The Texas Legislature finally worked out a compromise bill of reforms to the state’s insurance provider of last resort for wind and hail for properties along the Texas coast.
The House and Senate reached agreement on Texas Windstorm Insurance Association reforms in House Bill 3 just one day before lawmakers were set to adjourn the special session called to resolve issues not completed in the regular legislative session that ended on May 30.
As lawmakers in Austin were hammering out a consensus on reform to the association, TWIA’s board of directors voted for a 5 percent rate increase during a meeting on June 27 in Galveston, the Houston Chronicle reported.
The TWIA reform bill failed to gain passage in the regular session after the House and Senate reached a deadlock over tort reform provisions. Gov. Rick Perry had deemed the issue a priority and previously said he would call another special session to take up windstorm association reform if legislation was not passed by June 29.
The Property Casualty Insurers Association of America (PCI) said the legislation that passed is an “important step toward better protecting coastal as well as inland residents” and that the bill strengthens TWIA’S financial structure and improves its administrative and claims handling operations.
The bill requires claims be filed within one year of an event, streamlines the dispute resolution process and clarifies that bonds can be issued only once per calendar year, PCI reported.
The bill also establishes an interim task force that will examine wind insurance issues and TWIA operations from top to bottom and report back to the 2012 legislature.
“The reforms in HB 3 are essential to bring financial stability to TWIA,” said Joe Woods, PCI vice president for state government affairs. “One of the key provisions in the legislation allows TWIA to build much needed liquidity through pre-event bonding instead of depending on more expensive post-event debt funding. This bill builds upon legislation passed in 2009 and helps to ensure TWIA is financially prepared when a hurricane hits the Texas coast.”
The bill would allow policyholders to sue for claims and collect double damages if they are able to prove TWIA intentionally withheld a legitimate claim.
The American Insurance Association said the bill strikes a “fair balance between the reasonable expectations of TWIA’s policyholders” and much-needed reforms to TWIA’s financial structure.
“HB 3 authorizes the issuance of ‘pre-event’ Class 1 bonds for the first time,” said Fred C. Bosse, Southwest region vice president for the AIA. “The process for surcharging coastal property owners for ‘post-event’ Class 2 bonds has been streamlined and improved. The surcharge, which insurers will now have 180 days to implement following the commissioner’s order to do so, will now be refundable to consumers when a policy terminates prior to its expiration date. The issuance of Class 1, Class 2, and Class 3 bonds in a successive manner aims to shore up TWIA’s financial soundness and promotes a healthier insurance market on a statewide basis.”
Topics Catastrophe Natural Disasters Texas Legislation Windstorm
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