Three of the five emergency items that Texas Gov. Rick Perry has outlined for the 2009 legislative session relate to hurricane recovery, including legislation to reform the Texas Windstorm Insurance Association (TWIA) and legislation to fund the Catastrophe Reserve Trust Fund related to TWIA.
The emergency designation will allow lawmakers to begin considering these issues in the initial 30 days of the legislative session.
Specifically, the five declared emergency items are:
–Legislation to provide supplemental appropriations to state agencies and institutions related to hurricane response and recovery associated with the hurricanes of 2008;
–Legislation to assist public and private entities with recovery from the hurricanes of 2008;
–Legislation to reform the Texas Windstorm Insurance Association (TWIA) and legislation to fund the Catastrophe Reserve Trust Fund related to TWIA;
–Legislation to improve state schools and centers operated by the state of Texas; and
–Legislation to appropriate funds to the Texas Department of Criminal Justice for the purchase and use of screening and detection devices for contraband and personnel, as well as comprehensive security equipment.
The insurance industry in Texas has been trying to get the legislature to act on TWIA funding for years. Lawmakers came close in 2007 but the bill died in the last days of the session, overshadowed by the fight to remove then Speaker of the House Tom Craddick from that post.
Hurricanes Ike and Dolly wiped out TWIA’s catastrophe reserves, causing the state backed insurance fund to assess property insurers in the state hundreds of millions of dollars, some of which can be recovered in premium tax credits, which would directly affect the state budget.
The Texas Coalition for Affordable Insurance Solutions (TCAIS), an industry coalition of insurance companies, applauded Perry’s call for action on TWIA.
“Both TWIA and the CRTF were depleted not only by hurricanes in 2008, but by other catastrophes such as thunderstorms, damaging winds and large hail that struck our state. In fact, Texas led the nation in catastrophic losses in 2008, topping $10 billion,” said Beaman Floyd, executive director of TCAIS. “These losses and the corresponding total depletion of the state’s coastal insurance structure now are reverberating across Texas.
“While TCAIS agrees with policymakers that recapitalizing the Catastrophe Reserve Trust Fund is an immediate need, we urge lawmakers to go even further to fully reform TWIA. The state also needs a near-term solid funding system for TWIA along with long-term initiatives to safeguard TWIA’s ongoing financial and administrative health,” he said.
“The number of structures insured by TWIA has grown dramatically during the past decade even as we have seen the number of structures decrease significantly as a result of Hurricane Ike,” according to Jerry Johns, president of the Southwestern Insurance Information Service.
“As of February 1, TWIA has paid out over $904 million in Hurricane Ike claims,” Johns said. “Thus far 90,639 claims have been filed and 87 percent of those have been closed.”