bill KnarrSubject: Re: Ike photos

Hey Guy:

Looks like I will be reviewing TWIA files soon for GAB!

Looking forward to working agaiii.

Regards..........

Mike

---- Original Me%qage ----From: Bill Knarrfo: William Knaff (E-mail)Sent: Sunday, September 14, 2008 9:07 AMSubject: FW: Ike photos

Subject: Ike photos

Interesting FYI

PLMPMFPSTWIA-Instit-00016646

From: Richard MyersSent: Friday, September 26, 2008To: Reggie Warren

Subject: RE: Hurricane IKE Claims Handling Information / TWIA

Do you think it is to early to go up before we tested the water. I will send him the vehicle money today which should help him get started, I knowhe is working as I was there on Wedneqday and they had him busy

From: Reggie Warren [tnailto:RE-GGIE(qD.TW-IA.ORG]SLqi(: Friday, %epteniber 26, 2008 6:42 AMTu@ Richud MversSubject: RE: Hurricane IKE Claims Handling Information / TWIA

Really struggling on the price guide. TWIA will set the market for everyone else. Doift want to go up too much. fhe wind flood doc has to be

PDF. We do not %Asnt the adjusters to have the capability of changing anything in the letter.

No sets. Ate a 10 min lunch with Ro'Vin yesterdity. Did not try for the set She begged me.

TalkedloJoeyandtoldhimtotakecareofbusiness. larnnotsureheshouldn'tjustletthetruckgo,trylosavealittlemoneyandseeifhecangetanotheratsomepoint. Rentingonetodayhc-ays. Tdoubthedoes. ThevaTebu-,yandT)onislettinghimu-,ethetnickwehavealreadytented. -Fhat

haq to stop

Thanks.

Reggie

--Original Messagc -----From: Richard Myers [mailtoiRichardmW!brushcountr_vclaims.com]Sent: Thursday, SerAember 25, 2009 8:14 PMTo: Reggie WarrenSubject- RE Hurricane IKE Clairn3 Handling Information / TXVIA

Received and sent out I will input the price guide when received and burn to disc for Knarr will also email if he wants to send out Are the wind

flood doe on word) If -so I could create a package easy within Integria If not I %%ill build.

Relaxandgetsomesleep ifthatispossible. Iarnworriedaboutyou. Getsetbeforethcslecp

I.et me know ifT can help with anything.

Richard

PLAINTIFFSIBIT


From: Reggie Warren [mkhq:REGGIE(q)TWIA.CRGJSent: Thursday, September 25, 2008 7:03 PMTo: Reggie WarrenSiibjcct: Hurricane IKE Claims Handling Information / TWIA

All,


It is important if you are a principal of an IA firm that vou distribute this information to each and every one of Vour acklusters and that @ou make

certain thev abide accordingly.

I am concerned that man) attendees did not receive the 1.) Meeting outline 2.) Pricing Guidelines 3. i TWIA Fee Schedule that had been

distfibtitedseveraltimespriortothemeetings. Itis%,eryimportantth-,ityouwnveytheinfonnationtoyotiradjusters.

Please make certain you send adjuster reports to your designated email boxes. Watch your spelling.


<<adjuster meeting outline SElyl 08 14 rev.doc-

TWIA Fee Schedule for IKE Losses (Revised 9-25-08)

<<Ftx SchWulu 3 uff 09 11 081 rev 9 25 08.doc-

(-',ondo arkl Condo Unit-Owner Losses

Use the attached letters as appropriate to explain the adjustment process and to allow the Associations to choose their coverage. This should be done

early on in the investigation If the Association has a 280 and 282 endorsement, it is not necessary to give them the letter for them to make a

selection.

<<Condo Claim Corresp lb.doo- -Condo Claim Instructions l.doc.- <<Condo Claim Corresp 2a.doc-

Winctmonn vs. Storm Surge--`1;T,AR` Claini-q

See attached packet. Pr@t for your use in investigating each 'slab" claim.

