Texas Insurance Commissioner Jose Montemayor rejected the Texas Windstorm Insurance Association’s request for a 10 percent rate increase for wind and hail coverage of homes in the 14 coastal counties and part of Harris County. However, TWIA’s request for a 10 percent increase in rates for coverage of commercial buildings, effective January 1, 2003, was granted.
TWIA, created by the Legislature in 1971, is the state’s insurer of last resort for wind and hail coverage on the Texas coast, including portions of Harris County on Galveston Bay. It provides wind and hail coverage when insurance companies exclude it from homeowners and other property policies. TWIA currently insures more than 80,000 residential and 28,000 commercial structures.
All property insurance carriers doing business in Texas must participate in TWIA. Participation includes paying assessments if claims from a hurricane or other storm exceed TWIA’s available funds from premiums and other sources.
Before 2002, TWIA´s rates for residential properties were automatically set according to a formula that tied them to the benchmark rates set by the Commissioner for extended coverage insurance in the counties served by TWIA. Extended coverage insurance pays for damage from wind, hail and other causes besides fire.
A state law passed in 2001 requires TWIA to develop proposed rates and file them with the Commissioner, who can approve, disapprove or modify them after a public meeting. Rate changes may not exceed 10 percent, on average, or 15 percent for any individual rating class. This rate action was Montemayor’s first under the new law.
Topics Texas Pricing Trends
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