Texas Windstorm Insurer: Rate Inadequacy Up Year Over Year

July 29, 2019

In advance of its Aug. 6 board meeting in Galveston, the insurer of last resort for wind and hail in counties along the Texas coast said it has determined its residential coverage rates are inadequate by 41.7 percent and its commercial rates are inadequate by 50 percent.

In releasing its Rate Adequacy Analysis for 2019, the Texas Windstorm Insurance Association said by comparison, last year its analysis found rates were inadequate by 32 percent for residential coverage and 37 percent for commercial coverage.

TWIA posted its rate analysis on its website to comply with legislation passed by the 86th Texas Legislature this year. It’s the first year the association has opened its rate analysis to comment from the public.

TWIA said its staff used standard actuarial industry methodologies to prepare the analysis. “It is an estimate based on professional judgement and statistical modeling of future weather events. Actual future events will differ from these estimates,” TWIA said in an announcing the release of the rate analysis.

A proposed rate filing for 2020 is not included in the analysis, though the association’s board of directors will propose a rate filing at the Aug. 6 meeting. The analysis is one of several factors to be considered in crafting a rate proposal, which must be submitted to the Texas Department of Insurance by Aug. 15.

An annual rate filing of 5 percent or less does not require approval by the insurance commissioner if the effective date of the rate change is more than 30 days after the date of filing.

An annual rate filing that proposes a change above 5 percent is subject to approval or disapproval by the commissioner by Oct. 15.

In late May 2019, TWIA’S board voted withdraw a 10% rate increase filed last year, which had been put on hold by Gov. Greg Abbott.

The board had approved the rate increase in early August 2018, nearly a year after Hurricane Harvey devastated the state in 2017. The increase, if it had been allowed to go forward, would have been effective beginning on Jan. 1 of this year.

In addition to the governor’s opposition, coastal lawmakers also had balked at the proposed rate increase. They sent a letter to Insurance Commissioner Kent Sullivan asking that TWIA’s filing not be approved. In the letter, members of Texas’ coastal legislative delegation said the 10 percent rate increase would be “unfair, excessive and unreasonable” for coastal residents who continued to struggle to recover from Hurricane Harvey.

TWIA’s rate analysis and supporting documents are available on the association’s website: www.twia.org.

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