We discussed this at length at the orientations. The adjuster is to meet the insured at the risk site and collect as much physical information as possibleconceraingtherisk. Thelefter,blank-ProofofLossindblank-[nN,entoryshoilidbegiventotheinstred. Yoticiniisethecheek-lisiprovidedtosecure any information you can from the insured. Follow the instructions as closely as possible.

It is important that you do not tell the insured that we are not going to pay anything for windstorm damage.

TtiSal"A)illlpt)ltatittildtY(UlllakCtIOCOrTITIlitll]Cllt%

%indstonn dainage and how much.

We are working with certain experts and others to develop the facts concerning the winds and surge. Hopefully, this can he done in the near future so

we crinadjust these claims properly and based on the TWIA policy contract.

-3259-00l.pdf-


Windstorm vs. Storm Surge- -"Non-SLAB" Claims

Use your ad@justing experience to segregate the Windstorm damage, if any, from the surge damage. This does not mean that everything above the

.,watcr line" is considered vAndslorm damage. You have to imagine what damage thcir may have been to the stnicture (exterior and interior) and

personal property if there had not been a surge. Investigate fully. Talk to thu flood adjuster if possible and determine flood's course of action.

Prepare your estimate of covticd Winston damage accordingly. Please communicate NN,ell wall the insured and their lepleselitative.

Another email with additional information to follow tomorrow7

-Price Guide revisions-Clarifications on questions at the orientations-Other

Thank you,

Reggie WarrenTWIA ClaimsAustin


ADJUSTER FEE SCHEDULE

ScWule 3

Agreed Gross Loss 'Dwelline "CommercialNo inspection made orerroneous assignment S 80 S 800 to S500 204 206S501 to $1000 252 289$1001 to S2500 316 383$2501 to S3500 377 469S3501 to S5000 46D 561S5001 to $7501) 522 644$7501 to $10,000 638 741510,DOI to $12,500 709 804$12,501 to $15,000 767 869$15,001 to $17,500 825 933$17,501 to S25,000 881 998S25,001 to $50,000 1,044 1,220

$50,001 to $75,000 1,857 2,088$75,001 to $100,000 2,78S 3,132$100,001 to $150,000 3,714 4,175$150,001 to $250,000 5,570 6,263$250,001 to $350,000 9,284 10,439$350,001 to $500,000 12,998 14,614S500,001 to S750,000 18,569 20,877$750.001 to $1,000,000 27,852 31,316

$1,000,001 and above are T & E and final bill must be approved by the TWIA Vice President -Claimsor designated manager in the TWIA Claims Department.

Billing is based on gross loss not to exceed policy limit of liability on each Item of insurance adjusted.

Total Losses (sq. ft. estJonly when paying limits) 900 1250

"NO CLAIMS-less than deductible(s)"

These should be billed based on the gross loss per the schedule above for all applicable coverages on

a given loss. Item l(Dwelling) and Item 2 (Personal Property) on the same policy are consideredone Item of insurance. Commercial losses will continue to be billed as indicated on the bottom ofPage 3 of this schedule.

"NO CLAIMS-no coverage"

If your investigation reveals there is no coverage for the claim. you should bill your file on Time and

Expense (T & E). The loss must be investigated appropriately and the insured should understand

why there is no coverage and why no payment will be made. The "no claim" letter outlining all the

reasons for denying coverage should be mailed to the insured and agent after your verbal

For losses assigned on or after Sept 11, 2008- Revisions include.

'No Claim " billing'ActuaIT&Eonlossesover$]MgrossappravairequiredbyTWLA


communication with the insured as to why no payment will be made. TWIA requires your T & E tobe sufficiently itemized to support your invoice.

