Texas Brine wants insurance company to pay claims Texas Brine wants insurance company to pay claims State asked to make insurer obey its policy by David J. Mitchell| email@example.com Jan. 11, 2014 Comments Texas Brine Co., the Houston company blamed for the Bayou Corne-area sinkhole, has filed a formal complaint with the Louisiana Department of Insurance, alleging one of the company’s insurers is not paying up as its policy requires. Texas Brine officials charge Arch Specialty Insurance Co. has not reimbursed the costs of Assumption Parish government entities since Nov. 1 and never reimbursed Texas Brine for any of its $55 million in costs from the state-mandated response to the growing 26-acre sinkhole in northern Assumption. “Arch’s conduct violates both the letter and the spirit of Louisiana law governing fair claims handling by insurers,” wrote Mark D. Mese, a Texas Brine attorney, in the Dec. 23 complaint letter obtained Monday. Arch is the second Texas Brine insurer in the past 2½ months to balk at paying for sinkhole costs. Liberty Insurance Underwriters Inc. sued Oct. 22 in U.S. District Court in Houston, asking a judge to declare the insurer does not have to pay on its $50 million policy. Liberty alleges Texas Brine had years of warning about a company-operated salt dome cavern suspected of partially collapsing and causing the sinkhole to emerge in August 2012. Texas Brine has disputed those allegations. Texas Brine officials said in a separate statement Tuesday that Arch is trying to shirk its responsibilities and needs to be held accountable by the department. “We have paid our premiums, and we expect Arch to step up under its contractual obligation under the policy and start adjusting the submitted claims against its insured, not to continue to ignore and delay,” the Tuesday statement said. Texas Brine said in the Dec. 23 complaint that Arch ignored requests for a resolution, even reneging on a promised meeting Dec. 12 at Arch company offices in New Jersey. The complaint letter asks Warren Byrd, deputy commissioner of insurance, for whatever action is deemed “appropriate to cause Arch to handle claims related to the Bayou Corne sinkhole promptly, fairly, and as required by Louisiana law and regulations.” The letter is being treated as a complaint, said Ileana Ledet, Insurance Department spokeswoman, on Tuesday. Arch Insurance Group spokesman Thomas Routson said the company does not comment on claims-related matters. Arch Specialty, a subsidiary of the $5.84 billion Arch Capital Group Ltd. of Bermuda, had a net worth of $281 million through Sept. 30 and an A+ financial strength rating, Arch’s website says. Texas Brine has several layers of insurance coverage and, according to the Dec. 23 complaint, two are finished, bringing forward Arch’s $10 million policy. The Liberty policy has not been tapped, court records say. Arch has paid $5 million so far for weekly homeowner evacuation payments, homeowner buyouts and reimbursement of parish costs, the complaint letter says. Because of nonpayment, Texas Brine, the largest independent brine producer in the nation with annual revenue of $31.8 million, has had to bear its own response costs itself. The privately held company says the lack of insurance cash has not impeded its efforts. But, parish and company officials said, the insurance dispute has delayed reimbursement for parish governments owed several hundred thousand dollars and holds up Texas Brine’s ability to access additional insurance polices. While Texas Brine decries its insurer’s nonpayment, though, Texas Brine challenges some of parish governments’ reimbursement requests before sending the remainder to company insurers. The state has also spent more than $12 million, unreimbursed, on the sinkhole. Assumption Parish Sheriff Mike Waguespack said his office has been reimbursed $725,996 but is owed another $176,459. He said he expects the demands from the sinkhole only to increase in the coming months due to planned response work around the hole. Also, though sinkhole growth is believed to be slowing, it still has active periods. The parish Police Jury, which is owed almost $171,000, said tremors that cracked the sinkhole’s southern containment levee recently were followed with three days of slough-ins Friday to Sunday. The slough-ins sucked down trees each day in the hole’s northwest corner. Waguespack said Insurance Commissioner Jim Donelon told him he is trying to speed up payment but Waguespack is concerned Arch is “sitting on their hands and the payment of these claims.” “The issue Texas Brine has, is they can’t come out of pocket. Unless it’s approved by the carrier, they might not get reimbursed, so we’re stuck in limbo,” he said.