Texas Coast Wind Insurer: Position for Hurricane Season Is ‘Strongest-Ever’

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With its reinsurance program now in place, the Texas Windstorm Insurance Association (TWIA) says it is in its strongest-ever position for this year’s hurricane season with $4.9 billion in total funding available to pay claims.

TWIA is the insurance carrier of last resort for wind and hail policies in Texas coastal counties.

The 2016 TWIA reinsurance program comprises $1.1 billion in catastrophe bonds, approximately $110 million in reinsurance placed with capital markets on a collateralized basis, and approximately $990 million in reinsurance placed with traditional reinsurers, the insurer said.

TWIA said a list of reinsurance counterparties is not yet available for publication, but that participation from capital markets was consistent with prior years.

A record balance of around $600 million in its Catastrophe Reserve Trust Fund (CRTF) has allowed the association to reduce its reinsurance program by $100 million while maintaining overall funding of $4.9 billion for the second straight year.

This level of funding is sufficient to cover a 100-year storm season, or more than 99 percent of all possible storm seasons. The funding comprises the current year’s premiums, the CRTF, a combination of public securities and company assessments, and the tailored reinsurance program.

Under the new funding structure enacted by the 84^th Texas Legislature (SB 900), no assessments or surcharges will be required until after the CRTF is depleted and TWIA losses exceed $1.2 billion.

In TWIA’s announcement, General Manager John Polak stated: “TWIA’s position of strength has been built upon our commitment to continuous improvement in policyholder service. When you add together our level of funding, improved claims management technology, and a comprehensive catastrophe (CAT) response plan, you get a TWIA that is competent and capable of responding to a catastrophic weather event, regardless of the season.”

In 2015, TWIA’s CAT plan was put to the test during a series of spring storms. By scaling up its professional experienced staff, while leveraging claims best practices, TWIA was able to successfully handle near-record claim volume while maintaining excellent customer satisfaction.

Source: TWIA