Time and Expense (T & E) Files

ff approved by Texas Windstorm Insurance Association, riles can hebilled Time and Expense when additional work is needed above theroutine 1!equirements andlor the gross loss exceeds the fee schedule above.An itemization o expLfile activities and enses is required with all T & Einvoices. Hoyrl X rates Dwell@ag -- $105. 00 Lor negotiated rateCommercial -- $115. 00 (or negotiated rate)

The following are the only additional charm allowed on Flat Fee or T & E files, unless there is someextraordin@a Wense which must be pre-Vproved by TWIA:

*Supervision Chg for firm (NOT Adjuster) lo,,/* of Flat Fee (one time billing per file-max $500.00)Mileage $0.65 per mile (pro-rated when applicable)Fuel surcharge, one time per file $10.00Photos/ 35mm/digital $2.00 eachLong Distance Phone/Fax/Cell $5.00 per file (one time billing)Certified & Overnight Mail (when justified) Actual CostOther out of pocket expenses Actual Cost (receipts required)No photocopy charge Unless there is excessive copyingSales TaxIntegriClaim $ 1 0.00 (one time billing per file)

*Note: "No Claim" Supervision is calculated at 10% of Hourly amount.Forexample,4.Ohours@$105.00-$420.00. Supcrvisionfeewouldbc$42.00.Maximum Supervision fee on gM T & E file is $500.00

Fee Schedule:TWIA will decide which Fee Schedule applies to a specific storm.

Reovened rdes:• If the insured presents additional credible evidence that could lead IVIA to a different

conclusion on the claim, the file can be reopened.• Files can be reopened if the insured failed to identify damages, hidden damage is found,

subsequent continuing damage occurs or valid invoices are presented after closing.

• If an increase in the "gross loss" results, the file should be billed on the difference of the originalinvoice and the new schedule incremental fee per above with a $200.00 minimum plus expenses.

• If no billing change results, TWIA wfll permit a Flat Fee of $200.00 plus appropriate expenses.

RtLsRlacement Eg_ments to insureds ffgpjL1i_ca&!&If a displacement Rayment(s) are made on the claim without the adjuster's involvement, these

payments should not be considered part of the "gross 1033" when billing the file. TWIA will

decide if and when displacement payments are authorized.

For losses assigned on or qfter Sept 11, 2008- Revisions include: 2

'No Claim " billing'ActualT & E on losses over SlMgross, approval required by TWL4


Variadons to Fee Schedule:• The Fee Schedule is based on a "fall adjustment 11 of the entire claim.• Adjuster invoices will be promptly paid on properly handled files.• If TWIA takes over the handling of a claim Me and the adjuster is "out of the loop", TWIA will

not honor a full service invoice on the "gross loss'. Contact TWIA prior to billing.• If a claim is not properly handled, or supervised by the I. A. firm, TWIA reserves the right to

negotiate, reduce or reject the total service invoice.• Unique circumstances may arise on a specific claim requiring variance to the Fee Schedule. If

special handling/billing is appropriate, the adjusting firm should immediately raise the issueswith TWIA to reach an agreement on how to handle.

'Clean-up":Unless unexpected circumstances require us to hire adjusters to "clean-up" (handle reopens,supplements or other issues), TMFLA expects the adjusting firm that received the initial assignment tohandle the claim to completion, subject to the billing rules outlined in this document. TWIA expectsthe adjusting firms to keep at least one person in the area to do their own "clean-up".

* 'Commercial losses with multole items should be billed on thefull schedulefor the largest 5 Buildinftems(sr-osl loss to each) inspectedladjusted, expenses pro-rated when applicable. (A BuildIng isem and theBusiness Personal Propeny inside that building are to be considered one item).

The balance of the items is to be billed on the balance of the gross loss (dedud the gross loss on Ikefirst 5

itenubifledfromtherotaigrossloss)perthescheduleabove. Othernon-Buffifingornon-BusinessPersonalPropertyltemsuchasflagpoles,fences,antennas,tenniscourts,lightpoles,signsetc.shouldnotbilled separately UAEESS they are the only Items damaged T & E on "No Clatim-no coverage" itemswould be in addition to the above

On Dwelline losses with more than 5 items, contact TWL4 prior to billing thefile. This should not occurveyy oftem

if you handle a claim with multiple items and no windstorm or hail damage is found but each item requires a

separate inspection/reportlassessment, contact TWIA for instructions prior to billing the file

For losses assigned on or after Sept 11, 2008- Revkions include., 3

'No Claim 1, billing'A

ctual T & E on lossav nver S I Ad gross, approval required by TWIA


Reggie Warren

,Om: Reggie Warren,pent: Saturday, November 01, 2008 4:05 PMTo: Reggie WarrenSubject: Misc issues for Adjusters / IKE / TWIA

This email and attachments are going to all A firms handling TWIA claims. This is the only way weknow how to communicate with all adjusters collectively.

