TWIA Board Votes on 2026 Operating Budget

The Texas Windstorm Insurance Association Board of Directors met Nov. 4 in Corpus Christi, where the board voted on the association’s 2026 operating budget.

Net operating expenses are budgeted to increase from 5.2% of earned premium in 2025 to 5.5% in 2026.

Reinsurance costs are anticipated to be decrease compared to prior years due to a new state law that reduces TWIA‘s minimum required catastrophe funding for each storm season Actual reinsurance costs will depend on several factors in addition to the reduced funding requirement, including growth in TWIA exposures and general market conditions. The operating budget includes a placeholder of $237 million for reinsurance costs.

The TWIA board selected a method of determining the association’s 1-in-50 probable maximum loss (PML) for the 2026 storm season. 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 model selected by the TWIA board was presented by the association’s actuarial and underwriting committee last month:

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 Texas Insurance Commissioner may approve the board’s selected method or may adopt a different method for the Board by February 1, 2026.

TWIA 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‘s member insurance companies, not from TWIA funds. Member insurance companies cannot recoup the assessments from policyholders through a premium surcharge or tax credit.

Source: TWIA

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