The Texas Windstorm Insurance Association is broke, in debt and facing a shrinking revenue pool, according to the agency charged with reviewing the effectiveness of such state programs.

If legislative changes aren’t made to the program, the association’s policyholders will be left alone to weather future storms, the Texas Sunset Advisory Commission wrote in a report released last week.

The scathing report comes as elected leaders are near a return to Austin for a new legislative session. While the windstorm association won’t be abolished if legislators don’t act, the insurer will continue to be unsustainable if changes aren’t made, according to the report.

The state created the windstorm association in 1971 to act as the insurer of last resort for people in coastal counties that can’t get coverage from private insurance companies. Most private insurers left the windstorm market on the upper Texas coast long ago. In 2017, the windstorm association had about 240,000 policies covering more than $60 billion in property value, which includes residential, commercial and government-owned properties.

The association is funded by the premiums it collects from policyholders.

After Hurricane Harvey passed over the Texas coast in August 2017, the association’s reserve took a massive hit. More than 76,000 policyholders made claims after the storm, to which the association paid $1.7 billion. The association had to use $743 million of its $750 million reserve for catastrophes to pay off the claims, officials said.

Earlier this year, the association attempted to raise its premiums by 10 percent for both commercial and residential policyholders. Texas Gov. Greg Abbott in October blocked that attempt and said legislators should be allowed to try to reform the association before rate hikes go up again.

The sunset commission’s report gives some ideas about how legislators might go about trying to change things.

The association’s two mandates — to insure properties that can’t be insured elsewhere, and to survive mainly off of premiums — conflict with each other, according to the Texas Sunset Advisory Commission report.

“The Legislature has given TWIA opposing mandates that are driving TWIA to the brink of financial extinction,” the commission wrote. “TWIA’s revenue from premiums is not enough to pay future claims, meaning TWIA will likely have to go into more debt if there is another hurricane — further increasing costs to policyholders.”

To fix that, legislators would need to decide whether to keep the association as an affordable insurer of last resort, or allow it to act as a free-market insurance company that could more freely adjust its premiums.

The commission also recommended that the association be required to automatically renew policies, to improve its post-hurricane communication plans and to require association board members to publicly disclose conflicts of interest.

Windstorm reforms are likely to be on the top of the list for local legislators when the session begins in January.

During a legislative preview event last week, state Rep. Greg Bonnen said there would be a bill proposing changes to the association.

“We’ll have to be very vigilant as that bill makes it through the legislative process, because anything could happen,” Bonnen said.

At the same event, state Sen. Larry Taylor added that the presumed next Speaker of the House Dennis Bonnen, a Brazoria County Republican, also likely would be interested in addressing windstorm issues.

“His constituents are involved in windstorm, so that’s going to be good for us,” Taylor said.

As of Friday, no bills have been pre-filed in the Legislature to address changes to association.

John Wayne Ferguson: 409-683-5226; or on Twitter @johnwferguson.


Senior Reporter

(9) comments

Mark Stevens

There's no such thing as free lunch.
Unfortunately, the protlem with TWIA seems to be that various politicians have a two or four year time frame in which they think they can in effect legislate free or at least heavily subsidized insurance "lunch" so the voters won't get angry and chose the other guy or lady.
We need politicians who are willing to lay it on the line to voters--and voter/policyholders who are willing to recognize that indeed there is no "free lunch", that insurance has to be sustained....and that we may be entering an era when storms like "Harvey" impact a lot more folks than just those that live on sandbar islands.
Mark W. Stevens

Paul Hyatt

So the massive money that we are paying in to this totally worthless Insurance Agency will not be enough to cover us How much money are they paying their employees? Do they even know how to run that stupid worthless agency? It would seem as if they all need to be fired and others brought in to run the agency.... After all it is impossible to get your money out of these people....About like trying to get your money out of FEMA.../

Paula Flinn

I am not surprised that TWIA is nearly out of money. I remember after Hurricane Ike, if you went to the Dog Track in La Marque, and you had windstorm insurance, you were given a voucher for a free roof. My friend, whose house got 3 to 4 feet of water in it, did not need a new roof, but received one because THEY wanted to put one on. Her house was gutted to the ceilings because her Sheetrock was damaged and moldy, but her roof was not damaged. They put a new one on, anyway. That is how they managed their money 10 years ago.

Gary Scoggin

I’m no fan of TWIA but I doubt how much they pay their employees is material to the losses being talked about here.

Ronnie Richards

For the first time in years I was able to get both my home and business insured for windstorm by a private insuror. Hopefully this carrier will continue to write this coverage and help solve the problem. The premiums were less than the TWIA coverage we had before.

PS Robbins

Dont suppose you'd be willing to share the name of the carrier you bought Windstorm through? [wink]

Ronnie Richards

Westin Insurance Company out of Florida.

PS Robbins

Thank you very much

Wayne Holt

A few notes that may be of interest, dug up during our HOA's research into TWIA premium hikes:
1) It is wind and hail insurance. From what we were able to determine from weather records, hail damage in Galveston Co. going back to the 1950s amounted to a few million dollars. How much of our premiums are used to insure against hail damage?
2) The greatest damage to Galveston from wind was not from hurricane winds per se, rather from an F5 tornado spun off of Carla in 1961 which went right through downtown Galveston. If you're talking catastrophic damage to iconic Galveston and not metallic buildings, it would be by tornado.
3) Reading the history of how the TWIA money pot was subject to lawsuit abuse through "slab claims" is not for the faint of heart. A small pool of professional litigants increased the liability exposure of TWIA and reduced what is ultimately available for legitimate claims..getting filthy rich in the process.

By contrast, the flood insurance we purchase--even with the Biggert-Waters Act increases--seems fair relative to the risk that we have seen over the years. Since the overwhelming amount of damage done in our region has been done by flood waters over the years, why are our TWIA premiums being pushed through the roof? What are we getting for that coverage...and what won't be there if we need it in the future?

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