Please review with your ad*usters.I promised another email after the one issued on Oct 30 about "Customer Service".

We are getting complaints from insureds and agents about when they call your main number or

adjuster's number and no one answers. They get a voice mail box and leave a message and no

call backs. Or, your mail box is full. Please have someone answer the phone or at least returnthe phone calls if a message is left.

We expect you and your adjusters to handle the claims to completion (full adiustme t.f thenj I

insured or agent calls you or your adjuster about something you missed, please handleregardless if the file is open or closed. Do not refer the insureds and agents to us....reopen andhandle.

If you have done the proper investigation on a file and the insured or agent calls wanting anotherinspection, they must supply you with additional credible evidence that supports anotherinspection. Such as, roofer estimates, photos, other estimates, engineer report, etc. We do not

reopen files when the proper investigation and analysis has been performed and just becausesomeone is "unhappy".

Point is, most of the time we cannot avoid reinspections especially if there is other information toconsider. We want to consider all available information on each claim. But, do not tell theinsured and/or agent that you cannot do anything and that they have to call TWA for approvalwhen there is other information available or offered.

• We are getting many complaints from the Texas Department of Insurance. Many have to do with

the adjuster. Think about that when you are out there. Do everything you can to resolve the

claim within the parameters of the policy contract, be fair. be courteous and be respectful. Thatalways helps, even if you have to deny the claim or a portion of the claim.

• Please ask the insured if there has been a mortgagee change. If so, get the new information andadvise us accordingly so we can include the correct payee on the claim check.

• Please get accurate mailing addresses for where checks are to be mailed, if different than the

address on the policy.

• Please mail cmies of your estimate to the insured and agent. If it is over $25K paid claim, 4

should be approved by TWIA before mailing.

• Before submitting a report to us for authority to take a Proof, at least have some tentativeagreeMent on the adjustment with the insured or their representative.

I

PLMIMFPSTWIA-insfit-00000317

• On roof replacements, use good judgment on cutting waste-allowances. 15% is not for everyroof.

• If you can, please remove the color logos from your estimates. It takes up extra space on ourserver and it is not necessary.

• Attached are three (3) documents that can be helpful to you and your adjusters regarding "slab"claims, "heavy structural" claims, and displacement mone .

Let's all work together as much as possible to prevent complaints and multiple phone calls toeveryone. It takes adequate communication with insureds and others to achieve this goal.

Thank you,

Reggie Warren&-C@-7& EMFM@i es@MP--] M ke I

-FLJ -EA-Slab claims update Heavy Structur2l Displacement

lo adjuster... Claims Nav...

2ayments update

2


From: Reggie WarrenSent: Sunda3,, November 30, 2008To: Reggie Warren

Cc: Reggie Warren-,

Subject: Supplement Billing / Dolly and Ike / TVIAAttachments:Supplement Fee Schedule. Dolly and Ike eff Dec I 08-O.doc

We have enhanced our supplement billing per the revised "Supplement Fee Schedule' attached, effective for Dolly and Ike supplements worked on or

after December 1, 2008.

Please fulIv read this docurnent and understand our position on reopens and supplements. We do not like them and are getting way too many because

die job wds aot done property the fusL time.

While we understand that reopens and supplements are pail of the business, adjusters need to strive to handle the claim full@ in an effort to avoid

supplements.

Wehavenotboughtintatheideaofhaving"clemitip"or"stipplemetit"teaiilstogobeliitidaiidliaiidlestippleniciitsaiidre.oi)eiis Wee-Apeetthe

adjuster and adjusting firm who handled the original adjustment to also handle any qualified supplement,

We hope that this revised fee schedule for will aid in getting supplements handled efficiently.

