Very few surprises came out of a report released this month by the Texas Sunset Advisory Commission about the windstorm insurer for thousands of coastal property owners.

That the Texas Windstorm Insurance Association, which covers about 240,000 policies on more than $60 billion in property value, is broke, in debt and facing a shrinking revenue pool is nothing new.

To remedy all that, Texas lawmakers would need to decide whether to keep the association, a windstorm insurer of last resort for thousands of county property owners, or allow it to act as a free-market insurance company that could more flexibly adjust its premiums, the Texas Sunset Advisory Commission said in its report.

The Texas Windstorm Insurance Association, created by the Legislature in 1971, was intended to be a residual market property insurer, serving as a coverage source of last resort for businesses and people who have been rejected by the voluntary market insurers.

The association has a goal to depopulate and lawmakers have designed initiatives to provide the association’s policyholders with alternative options for wind and hail insurance. It has seen some success with that, but private-market insurers haven’t exactly flocked to the opportunity to cover the very high-risk properties along the coast, as seen by the fact that most of those policies, virtually all of them, are still on the association’s books.

The association exists because private insurers over the decades fled the market, phasing out windstorm coverage for homeowners along the state’s coastline. Those insurers apparently couldn’t find the balance between risk and profit, and if they did, realized they would likely price themselves out of the market.

The question then is how would allowing the association to operate as a quasi free-market enterprise achieve a result better than the actual free market experienced? Maybe there’s a way, but it’s certainly not apparent.

Allowing the association to raise rates as much and as often as it wanted certainly would help depopulate the program, as consumers unable to pay the high premiums were forced out of coverage.

What then? What would the option of last resort be if it’s no longer the Texas Windstorm Insurance Association?

There’s a perception among some inland lawmakers that people live along the coast because they enjoy life on the water, and some do. Most, however, live here because a huge part of the state’s economy is based here at refineries, ports and the seafood industry. Where are those vital workers going to live if they can’t afford something as basic as insurance?

Rather than give the association a free hand to increase rates, lawmakers should require it to find ways to spread the risk, perhaps by attracting thousands more policyholders by keeping premiums affordable. Or, the state could force private insurers who want to sell auto and other highly lucrative insurance on the coast to also sell windstorm policies.

Whatever the solution might be, it can’t include leaving consumers at the mercy of the private market.

The private market for windstorm insurance didn’t work before, and it’s hard to see how it would work now.

• Laura Elder

 Laura Elder: 409-683-5248; laura.elder@galvnews.com

Managing Editor

(5) comments

Bailey Jones

It seems like, with hurricanes on 2 coasts, wildfires on the other, flooding on major rivers, tornadoes, etc., that a simple solution might just be to require that all homeowners insurance companies cover all disasters across all of the country. I don't understand the logic of an America First that allows, or even requires, insurance companies to slice us up and pit state against state and county against county.

Paul Hyatt

IT is called follow the money.... The last windstorm damage we had was during Ike and TWIA paid us around 23 cents on the dollar of damage. TWIA (Totally Worthless Insurance Agency) is worthless as an insurance agency, You have to have them and pay them a fortune every year and then when you need them to pay back some of that money that you have paid in for 25 years they treat you like garbage and pay out minimal.... The only reform that I have seen at TWIA is the price of their worthless product continues to go up....

Ray Taft

Without insurance, few could afford to build a house in an area susceptible to the coverage offered by TWIA.

If The Daily News had investigative reporters, they could look to see if the legislators were paid off to create the TWIA so that builders could build and insurance companies did not have to insure.

Instead, today’s news media feeds us the establishment line and is content with the fake news they push. To some, going along to get along is the way to go.

Jarvis Buckley

Ray I understand what you are saying but -- the fact is over 50 percent of the folks on the WestEnd pay cash for their home. They aren't required to buy any insurance. When they don't as soon as damage occurs. Guess where they go?. To FEMA .

John Merritt

The TWIA is almost privatized already. If you buy a policy, then you might get pennies on the dollar for repairs after storm damage. But because of the government backing, people who don't buy a policy get benefits based on their income. Of course the program is bankrupt, just like Social Security. The solution is to combine Windstorm with Flood, not two separate policies. and ALL who live on the coast must purchase the insurance. But, as we see with the Affordable Care Act, it is questionable whether or not the government can force anyone to buy insurance. I quit buying windstorm insurance after Hurricane Alicia, when an adjuster gave me $10 to replace 10 feet of faceboards.

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