Agents Speak Out Against TDI Residual Market Proposals

At a Texas Department of Insurance public hearing held in early October, insurance agents and other interested parties testified on TDI proposals to create a temporary residual market or market-of-last-resort for homeowners insurance. Almost in unison, agents spoke against the proposals, which include expansion of the Texas Windstorm Insurance Association coverage to include all 254 counties in the state (Docket No. 2535), a requirement that insurers offering homeowners coverage must participate in the state’s Market Assistance Program (MAP) and the development of a Fair Access to Insurance Requirements (FAIR) Plan (Docket No. 2536).

Insurance Commissioner Jose Montemayor opened the hearing by explaining that the proposals are meant as a “safety net for homeowners having trouble finding residential insurance for whatever reason. … While I have complete confidence that a sufficient capacity exists in the current market to absorb the vast majority of all policyholders whose insurer has withdrawn from the residential market or is no longer writing policies,” Montemayor said, “I believe it is sound policy to undertake proactive measures to ensure that no one falls through the cracks as a result of insurers’ actions.”

A number of insurance agents, both independents and those from Farmers Insurance Company, testified against the proposals. Victor Gonzalez of Corpus Christi, owner of Victor Gonzalez Insurance Agency, expressed concern that if the TWIA is stretched too thin—to include other areas of the state and coverage beyond windstorm and hail—it would not be available to take care of the coastal counties, for which it was originally established, in their time of need.

Like many of the other agents who testified, Gonzalez expressed concern about the quality of the coverage offered by the state programs and questioned whether theft and liability would be included. With only wind, hail, explosion and fire covered under TWIA policies, agents said coverage would be too limited and they would be exposed to lawsuits from customers if they sold them. At the same time, agents worried that if the TWIA is expanded too liberally, then its function as a catastrophe fund would be weakened.

Several Farmers agents took the opportunity to express their frustration with Montemayor and the department. Ronnie Wright, a Farmers agent who owns his own agency in Stafford, said the free enterprise system would “solve these problems, not more governmental interference.” He also complained about the state’s actions that resulted in his “company being run out of town without a day in court.”

Admitting she was in “uncharted waters” having never before spoken at a TDI docket hearing, State Senator Leticia Van de Putte (D-San Antonio) expressed her support for the proposals as a temporary measure. Referring to Texas’ homeowners insurance troubles, Van de Putte said, “This is not about market share, this is not about a collapsed market, this is about families who cannot lose their homes.”

TDI staff recommended that the three proposals be approved, asserting that potential availability problems make it inappropriate to take a “wait-and-see” attitude.

At the hearing’s close, Montemayor indicated he would immediately sign an order making participation in the Market Assistance Program mandatory rather than voluntary. He said a decision would be made soon on the FAIR and TWIA proposals, but at press time no order had been issued regarding those plans.

Topics Texas Agencies Homeowners