Thanks for your continued cfforts.

Reggie Warren

FOM"FFSHieff


SUPPLEMENT FEE SCHEDULE

For Oualified Supplements Only-Hurricanes Dolly and Ike

Reopen / Supplement files:

• if the insured presents additional credible evidence that could lead TWIA to a different

conclusionontheclaim,thefilecanbereopened. JustbecauseaTOOfer wants to put on a

new roof does not necessarily justify a supplement.

• If the file reopens because the adjustment was clearly not performed properly to begin with,

no additional billing should be submitted to TWIA. If there is a question regarding this,

TWIA will have the final say.Files can be reopened if the insured failed to identify damages, hidden damage's found,

subsequent continuing damage occurs or valid repair invoices are presented after closing.

Use goodjudgment when handling supplements. It may be necessary to reinspect, but onsmaller amounts, consider handling by phone with the insured. If there is a reinspection, we

want photographs of the damage involved with the supplement.

We will need any printed, additional evidence provided by the insured that supports thesupplemental claim. Secure names and contact information of insured's contractors/experts

especially if an agreement on the supplement is not reached.

• The adjuster's supplemental report should clearly demonstrate the validity of the supplement.

• We do not reopen claims just because someone expresses disagreement or unhappiness with

the amount. We require more evidence especially if the original claim decision/payment is

well documented.

• Until further notice, the gross amount of the supplemental loss regardless of the number ofItems of insurance involved will be billed per the schedule below.

• If the supplement appears to exceed $25,000, we will need a call from the 1A firm supervisor

and will expect the supervisor to get involved to answer the reason for the large supplement.

• In the event of a second or additional supplement, refer to "Reopened Files" in TWIA Fee

Schedule 3 for supplemental billing ($200).

Agreed Gross Supidemental Loss DweHip CommercialS1 to $500 or telephone adjustment 172 181

$501 to $1000 221 254

$1001 to $2500 277 336

S2501 to S3500 331 412

S3501 to SM" 404 492

$5001 to $7500 458 565

S7501 to S10,000 1%0 650

$10,001 to S12,500 622 706

$12,501 to $15AM 673 764

$15,001 to S17,500 724 820

$17,501 to $25" 773 877

For Reopens / Supplements -,Porked on or after December 1, 2008 1

Reopens cindSuppletnetassubmitted to 7THA prior (a December 1, will not be affected bythis whedide.


SUPPLEMENTAL ESTIMATES SHOULD INCLUDE ONLY ADDITIONALDAMAGES OVER AND ABOVE THE ORIGINAL ESTIMATE

Time and ExiDense (T & E) Files on Supplements

If Pre-approved by Texas Windstonn Insurance Associadom riles can he hilkd rune and Ewense when

additional work is needed above the routine requirements andlor the eross loss e-weeds e fee schedukabom An itemization offile activities and expenses is required with aU

T&Einvoices.Hourh,rales Duellink,--$105.00(oi-neizoliatedrate) Commercial - SI15. 00 (or

nEgntiared rate)

The following are the only additional cligges allowed on Flat Fee or T & E files. unless there is some

extraordinan, expense which must be prc-4pprovcd by TWIA:

*Supervision Chg for firm (NOT Adjuster) 10%ofFlatFee(onetimebillingperfile maxSS7.70)

Mileage $0.65 per mile (pro-rated when applicable)

Photos/ 35min/digital 12.00 each

Long Distance Phone/Fax/Cell S5.00 per file (one time billing)

Certified & Overnight Mail (when justified) Actual Cost

Other out of pock-et expenses Actual Cost (receipts required)No photocopy charge Unloss there is excessive copyingSales Tax

*Note: Supervision is calculated at IO% of hourly amount total on T & E filcs.

For example, 4.0 hours,@), $105.00 = $420.00. Supervision fee would be $42.00.

