On Monday, the Texas Legislature adjourned sine die and I’m pleased to report on behalf of the Coastal Windstorm Insurance Coalition that we had a very good session.

Not only did significantly beneficial Texas Windstorm Insurance Association related legislation pass the legislature, but it passed overwhelmingly. In the wake of the inevitable passage of these bills, the association’s board of directors met to rescind a proposed 10 percent rate increase.

The most significant of these bills is HB1900 authored by state Sen. Larry Taylor and state Rep. Greg Bonnen.

The bill requires insurance companies to pay for any reinsurance the association purchases above a 1-in-100-year storm. Currently, ratepayers are paying that cost. For the 2019 storm season, the association has purchased roughly $550 million in reinsurance above that threshold. Not only will those costs not be borne by coastal Texans in the future, but this provision will also increase the funds the association will have on hand to pay claims, and do so without having to frequently raise rates on policyholders.

The bill requires the association to publicly post any proposed rate increase for 14 days before a board vote and requires the board to accept public comment on proposed increases. For the first time, policyholders will have a voice in the rate-making process.

HB1900 also requires the legislature to create two interim studies. The first is to review the association’s funding and funding structure, and the second is to evaluate merging the windstorm association and the Texas FAIR Plan Association, which the legislature created in 1995 to deliver property insurance to Texas residents in areas designated by the Commissioner of Insurance as underserved.

Both interim committees are required to hold public meetings and issue a report to the legislature.

SB615 also passed, benefitting policyholders by improving customer service processes for policy renewals and premium payments, providing customers increased clarity in the claims process, and providing public transparency in the windstorm association’s rate filings.

Three other pieces of legislation will also benefit association policyholders. Surplus lines companies will be able to provide windstorm and hail coverage. This will give consumers more options in purchasing wind and hail insurance and decrease costs even more. Also, some association claims deadlines have been extended, which likely will result in fewer wrongful denials.

There are many people to thank for these successes. Gov. Greg Abbott’s leadership in freezing the 2018 10 percent rate increase was crucial. He gave legislators the needed time to work on this issue. Members such as Taylor, Reps. Eddie Lucio III, Bonnen, Todd Hunter and Mayes Middleton (to name a few) championed our cause. I’m thankful for the support of County Judge Mark Henry and Galveston Mayor Jim Yarbrough, as well as coalition members and friends that testified and made phone calls.

The association withdrawing the previous rate increase will save Galveston County $135,000, and the city of Galveston $65,000 in windstorm insurance renewals alone.

This session was very successful, but there’s still more work to be done. The association board will meet in Galveston on Aug. 6, and rate filings will be back on the agenda. The public is invited to testify.

Henry Freudenburg is chairman of the Coastal Windstorm Insurance Coalition.

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(4) comments

Gary Scoggin

“The bill requires insurance companies to pay for any reinsurance the association purchases above a 1-in-100-year storm. Currently, ratepayers are paying that cost.“

Just wondering, if not ratepayers, who does pay that cost?

Reggie Barnett

I always thought TWIA was intended to cover coastal counties for a tropical named storm. When did hail damage become tropical when hail damage is far more damaging in North Texas and the Panhandle? I also wondered why main line insurance companies were allowed to exclude windstorm and how hail was a windstorm? Why not just raise the deductible to 15-20% across the whole state and let TWIA be gap insurance. TWIA would only cover the first 12-18% of the insured value and not restricted to only coastal counties? Isn't that what supplemental insurance does when you are on Medicare?

Wayne Holt

Reggie, you've hit on an interesting tidbit of information. TWIA is both wind and hailstorm insurance. The Dallas Morning News did a feature a few years ago showing how much money was lost in Texas due to hail damage...and it was almost entirely in central and north Texas.

We did a little study for our HOA on this topic and found out total hail damage in Galveston Co. going back to the 1950s was only a couple million dollars, as I recall. Statistically insignificant compared to flood damage; even wind was not nearly as critical as flooding in assessing total risk. And yet flood insurance, by comparison, seems priced to risk more favorably.

Our condo building was assessed outsized TWIA premiums for several years as having non-wind resistant roofing. When we finally had an engineering firm certify it (Zero/Six Consulting did a fantastic job for us), we were actually OVER engineered; we got an $18,000 return of premium and lower rates for TWIA coverage.

Reform of the TWIA debacle is long since overdue. There are many ways this indemnification could be handled in a more efficient, equitable and rational way. Why it hasn't been is something that coastal residents should demand an answer to.

Wayne Holt

I should also add, especially if you are in a condo but in any situation, your insurance agency better understand the ins and outs of the very complex rules, arcane processes and mystifying dead-ends of the TWIA machine. It will stymie your sincere attempts to make sure you have adequate coverage that will deliver if you need it, nothing more or less, and at the best price possible. We relied on GIA agency here on the island, and we never would have made it through the morass without them guiding it.

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