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The Texas Windstorm Insurance Association (TWIA) Board is meeting Thursday, Jan. 19 to determine funding for probable maximum loss (PML) for the 2023 storm season.
TWIA is statutorily required to purchase enough reinsurance to meet the 1:100 year PML. Last week TWIA’s actuarial and underwriting committee recommended the board establish $5.244 billion as the association‘s 1:100 PML for the upcoming storm season, up from $4.236 billion in 2022.
The $1 billion increase is driven by the insolvencies of Weston Property & Casualty Insurance Company and FedNat Insurance (Maison).
As a residual insurer of last resort, TWIA provides wind and hail insurance to 14 Texas gulf coast counties and a portion of Harris county.
“The most important thing to start with will be that exposure change. It’s up plus 27 percent, primarily driven by the addition of the companies no longer in the Depop program, Weston and Maison,” said Jim Conroy, executive manager director, Aon, at last week’s actuarial and underwriting committee meeting.
The committee considered catastrophe model results presented by Aon, TWIA’s catastrophe modeling vendor, before recommending the board take the average of two different catastrophe models, AIR and RMS. The committed voted to use model results based on long-term assumptions, and include loss adjustment expenses in determining the 1:100 PML for the 2023 storm season.
TWIA has a retention of approximately $2.28 billion, meaning the association would need to purchase more than $2.9 billion to satisfy the actuarial and underwriting committee’s recommended PML funding.