For Reopens / Supplements worked on or after December 1, 2008 2

Reopens mid Supplements submitted to DHA prior to December 1, will not be affected by this schedule.


From: Jeff KaiserSent: Saturday, November 15, 2008 03:37 PMTo: Reggie Warren


Reggic,

I believe that we think alike in many- ways. My intent is feedback on our problems and what I hear on the street. While you mav not be seeing

problems with the reopens yet, you will. AqJuRters are giving hack their inventories of claims and going home. T agree "ith voi iT comment on quality

issues. I have been doing this many years and never has the quality been so poor. Many senior people are leaving the industry because of age and the

lack of consistent work. We are a Citizens of Florida trainer but the number of quality candidates is diminishing. We have to pretty much "idiot

proot" the process. Because ofthree storm deployments going on at once, many of our senior folks grabbed at Fay and Gustav deployments that were

available as theN had not worked in two years.

At this point, we are going to see how many of the reopens we can handle from Lhe desk. I expect that as the holidays arrive we 'Aill lose most who


have anv fresh claims lo attract actiuslers back. At this point, you are probably better off continuing lo send them to vour core firms. At least you will

have tbose funis to back vou Mien the reopens get out of control. I do Luiderstand the economics of this business.

Reggie, we have worked hard to inake things as smooth as we can. I do not necessarily agree with you enLirely on the reopem,. Of course Lhere are

many that have not been handled perfectly the first time around but everyone thought the losses were coming fast and furious so we were trying to

move them alongag fa,;t as we coilld qowe woiild have capacity In hindqght, we could baveall taken our time,.qt least my firm We have also seen

the typical policyholder survival patterns and are starting to receive contractor estimates, PAs, etc... I don't care how thorough the adjuster was on the

first go, when the contractors & PAS start getting involved, that is a step of the process that cannot be avoided. To derry at "St a reinspection on even

the mostwell done file is the groundwork for a bad faith claim. '['bat is why I have asked for consideration on the billing, I do not want lo set up

TWIA nor do I want to excercise my E&O carrier for the litigation that will certainly come. At the risk of making you angny, I again ask you to

consider allowing us to bill from the bottom of the schedule of these very necessary reinspections. Before you answer this request, I urge you to take

the temperature on the street. I cannot think of a firni or adjuster out there whoviouldwant a $200 ($1 30 to tbe adjuster) reopen file considering the

work- difficulty and their overhead cost to stay in the area. All of these are being handled by different adjusters than the original and I don't believe

there are enouib local people to handle them if all the adjusters in the area leave. The time to address this issue is growing short, mainly because the

approaching holidays are causing the adjusters to make decisions.

As always it is a pleasure to communicate with you. I Rcd the comment dboUL the length of my last email and I apologi" for the lengih of this onc,

However. I believe this issue is at critical mass and I do no( believe I can stress that enough. I am hopeful that we can work with you again but

t4ouldn't blame you if (bat did not happen. I hope you understand that I am Lrying Lo head off what I perceive to be a disaster and please do no( think

f am a troublemaker. I really intend this to be my attempt to protect your interest. This is not a greed move a, the incremental increase is not %vorth

that.

Thank you,

Jeffrey A, KaiserPresidentSpecialty Group, Inc.

----Original Message -----From: Reggie Warren liniaillo.RFGGI.EOa.T.)MLA-O-R--Gj

Sent: Sat I I i 1 5/200 8 9: 00 AMTo: Jeff KaiserCC:



----Original Message -----From: Jeff Kaiser [Mg_ilto-kdiscr @§pceidItygroupinc-corril

Seat: Fridav, November- 14, 2008 6:21 PMTo: Reggie WarrenSubject: RE: Supplemen[s and Reopens / IKE / TWIA

Reggie,

I have attached a copy of the email I sent you yesterday. I received no response or indication that you received the email I am hoping this email

is not your response as this is a problem we do need to address, Please let me know your thoughts.


