Windstorm Insurance Bill Passes Texas Senate

Texas Windstorm Insurance Association policyholders could see an estimated rate increase of 5 percent per year for three years if Senate Bill 14, authored by Republican Sen. Troy Fraser of Horseshoe Bay, makes it all the way to the governor’s desk. Passed recently by the Senate, SB 14 provides a new structure for funding the Texas Windstorm Insurance Association through a combination of potential rate hikes, bonding and other revenue sources. The Senate approved the TWIA legislation 27-4, despite the objections of several Gulf Coast senators who wanted the costs of funding to be spread more evenly across the state.

The legislation as written would add a post-storm charge of $400 million to TWIA member insurers if losses exceed amounts in the association’s catastrophe reserve fund, which is currently empty.

Fraser said the bill approved by the Senate removes a provision in an earlier version that mandated a steeper automatic rate increase for TWIA policyholders, the Associated Press reported. Fraser said he will push for $300 million to $500 million from the state’s Rainy Day Fund to enable the windstorm association to buy reinsurance.

The Texas Coalition for Affordable Insurance Solutions, an insurance industry trade group, said it welcomed a windstorm insurance bill but expressed concern about SB 14, including the $400 million post-storm assessment on private insurance companies.