Texas Gov. Greg Abbott‘s decision Thursday to delay action on premium rates the Texas Windstorm Insurance Association can charge coastal property owners was a good use of executive power.
Abbott used emergency powers to suspend part of the Texas Insurance Code. In doing so, he prevented the Texas Department of Insurance from acting on an association request to raise premium rates on both residential and commercial windstorm policies by 10 percent.
In a letter to Insurance Commissioner Kent Sullivan, Abbott said the proposed rate increase would “negatively impact the people of the Gulf Coast.”
Sullivan had until Monday to decide whether to allow the rate increase the windstorm association’s board of governors had proposed 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.
The rate increases had been widely opposed by elected officials and insurance reform advocates from coastal counties and Abbott had made statements against the rate increases as well.
There was question enough about whether the association needed to hit premium payers with another increase, the eighth in as many years, to justify the governor’s action.
The association approved the rate hike request, which Sullivan was expected to decide about Monday, 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.
Consumer advocates, on the other hand, argue the association is seeking more money through premiums than actuarial reality warrants.
Property owners already are paying premium rates more than 40 percent higher for windstorm insurance now than they did less than a decade ago.
Along with the question about whether the association is underfunded or not is whether ratepayers are the most appropriate source to make up the difference, even if it is.
It could be that the insurance industry needs to kick more into the association’s funding mix.
Those questions the Texas Legislature could and should take up and answer during the session that will begin in January.
Abbott was right in keeping another rate increase off the backs of coastal Texans until after lawmakers have had a chance to dig into the issue in detail.
• Michael A. Smith