Aside from that. for reopens where the ad@iuster has to change measurements or unit prices, the easiest way to figure the supp is to rewrite the

estimate and plug in the new pricing then deduct the original estimate amount. I know this doesnt seem to be well received bv your examiners but I


Thank you.,

Jeffrey A. Kaiser

President

Specialty Gronp, Inc.

Dear Mr. Warren,

In response (o your recen(message: abotil reopened files, I likive decided to send you a response and a reqUeS1. I will start with an explanation of


When we received your request to deploy for FWI.A, We responded with substantial resources. Along the way many things happened which were

beyond the control ofarry ofus, namely, a couple ofodier stores. We Were requested to submit a list ofFirst responders and we sent a list of8O

adjusters before We were told that was enough. Some of them ended up taking other deployments before they got to Texas because of the old "bird in

the hand" syndrome. We successfully deployed adjusters ever@ day and at the end of almost ever), day., all claims received up to that point had been

assigned out, all while we limited the adjusters to no more than 50 losses. even for the most experienced ones. That drew some criticism from the

greedy ones but we stuck to our plan as %ve have learned that lesson in the past. Then suddenly the flow of losses to our firm stopped even though we

I-od only deployed about 65 adJustcrs. We could have put out 150 within the nionth if We had Die volunic of losses, even with all of the other storm

deployments that were going on at the tinie. Now we could probably put out 250 as many have finished other deployments.

During our initial deployment, I sell( you a request for an estimate of losses- You Were always very good in responding and told me We would

get all we wanted So we contimied to move people toward Texas, guaranteeing them work and standby money, even thmigh We si6mitted very few

standby daily fees to TWIA for reimbursement. We had many adjusters arrive to find that we had no work for them and we helped many to find work

elsewhere. As I told you earl), on, we committed to handle TWTA and did not accept losses from other clients because we all expected many losses.

Wliile I know that no oric: call see into the future and tl)cre is no way to predict thc number of losses, a huge number of firitis and adJustei-5 were

deployed by TWIA. When the flow of losses stopped completely and not even a slight flow continued, I had no way to fecd those who were en route.

I also had no way to keep the pood adjusters hi Texas after their losses were scoped out or to mix with the reopens. Most left because they could not

sustaill 010 additional expense of living ill a Liailer or hotel room and incurring $200 a day to live, while also hav ing to pity En a home somewhere


As such, most of the adjusters have gone home and very few are left to handle the reopening files. Most of those have said that the (65% 01)

S200 fee is not enough to pay them to review the original report & estimate, tra,@el to the loss location, re-inspect, negotiate with the insured and/or

contractor. write an estimate, report, bill and close the file. They are now starting to reject these assignments because they only get $130 plus mileage

Forall this work. I do not like this response from them at all' I have said to clients in the past t1lat it really doesn't matter to me what the fee schedule

is, it matters to the adjusters because if it isn't enough to attract them, it is a setup for failure since we all draw from the same gene pool of storm

adjusters. At this point, I am hard pressed to move this matter toward success and away from failures However. I have a proposal that I ask you to

consider.

I am setting up a triage unit to determine whether the reopen can be done from the desk or if it needs to be re-inspected. We are also looking to

see ifthe original ackjuster has done Their oh properly. lfnot, we will pay the new adjuster front the oripj inal adJuster's, proceeds-. If there is a price

difference issue, we should be able to handle it from the desk. If it is measurements or missed items, we may be able to handle it from the inside but

many will have to go outside. We are seeing a wave ot'huge contents claims where the insured is saying the original adjuster told them to dispose of

the items and they want to be paid. We have seen this before and the adjuster will tell you it is not so. You and I both know the only wav to deal With

these aggressive claims is to go and sit with the insured and ask them to start justifying their claim. This is very time consuming and it is difficult to

get adjusters, who feel they are underpaid, to properly work through this process. However, it is also difficult to pay some of these claims when the

insured showed the original adjuster one item during the initial inspection and we get an inventory for 30 items. Please also keep in mind that these


reopen claims are being handled by different adjusters who almost alwavs do not have much good to say about the, original adjuster simply because

they have to handle the reopen, It gets worse when they feel like they are losing money doing it. Jeff, I am not buying this. I think in most cases theadjusterdidetdotheiTjObinitiallyonttvselargePPeiaims. AdjusteTsarenotinterviewingtheinsureds. Theva'renotereativeinadjustingaclaim.

