AIA Supports Texas’ Development of Stopgap Residual Market

Given the increasingly complex situation created by Farmers Insurance Group’s recent announcement to leave the Texas homeowners insurance market, the American Insurance Association (AIA) supports the efforts of the Texas Department of Insurance, the Texas Windpool Insurance Association and the insurance industry to take steps toward developing a stopgap residual market.

“While it is important to address the current situation facing Texas homeowners, there are many legal, regulatory, financial and administrative hurdles that must be resolved before a program of this type can be initiated,” said Ronald H. Cobb, AIA vice president, Southwest region.

“Texas law already provides for implementation of a residual market for basic homeowners coverage when the market demonstrates that it is necessary. If it is determined that a residual market is necessary, AIA will support and assist the insurance commissioner in his efforts to implement such a mechanism consistent with existing Texas statutes,” Cobb said.

“The overriding priority is to provide consumers with more choices while giving insurers a stable and healthy market in which to compete. However, any residual market program must operate solely as a market of last resort,” explained Cobb.

No AIA member company has announced plans to discontinue writing homeowners policies in Texas. To encourage more companies to conduct business in the state, it is prudent for legislators and regulators to address the real causes of the homeowners insurance situation. Gov. Rick Perry and Insurance Commissioner Jose Montemayor have taken initial positive steps by approving national policy forms for several insurers.

Topics Texas Homeowners