10 Things to Know About the Texas Windstorm Insurance Association

Changes to the way the state handles coastal property insurance issues are certain to be made during the 2013 Texas legislative session. Here are 10 things to know about Texas’ property insurer of last resort, the Texas Windstorm Insurance Association (TWIA), taken from its Biennial Report, published in December 2012.

1. TWIA was established by the Texas Legislature in 1971 following Hurricane Celia to provide wind and hail coverage in 14 coastal counties and portions of Harris County that are underserved by the private insurance market.
2. TWIA’s policy count grew from 77,000 policies in 2001 to 216,000 policies just prior to Hurricane Ike in 2008. The annual growth rate since Ike has averaged 4.5 percent.
3. Hurricanes Dolly and Ike in 2008 together generated more than 100,000 claims and an estimated $2.8 billion in losses.
4. Following Hurricane Ike, TWIA’s claim volume grew from 10 to 15 claims per day to nearly 93,000 in a 12-month period.
5. More than 7,000 lawsuits have been filed against TWIA by Ike claimants. It is estimated that Ike losses and litigation will ultimately total more than $2.5 billion.
6. Because of claims handling and other administrative issues following Ike, TWIA was placed under administrative oversight by the Texas Department of Insurance in 2011.
7. TWIA currently has around $3.1 billion available to pay claims, which the association said would cover a 1-in-60 year event. TWIA estimates that a 1-in-100 year storm could cause losses to the association of more than $4.5 billion.
8. In its biennial report, TWIA suggested ways its policy count might be reduced. One would be to extend claim protections granted to TWIA by state statute to carriers voluntarily writing wind coverage on the coast. Claim protections include limitations on when claim issues may be brought to suit and the extent of damages that may be awarded in any lawsuit against the insurer.
9. Another suggested depopulation method would be to require consumers to accept any voluntary market coverage offer, including surplus lines carriers, providing they have a minimum A7 rating from A.M. Best, and the offer includes comparable coverage.
10. If a mandatory acceptance rule is adopted, TWIA suggested lawmakers could limit the size of allowable rate hikes by private carriers; for instance, no more than 50 percent higher than TWIA’s quoted premium.

Topics Catastrophe Natural Disasters Texas Windstorm Hurricane