Texas Windstorm Insurance Association: Part 3

Top TWIA officials leave with tens of thousands in severance pay — and a pickup truck

February 17, 2011
By Steve Miller, Texas Watchdog

Two high-ranking employees of the Texas Windstorm Insurance Association left their jobs abruptly in December, one driving away with a 2010 Ford pickup truck and more than $110,000 in severance pay and the other with nearly $50,000, records show.
The employees, Reggie Warren and Bill Knarr, were intimately involved in the processing of millions of dollars in claims in the wake of Hurricane Ike.

Warren, the former vice president of claims, had been the target of criticism from Houston plaintiff’s attorney Steve Mostyn in a news investigation from November 2009. Mostyn alleged Warren directed claims adjusting business to a company where his brother and son were employed, Brush Country.

Warren was also a defendant in a Hurricane Ike lawsuit that set the stage for a $189 million settlement between 2,400 policyholders and TWIA that was announced in July.

“It’s sickening,” said Rep. John Smithee, R-Amarillo, after he was shown the severence agreements. “I don’t know the full details just yet, but I want to get to the bottom of this.”

Smithee is the chairman of the House Insurance Committee and has been examining ways to restructure the quasi-public TWIA.

Smithee said he’s particuarly concerned about the sverance packages because it’s nothing like the kind of packages that folks in the business world would get.

“I’ve never seen anything like this,” Smithee said.

In a 288-page Hurricane Ike legal petition filed by Mostyn, former TWIA lieutenant Warren is referred to as “the claims god.” The filing alleges Knarr, whose title was catastrophe office manager, was “Warren’s henchman,” and says he and another TWIA employee were “the right hand men.” The petition alleges Warren was offered gifts and trips from TWIA’s six primary adjusting companies, who “discussed inappropriate relations in quid pro quo for a position on TWIA’s preferred adjusting list.”

The filing came about seven months before TWIA signed off on a Texas Department of Insurance report highlighting a number of problems at the beleaguered agency. Among the findings were the lack of a “complete” complaint log, incomplete anti-fraud initiatives, and inadequate policies – including a disaster recovery plan that did not outline the responsibilities of senior management.

Both Warren and Knarr signed 7-page departure agreements, negotiated through attorneys retained by each, that forbid them from talking about the terms of their departures, according to records released to Texas Watchdog under the state Public Information Act. Warren received $114,273 in 20 bi-weekly installments; Knarr received $47,289 in 13 payments.

Warren resigned without being allowed access to the personal belongings on his work computer or his desk, and he was concerned about being able to find another job, according to e-mail records. He also negotiated more severance pay than TWIA initially proposed.

In a Jan. 7 e-mail to TWIA general manager Jim Oliver, Warren says:
From a practical standpoint, this decision came with no notice or time to prepare. At my age and in this economy, I will be hard pressed to find [a job] comparable in 40 weeks, much less in 26 weeks. …

When items/docs etc. were removed from my office without my involvement, some personal items were inadvertently taken and that I would like to have. (sic)

Calls for Knarr or Warren were to be handled according to a script dated Dec. 27, which TWIA general counsel David Weber forwarded to a colleague:
If the person asks for either Reggie or Bill: Reggie Warren or Bill Knarr no longer work at TWIA. If this is a personal call, he may be reached at home. If this is about a TWIA matter, please provide me information about the matter you are calling about including any claim number and I will have the appropriate person contact you shortly.
If anyone asks anything else, your answer is: I don’t know.

Reached last week, Knarr and Warren referred calls to Oliver, who said through spokeswoman Meg Meo only that “they have resigned.”

Meo is an agent with Elizabeth Christian & Associates Public Relations in Austin, which was retained by TWIA in the summer of 2009 and has been paid more than $250,000 since July of that year, according to records. Meo said her company was retained “primarily to help with consumer education,” but invoices indicate the firm has been used for much more, including clipping articles and television news stories regarding TWIA.

The agency is paid a $9,500 monthly retainer, and an expense fee of six percent. In addition, the firm is paid $250 an hour for public relations consulting as needed.