Texas Insurance Commissioner Mike Geeslin on May 26 signed a Commissioner’s Order allowing the Texas Windstorm Insurance Association (TWIA) to increase rates for residential homeowners’ wind coverage by 3.1 percent and commercial rates by 8 percent, the Texas Department of Insurance reported.
In a public hearing last month, TWIA had asked the Commissioner to increase homeowners’ rates by 19 percent and commercial rates by 24 percent.
Additionally, Geeslin signed an order allowing TWIA to surcharge windpool applicants seeking wind coverage through an approval process that does not require the standard windstorm inspection. The refusal of insurers to write wind coverage causes existing structures to be at risk of not being able to obtain wind coverage except for the approval process. Those homeowners who get coverage through the approval process will pay a 5 percent annual surcharge to the TWIA base rate. TWIA had asked for a surcharge of 25 percent.
“This is the first step in a multi-year effort to strengthen the financial condition of the Texas Windstorm Insurance Association,” Geeslin said. He noted that he supported an incremental, gradual approach to strengthen TWIA in a manner that does not put undue economic burden on coastal homeowners.
Coastal policyholders should examine their homeowner’s policies and their wind policies to make sure they are fully insured to the value of their homes. It is estimated that many policyholders have not increased their policy limits over the years as their homes have increased in value and rebuilding costs have increased. Geeslin wanted to ensure that increased windstorm rates did not lead to “sticker shock” for policyholders who must also increase their coverage limits.
Geeslin noted that this action should be viewed in the light of last year’s events along the Gulf Coast and recent forecasts of a more intense hurricane season in 2006.
“We have a long way to go to put TWIA on solid footing,” Geeslin said. He also noted that legislation is necessary to shore up the windpool and protect the state’s general revenue.
TWIA is the state’s insurer of last resort for wind coverage in Texas coastal counties. The pool currently has more than 100,000 policies in force. That number could rise significantly in light of Allstate’s recent announcement that it will no longer write wind coverage for coastal residents. The Allstate action affects approximately 65,000 policyholders.
Source: Texas Department of Insurance