The Texas Windstorm Insurance Association board of directors voted today to assess member insurance companies $90 million based on losses from Hurricane Harvey and voted to defer further consideration of action regarding TWIA insurance rates on residential and commercial policies until its next rate filing in August 2020.
The member company assessment requires the approval of the state’s insurance commissioner.
The assessment of member insurance companies is in addition to the $282 million already assessed and is based on an update to TWIA’s ultimate loss estimate for Hurricane Harvey to $1.7 billion from the previous estimate of $1.61 billion.
By law, most insurers authorized to engage in the business of property insurance in Texas are required to be members of TWIA and share in a portion of the Association’s losses.
The Board voted to direct the Actuarial & Underwriting Committee to work with staff to develop a request for proposals to engage an independent actuarial firm not based in Texas to review TWIA’s rate analysis and use of hurricane modeling in determining rate adequacy and to prepare a report in support of the committee’s and the board’s annual rate review.
The work of the independent actuarial firm is to be completed before TWIA considers its next statutorily required rate filing due August 2020.
The Board’s next quarterly meeting will be held in Austin in February 2020.
The Insurance Council of Texas issued the following statement after the vote:
“ICT is disappointed with the decision to forgo any rate increase, however, we remain confident in the board of directors and their fiduciary responsibility to weigh all factors. It should be remembered that Coastal legislators urged the board to vote no rate increase in 2017 before Harvey arguing that TWIA had enough in the CRTF. Rates were not increased and now insurance companies are faced with another $90 million assessments to fund TWIA and pay Hurricane Harvey losses. It’s unfortunate that Texas policyholders across our state will ultimately be paying this assessment. None-the-less, the private market, already writing at least 52% of policies on the coast, will continue to be there to financially support TWIA.”
Beaman Floyd, executive director of the Texas Coalition for Affordable Insurance Solutions, which represents major homeowners insurance companies doing business in Texas (Allstate, Farmers, Nationwide, State Farm, Texas Farm Bureau and USAA), issued the following statement:
“The TWIA board today voted not to raise rates for the coming year after a highly contentious meeting in Corpus Christi. Many on the coast may be celebrating. But the bad news is that the underlying TWIA issues that threaten the economic viability of coastal residents and businesses remain unaddressed. TWIA’s inability to take even a small, incremental step to reverse its growing rate inadequacy threatens its capacity to pay claims following a storm.”
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