The hum through and their product i I lustrates it.

laiiiask-iiigforautlioritNtocoiiimittotlieseadjusters,whohavetogooutatid,Aurk-throupjisomeverydifficultclainis,tliatthe),caiibilldieLidjuster fee from the bottom of tht; schedule as if it were a ne" claim. We will not bill any of the surchalges. just the adjuster foe. additional infleage,

additional photos and exam fee. The only change would be the adjuster fee. The ones we can handle from the desk will be billed at the $200

minimum based on the difference in fee amounts and the ones we find to be deficient. we will not bill TNAIIA. Jeff, we cannot treat you differently

than the others and I have not had these comments from anv other final.

MY logic is that if we even had a trickle of claims coming through instead of a total shutoff, I would be able to keep a group of ad-lusters

sufficient to spread them out and get the reopens handled. I would also be able to mix the reopens with the new losses as we went along, to keep the


demons we are facing as we try to move this Cat to a conclusion, this one is looming large andwc arc trying very hard to succeed for TWIA, the

policyholders in Texas and for you. You have been fair and evenhanded to deal with so I am hoping that we can figure out some resolution to this

probfeni as I expect our firm and adjusters are not the oilly ones who are facing this. I also believe diatwe may be able to attr act some adjusters back

if t1wre is a fillancidl illecriLivc to do so because I believe the clainis will continue Lo ivoperi for sonie time to come. Jeff, claims die totaling ill slow at

Ns time. Our initial predictions were based on information we had Hi [he time. No tine can predict numbers early in a slorm I feel we will continue

to get losses for months and will initially get as inany as I first thought, but they are not coming ill at a pace to keep any one film particulaily busy. I

think most firm q are hanging on to the real adjusters that want to work and those adjusters can handle the reopens. I wish there weren't -so many and

there wouldn't be if the adjusters handled the claims to start with. I think adjusters are accustomed to having clean tip crews come around and clean

Lipthcirmess,butwearcnotatthatpoint. Wccxpcetthcfirmstohandlethecisimsonaftilladjustmcntbasisandthatmeansrcopens.

Jeff, there are some good adjusters out there but many more that are inexperienced and that are not getting the job done. That is across the

board. TWIA was promised qualified adjusters from the beginning and quite frankly, Lot very few. I am not tr@ ing to beat up all the adjusters, but

the general consensus is that the products are bad. I know there is a Icaming curve, but many of the adjustment procedures are not that much

different than any other state.

I am sure I am not addressing your issues and needs, but most of this involves issues that need to be managed by an IA firm that considers itself

to be a 'eat" firm.

If you have individual supplments that require an inordinate amount of time, let us know and we will consider different billing. We don't want

you are the adjusters to go broke, but we don't want quality from the beginning.

No one is perfect including TWIA. We. have mir issues too We are all doing our best but if I decide to he a "cat" qdjti,;ter I will have to

understand that there are no real guarantees on numbers of claims and how fast they will come in.


Jeffrey A. Kaiser

President


----- Original Message -----From: Reggie Warren [mailto: EGGI U_)TWIA.QRGI

Sent; Fri I 1/1 42008 1:19 PMTo: Reggie WarrenCc: Reggie WarrenSubject: Supplernerits and Reopens / IKE / TWIA

This is going to all TA firms handling IKE claims for TW`lA.

We are getting supplements in various forms.

We do not want the original estimate to be re-written to include the supplemental items. This takes a lot of time to figure out.


Bakht Khattak v. Texas Windstorm Insurance Association, Pacesetter Claims Service, Inc. and Blane E Bergan

Documents

process of texas

texas onor

plaintiffof texas

thestate of texas

business of insurance

insurance claims

thiss defendant

state defendant reggie