TWIA Board Votes to Increase PML to $6.5B in 2024

February 21, 2024

The Texas Windstorm Insurance Association Board of Directors voted Tuesday to establish $6.5 billion as the association’s 1:100 probable maximum loss (PML) for the 2024 storm season, an increase of $2 billion over last year’s PML.

TWIA has added more than 25,000 policies over the last year, and the total insured value of the properties it covers has increased by 26.4%, the association shared at its meeting.

The board voted to use a 75%/25% blend of the RMS and AIR catastrophe models presented to the actuarial and underwriting committee earlier this month. The board used the model results based on long-term assumptions to determine a base PML of $5.67 billion. The board also voted to include a factor for loss adjustment expense (LAE) of approximately 15% for a total PML of $6.5 billion.

The 1:100 PML is the probable maximum loss for the Association for a catastrophe year with a probability of one in 100. This benchmark establishes the minimum amount of funding needed to meet TWIA’s statutory funding obligation for the upcoming storm season. In conjunction with the Association’s other statutory sources of funding, the 1:100 PML also determines the amount of reinsurance the Association must purchase.

TWIA said it will pursue $3.35 billion in reinsurance on the most favorable terms that can be achieved in the market. This reinsurance funding is in addition to $2.45 billion in statutory funding and $700 million in existing multi-year catastrophe bonds. This will bring TWIA’s total funding for the 2024 storm season to $6.5 billion, meeting the statutory minimum.

Source: TWIA

Topics Trends

Was this article valuable?

Here are more articles you may enjoy.