The New Year is ushering in changes to the operation of the insurer of last resort for wind and hail along the Texas coast.
Many of the operational changes will affect insurance agents who handle Texas Windstorm Insurance Association policies. The modifications are the result of the implementation of House Bill 3, which passed the Texas Legislature in a special session in the summer of 2011.
One significant change affecting agents is that beginning Jan. 1, 2012, transactions processed in TWIA’s office after that date will require submission of the gross premium, rather than the net premium, including surcharges if applicable, regardless of effective date. After processing the gross premium payment, TWIA will pay the agent’s commission on a monthly basis. Payments will be made electronically; no paper checks will be issued.
In an agent bulletin dated Dec. 1, 2011, TWIA said in order to pay commissions electronically it needs to collect banking data from each agency representing TWIA policies. Agencies are asked to complete and return to TWIA an authorization agreement. If agents previously sent in the information and no changes to the account have occurred, no additional correspondence is needed. But if account information has changed or if it has not yet been submitted, the authorization form should be completed/updated and sent to TWIA as soon as possible.
If a policy is being premium-financed, agents should collect the down payment from the insured and have the finance agreement signed. Checks for the down payment and the total premium collected from the finance company should be attached to the policy application and sent to TWIA.
The company notes that if an agent is submitting an insured’s check and not an agency check, the agent should endorse the check to TWIA and include a notation on the back of the check that states: Pay to the order of TWIA.
TWIA has also modified its minimum earned premium requirement from 180 days to 90 days.
“Individuals who were premium-financing essentially would have to come up with 180 days or six months or 50 percent of the premium down payment,” said John Polak, interim general manager of TWIA.
Speaking at a webinar on TWIA changes presented by the Independent Insurance Agents of Texas, Polak explained that the Legislature changed the earned premium requirement “so that it’s only a 25 percent down payment. It makes the payment process a little bit easier. … The way it works is that if you were under the 180-day requirement that will continue until the end of the policy term. Once you get that policy renewed or you are a new policyholder you are under the 90-day” requirement.
Polak noted that additional changes will be forthcoming as the Texas Department of Insurance promulgates more rules to implement HB 3.
A link on TWIA’s website, www.twia.org, provides extensive information concerning House Bill 3 and its implementation.