While the board of the directors of the Texas Windstorm Insurance Association voted at its recent quarterly meeting to raise rates for residential and commercial properties by 10 percent next year, the group acknowledges a rate inadequacy that is far greater than that.
TWIA, the insurance company of last resort for wind and hail along the Texas coast, is required by law to file the proposed rate increase with the Texas Department of Insurance (TDI) by Aug. 15, 2018.
In an announcement on its website, the association said the board made the decision to increase rates for 2019 upon the recommendation of the Actuarial and Underwriting Committee. Input from a diverse group of stakeholders and actuarial indications show rates are currently inadequate by 32.2 percent for residential policies and 37.3 percent for commercial policies, TWIA said.
Texas Insurance Code (Chapter 2210) requires TWIA rates be “reasonable, adequate, not unfairly discriminatory, and non-confiscatory as to any class of insurer.” Rates must also be based upon sound actuarial principles and sufficient to sustain projected Association losses and expenses. TWIA’s ratemaking process focuses on rate adequacy and is not the same as the process for securing annual funding for potential catastrophic weather losses.
The proposed rate increase must be approved by the insurance commissioner. If approved, it will go into effect Jan. 1, 2019. New business and renewal policies issued in 2018 will not be affected by the rate increase until the policies renew in 2019.
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