View this article online: https://www.insurancejournal.com/news/southcentral/2012/01/10/230461.htm
The New Year ushered in changes to the operation of Texas’s insurance company of last resort for wind and hail along the Texas coast.
Many of the operational changes will affect insurance agents who handle Texas Windstorm Insurance Association policies. The modifications are the result of the implementation of House Bill 3, which passed the Texas Legislature in a special session in the summer of 2011.
One significant change affecting agents is that effective Jan. 1, 2012, transactions processed in TWIA’s office after that date will require submission of the gross premium, including surcharges if applicable, regardless of effective date. After processing the gross premium payment TWIA will pay the agent’s commission on a monthly basis. Payments will be made electronically; no paper checks will be issued.
With the implementation of HB 3, “the biggest difference is that agents are going to see is instead of sending the net premium to us we are now requesting that they send gross premium,” said John Polak, interim general manager of TWIA. “We will then every month send them full payment for the entire policy term that commission for all policies from that prior month.
The new process is something agents will have to get used to, Polak noted during a webinar on TWIA changes presented by the Independent Insurance Agents of Texas. “I don’t think it’s much different from what they are experiencing with other carriers,” he added. “But it is different from what we’ve done in the past.”
In an agent bulletin dated Dec. 1, 2011, TWIA said in order to pay commissions electronically it needs to collect banking data from each agency representing TWIA policies. Agencies are asked to complete and return to TWIA an authorization agreement.
If agents previously sent in the information and no changes to the account have occurred, no additional correspondence is needed. But if account information has changed or if it has not yet been submitted, the authorization form should be completed/updated and sent to TWIA as soon as possible.
If a policy is being premium financed, agents should collect the down payment from the insured and have the finance agreement signed. Checks for the down payment and the total premium collected from the finance company should be attached to the policy application and sent to TWIA.
The association notes that if an agent is submitting an insured’s check and not an agency check, the agent should endorse the check to TWIA and include a notation on the back of the check that states: Pay to the order of TWIA.
TWIA has also modified its minimum earned premium requirement from 180 days to 90 days.
“Individuals who were premium financing essentially would have to come up with 180 days or six months or 50 percent of the premium down payment,” Polak said.
He explained that the state Legislature changed the earned premium requirement “so that it’s only a 25 percent down payment. It makes the payment process a little bit easier. … The way it works is that if you were under the 180 day requirement that will continue until the end of the policy term. Once you get that policy renewed or you are a new policyholder you are under the 90 days.”
Polak added that additional changes to TWIA operations will be forthcoming as the Texas Department of Insurance promulgates more rules to implement HB 3.
TWIA has a link on its website, www.twia.org, that provides extensive information concerning House Bill 3 and its implementation.