Texas Insurance Commissioner Jose Montemayor initiated two actions—a statewide expansion of the Texas Windstorm Insurance Association (TWIA) and triggering of state market assistance programs, called the FAIR (Fair Access to Insurance Requirements) Plan—to assist Texas homeowners in finding insurance.
Both actions are designed to build upon existing capacity available within the Texas homeowner’s market in light of the recent announcement by California-based, foreign-owned Farmers Insurance Group. These actions will assist policyholders that Farmers Insurance Group plans to discontinue starting in November and who may need additional assistance in finding homeowners insurance.
TWIA currently provides wind and hail coverage in the 14 coastal counties and part of Harris County. This action will expand the program statewide to owners of insurable property and expand coverage to include fire and explosion.
The FAIR plan would implement a system under which all property insurers would combine to provide coverage for insurable homes in “underserved” areas. To be eligible, a home may have to be rejected by two licensed companies.
“Precautions will be added to ensure that neither of these options competes with the private marketplace,” said Montemayor. “Both actions are intended to be insurers of last resort.”
“This residual market program would not compete with the normal property insurance market but would be a last resort source of coverage for homeowners,” Montemayor said. “Additionally, we could have the program up and running in a matter of weeks because the basic infrastructure is already in place.”
“Although companies active in the homeowners market have plenty of capacity to facilitate additional customers, there is the potential that some consumers will have greater difficulty than others due to past claims or other problems,” Montemayor said. “By creating a residual market, we can complement the insurance industry’s current capacity and create a temporary safety net for those hard-to-insure consumers until the 2003 Legislature can consider a permanent solution.”
The Department of Insurance will hold a public hearing October 10, to receive public and industry input on initiation of these steps. The hearing will be at 8:30 a.m. in Room 225 of the William P. Hobby Jr. State Office Building, Tower II, 333 Guadalupe, Austin.
Topics Texas Homeowners
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