Texas Gov. Greg Abbott on Thursday used emergency powers to suspend part of the Texas Insurance Code and block a proposed increase in premium rates on policies sold through the Texas Windstorm Insurance Association.
In a letter to Texas Department of Insurance Commissioner Kent Sullivan, Abbott said the proposed 10 percent rate increase would “negatively impact the people of the Gulf Coast.”
Sullivan had until Monday to decide whether to allow the rate increase proposed by the windstorm association’s board of governors. The board approved 10 percent increases on both residential and commercial policies in July during a meeting in Galveston.
The short deadline wouldn’t allow the state’s elected leaders time to properly review the association’s proposal, Abbott said. He cited powers granted to the governor by state law after Hurricane Harvey in blocking the rate increase.
“Strict compliance with this time frame would deprive the Legislature of the opportunity to address any actuarial deficiency in TWIA during the upcoming legislative session and could force a decision that hinders efforts to cope with the declared disaster,” Abbott said.
Action on the proposed rate increase is suspended until June 16, the last day the governor could sign or veto a bill passed during the next legislative session.
Abbott, who is seeking re-election against Democrat Lupe Valdez, said in a Sept. 28 debate in Houston that he opposed the rate increase and was working to ensure it didn’t happen.
The rate increases were widely opposed by elected officials and insurance reform advocates from coastal counties.
Henry Freudenberg, chairman of the Coastal Windstorm Insurance Coalition, a consumer advocacy group, said Abbott’s decision was great news.
The coalition helped organize public comments against the rate increase, and delivered a privately funded actuarial report about the plan to Abbott and Sullivan two weeks ago.
The report questioned some calculations the association used to justify a rate increase request.
The rate increase would have hurt people and governments in Galveston County, Freudenberg said
“You’re talking about big money, and they don’t need it,” he said.
The association is the insurer of last resort for property owners on the Texas Gulf Coast. The legislature created the association to provide insurance to property owners who private companies refused to cover.
The association approved the rate hike amid claims that its funding was depleted by Hurricane Harvey in 2017. The windstorm association received more than 75,000 Harvey-related claims, for which it paid a little more than $1 billion, according to the association.
The windstorm association has raised its rates seven of the past eight years.
In a prepared statement, a spokeswoman said the association was “aware,” of Abbott’s letter to the insurance department.
“We remain committed to serving our policyholders on the coast as we await further direction from the Department of Insurance,” said Jennifer Armstrong, the association’s vice-president of communications and legislative affairs.