TWIA Committee Recommends Method for Determining PML for 2026 Storm Season

The Texas Windstorm Insurance Association’s Actuarial & Underwriting Committee has developed a recommendation to the TWIA board on a method to determine the association’s 1-in-50 probable maximum loss for the 2026 storm season.

The 1-in-50 PML is TIWA’s minimum required catastrophe funding level for each storm season per state law. The 1-in-50 PML is a calculated estimate of the amount of loss TWIA would expect to exceed in 2% (1-in-50) or less of all possible storm seasons.

The committee, which met on October 23, is recommending the following method for determining the PML:

• Use of the commercially available catastrophe models Verisk Touchstone version 13, RMS RiskLink version 25, Impact Forecasting version 18 and Cotality RQE version 25.
• The models weighted such that those producing the highest and lowest PMLs for 2026 receive weights of 20% each, and the two remaining models receive weights of 30% each.
• Use of model results based on long-term hurricane frequency assumptions.
• Inclusion of a loss adjustment expense factor of 15%.

The committee made its recommendation after receiving a presentation from Aon, the association’s catastrophe modeling vendor.

The TWIA board is expected to consider the recommendation and adopt a method of determining the 1-in-50 PML at its November 4 meeting. The Texas Insurance Commissioner, Cassie Brown, may approve the board’s selected method, or she may adopt a different method for the board by Feb. 1, 2026.

The association secures funding to meet its minimum required catastrophe funding level by purchasing reinsurance to supplement other sources of catastrophe funding provided by statute. The board may also direct Association staff to purchase additional reinsurance above the 1-in-50 PML. Any reinsurance for coverage above the minimum required funding level would be paid for through assessments of TWIA member insurers, which cannot recoup the assessments from policyholders.

Topics Windstorm