A group of Texas legislators wants to require insurance companies to pay into a state catastrophe fund they could tap in case of big losses in a hurricane or other natural disaster.
The Texas Windstorm Insurance Association – the last resort insurer for some coastal counties – also would pay into the reinsurance fund. Reinsurance is a backup policy for insurance companies.
Democratic Rep. Craig Eiland of Galveston, who filed the bill, said the savings would be passed on to consumers. The state would pay $10 million in seed money. Then insurance companies would pay into the fund and the money would be invested.
State Farm and Allstate support the plan. Some insurers don’t like it and want to keep buying reinsurance on the open market.
Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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