The Texas Windstorm Insurance Association (TWIA) says it is financially sound and ready for the 2017 hurricane season after once again securing $4.9 billion in total funding.
TWIA is the insurance carrier of last resort for wind and hail policies in Texas coastal counties.
In a media release, TWIA said its 2017 season funding includes a contribution of $147 million to the Catastrophe Reserve Trust Fund (CRTF) as a result of 2016 operations, bringing the CRTF balance to almost $740 million — the highest in the association’s history.
TWIA also experienced a reduction in projected exposures and minor changes in the hurricane models that led to a decrease in the 100-year Probable Maximum Loss (PML) for 2017 to $4.3 billion from $4.7 billion in 2016.
TWIA’s 2017 reinsurance program, effective June 1, 2017, to May 31, 2018, provides $4.9 billion in total aggregate funding, sufficient to cover a 125-year storm season, or more than 99 percent of all possible storm seasons and in excess of the statutory minimum funding to a 100-year storm. The reinsurance program includes catastrophe bonds, an aggregate amount of $1.1 billion, issued in 2015 and 2017, with staggered expirations in order to provide multi-year stability, diversification, and expanded claims-paying capacity.
TWIA General Manager John Polak said the organization is committed to financial sustainability, providing quality service to policyholders and operating as efficiently as possible.
TWIA said key initiatives are providing continuous improvements to its claims handling processes.
The Texas Windstorm Insurance Association (TWIA) was established by the Texas Legislature in 1971 in response to regional market conditions following Hurricane Celia in August 1970.
The organization has been working to improve its financial and operational resilience since 2008, when it took a beating not only from direct claims from Hurricanes Ike and Dolly but also from litigation stemming from its claims handling practices. According to the association’s most recent annual report card, the two hurricanes together resulted in more than 100,000 claims and almost $3 billion in losses.
TWIA came under intense scrutiny by lawmakers and insurance regulators in Ike’s aftermath and ultimately was place under administrative oversight by the Texas Department of Insurance in 2011. It subsequently began making operational changes after the passage of House Bill 3 in 2011 and installed new leadership. TWIA was released from TDI oversight in April 2016.
Policy numbers spiked after Ike and Dolly, as well. In 2015 the state legislature passed House Bill 900, which not only addressed TWIA funding mechanisms but required the insurer to establish a depopulation program. In March 2016, TWIA’s first depopulation program, the Voluntary Coastal Windstorm Insurance Portal, was replaced by the Voluntary Market Depopulation Program. TWIA also has established an Assumption Reinsurance Program, which allows for assumption reinsurance agreements between TWIA and participating private insurers to facilitate depopulation.
The association’s Annual Report Card for 2017 shows that as of April 30, 2017, TWIA had 248,635 residential and commercial policies in force, down from 15.82 percent from the previous year April 30 total of 267,859.
Topics Catastrophe Carriers Natural Disasters Texas Windstorm Reinsurance Hurricane
Was this article valuable?
Here are more articles you may enjoy.
Trump’s Bond Insurer Tells Judge Shortfall Is ‘Inconceivable’ 
Former Congressman Charged After Collision with State Trooper in Florida 
South Carolina Ringleader Sentenced to 8 Years for Staged Accidents 
FBI Says Chinese Hackers Preparing to Attack US Infrastructure From This Issue
