In the final hours of the 2011 Special Session the Texas Legislature worked out a compromise on reforms to the state’s insurance provider of last resort for wind and hail for properties along the Texas coast. The House and Senate reached agreement on Texas Windstorm Insurance Association reforms in House Bill 3 one day before lawmakers were set to adjourn the special session called to resolve issues pending from the regular legislative session that ended May 30. The TWIA reform bill failed to gain approval in the regular session due to a deadlock over tort reform provisions. Gov. Rick Perry had deemed the issue a priority and said he would call another special session to take up TWIA reform if legislation was not passed.
The Property Casualty Insurers Association of America (PCI) said the legislation is an “important step toward better protecting coastal as well as inland residents,” and that the bill strengthens TWIA’s financial structure and improves its administrative and claims handling operations.
The bill requires claims be filed within one year of an event, streamlines the dispute resolution process and clarifies that bonds can be issued only once per calendar year, PCI reported. The measure establishes an interim task force to examine wind insurance issues and TWIA operations. It also allows policyholders to sue for claims and collect double damages if they are able to prove TWIA intentionally withheld a legitimate claim.
The American Insurance Association said the bill strikes a “fair balance” between policyholder expectations and reforms to TWIA’s financial structure.
“HB 3 authorizes the issuance of ‘pre-event’ Class 1 bonds for the first time,” said Fred C. Bosse, Southwest region vice president for the AIA. “The process for surcharging coastal property owners for ‘post-event’ Class 2 bonds has been streamlined and improved.”
Shoring up TWIA’s ability to pay claims is one of the biggest concerns for agents, said David VanDelinder, executive director of the Independent Insurance Agents of Texas. With the ability to purchase pre-event bonds “we can go into the bond market now, accumulate that money, [and] service those bonds with existing premium dollars,” VanDelinder said.
Topics Lawsuits Texas Legislation
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