Commissioner Denies TWIA’s Request to Raise Liability Limits

The primary windstorm insurer for Texas coastal properties won’t be raising limits of liability next year for property it covers.

Insurance Commissioner Julia Rathgeber has denied a request by the Texas Windstorm Insurance Association to raise the limits on both commercial and residential properties that would have become effective Jan. 1, 2014.

On Sept. 30 TWIA filed to raise the liability limits (see below). Even if the proposal had been approved, it would have represented only a slight increase in TWIA’s overall exposure. State insurance regulators, however, had concerns over increasing TWIA’s exposure by any amount. The insurer continues to struggle to become financially viable after being inundated by claims and litigation resulting from Hurricane Ike in 2008.

A brief hearing was held Oct. 30 to consider TWIA’s request; TDI had 60 days of the receipt of the request to respond. The order denying the request — issued on Nov. 22 — simply stated that “the commissioner determined an increase is not necessary at this time.”

Big Challenge

Speaking at the annual meeting of the Texas Surplus Lines Association on Nov. 11, Rathgeber — who was appointed to the post last May — said she realizes that windstorm insurance is one of biggest challenges facing the Texas Department of Insurance.

“I have been told that TWIA is the number one concern of this industry. I get it,” Rathgeber said.

“What I would really like is a stable, sustainable financial situation that we all know how to follow,” she said.

TWIA’s funding remains a top priority for regulators, she said. For now, however, “TWIA must operate under the current financial structure. … So I am working with TDI staff, TWIA staff and the Texas Public Finance Authority on options to fund short term liquidity in the event of a storm. …

“Our goal is simple: We want to implement the current statutory framework to assure that TWIA’s claims get paid in the event of a larger storm,” Rathgeber said.

The association was placed under supervision of TDI in early 2011 as it faltered under the weight of Hurricane Ike claims and mismanagement.

Rathgeber said TWIA’s board has implemented a “lot of good procedures,” but that the association would remain under TDI oversight for the foreseeable future.

“I think they will remain [under supervision] until we can make sure we can get through a larger storm,” she said. “I’ve watched the legislature grapple with this issue for many years. I hope that they can come up with a stable funding method in the next session.”

In addition to funding, reducing TWIA’s policy count, which has soared since Hurricane Ike, is a priority. Rathgeber told a legislative panel in October that the agency has been working with TWIA on the feasibility of developing a clearinghouse or portal that would allow voluntary take out by private insurers of TWIA policies.

“Our thought is, if we create a voluntary program and we see how it works, when you come back next session and you’re interested in a mandatory program we’ll at least have better data for you,” Rathegeber told the legislators.

Lt. Gov. David Dewhurst, who is up for re-election next year, also has TWIA on his radar. He recently called on lawmakers to study the organization and come up with a plan to fund the association so it can pay for a major storm such as Ike.

Proposed TWIA Liability Limits

Topics Texas