TWFG Offers to Replace Coverage for Customers of Failed Texas Insurer

The Woodlands Financial Group (TWFG) announced that TWFG will offer replacement coverage for the homeowners business of Austin Indemnity Lloyds Insurance Company, effective Jan. 29, 2009. TWFG General Agency, a subsidiary of TWFG, will provide coverage for impacted homeowners policyholders previously insured through AILIC.

The Texas Department of Insurance (TDI) has filed to liquidate Austin Indemnity. The company sold homeowners and personal auto coverage in Texas. All policies issued by Austin Indemnity that are still in effect on Jan. 28, 2009, will terminate effective Jan. 29 at 12:01 a.m.

TWFG General Agency will provide all homeowners clients with an offer for a new policy. All offers will be mailed by Dec. 17, 2008. There will be no lapse in coverage if replacement policy is accepted by Feb. 8, 2009.

Coastal area policyholders will not be offered windstorm, hurricane and hail (WHH) coverage, and may have increased deductibles. Policies that exclude WHH will contain a HO-140 WHH Exclusion form that must be signed and returned for coverage to take effect. Agents will need to obtain a windstorm policy through the Texas Windstorm Insurance Association for impacted policyholders.

Unearned Premium
There may be an unearned premium refund due for the amount paid on the terminated portion of the policy. Unearned premiums are handled by the Texas Property & Casualty Insurance Guaranty Association (TPCIGA), which pays policy claims of insolvent insurers in Texas, subject to certain limitations. If coverage is accepted from TWFG, the policyholder may assign any unearned premium to be applied to the new policy premium due. Any unearned premium will be refunded to the client if it is not assigned to TWFG subject to TPCIGA’s guidelines.

On July 1, 2008, Austin Indemnity began to send out non-renewal notices to all of its homeowners insurance policyholders, and the company stopped taking new applications for auto insurance on Aug. 16, 2008. In September company officials signed a hazardous financial condition order, which allowed TDI staff to more closely monitor the company’s operations.

While TDI was working with Austin Indemnity to develop an orderly withdrawal from the market, Hurricane Ike hit the Texas coast. The financial impact of the storm was too much for Austin Indemnity to continue its monitored withdrawal and forced TDI to take the additional action of ordering liquidation.

Management for Austin Indemnity has consented to receivership, and the entry of a liquidation order. In accordance with the Texas Insurance Code, policies will be canceled 30 days after the date of the liquidation order. The liquidation order is expected to be entered on Dec. 29, 2008. Austin Indemnity, working with TDI staff, is sending notices to affected policyholders advising them of this situation, and providing them with resources to obtain replacement coverage.

In June 2008, Austin Indemnity entered into an agreement with TWFG General Agency through which policyholders were extended an offer to purchase a renewal homeowners insurance policy with a new carrier upon the expiration of the term of their Austin Indemnity policy. Policyholders will receive a notice of an offer from TWFG to obtain replacement coverage upon the termination of their Austin Indemnity policy.

TWFG, founded by President and CEO Richard “Gordy” Bunch in 2000 as an independent insurance agency and financial services firm, has grown to include a full service general agency providing markets and support to more than 160 exclusive branch office locations and 950 independent agencies across 17 states. TWFG’s combined written premium in 2008 will be more than $120 million.

Source: TWFG, www.twfg.net

Topics Carriers Texas Homeowners