Citing increased exposure along the Texas coast, the Texas Windstorm Insurance Association has requested Commissioner of Insurance Mike Geeslin to authorize the purchase of $1.5 billion in reinsurance for the windstorm pool for the 2008 hurricane season. The request represents a half-billion dollars more than the $1 billion TWIA bought for the 2007 hurricane season.
TWIA is the state-backed “insurer of last resort” for wind and hail for 14 counties along Texas’ Gulf Coast and for parts of Harris County.
The $1.5 billion would come with a retention of $600 million, according to a letter to Geeslin from TWIA Executive Director James W. Oliver. Oliver said the “increase is based on the substantial increase in TWIA’s probable maximum loss (PML) because of significant growth during 2007.”
He explained that exposures in heavily populated Galveston/Brazoria Counties, as well as Nueces County, which includes Corpus Christi, have been a source of concern for the association. TWIA has estimated that those locations historically “offered the only potential for overall losses in excess of $1 billion.” Now, Oliver said, significant growth in Cameron and Jefferson Counties raises concern of two more locations with the potential for incurring “losses in excess of $1 billion as a result of a moderate or severe hurricane.”
“In 2007, catastrophe reinsurance represented approximately 48 percent of TWIA direct written premiums,” Oliver wrote. The proposal for 2008 would represent about the same percent of TWIA premiums.
Oliver acknowledged Geeslin’s past concern over TWIA’s reliance on reinsurance and the increasing costs to the windpool that the coverage represents. However, Oliver said, without the express approval from the legislature to issue and pay back bonds through assessments to property casualty policyholders, the association would be unable to reduce dependence on reinsurance.
A hearing is scheduled for May 1 to consider TWIA’s petition (Docket No. 2683). The hearing will be held at 9:00 a.m.