Lawmakers urge delay in rate increases for windstorm, hail coverage


Texas lawmakers including State Senator Lois Kolkhorst are applauding a delay for proposed insurance rates along the Texas coast.

“The Bay City Chamber of Commerce and Agriculture joined with the Galveston and Corpus Christi Chambers to seek relief from the 10 percent increase in our insurance rates,” said Bay City Chamber of Commerce and Agriculture President Mitch Thames. “We will be active in Austin next session seeking a reasonable approach to the coastal insurance situation.”

Gov. Greg Abbott instructed Texas Insurance Commissioners to delay a proposed 10 percent increase in rates for windstorm and hail coverage insurance along the Texas coast, citing his concern that this additional cost to those consumers could hinder recovery from Hurricane Harvey. 

The Texas Windstorm Insurance Association (TWIA), a nonprofit organization created in 1971 by legislators after Hurricane Celia, approved a 10 percent rate hike increase in July, which will automatically become effective on Jan. 1, unless the insurance commission acts to delay the increase.

In Abbott's letter to the insurance commission, he suspended portions of the state insurance code to the extent necessary to delay any decision to approve or disapprove the proposed rate increase, and any deemed approval of the proposed rate increase, until the Legislature has had a full opportunity to address the matter. 

According to TWIA officials, the rate hike is necessary to ensure it has an adequate amount of money to rebuild its Catastrophe Reserve Trust Fund for payment of future TWIA catastrophe losses. TWIA officials were able to secure access to $4.6 billion in funding for the 2018 hurricane season.

The Texas Windstorm Insurance Association in August filed with the Texas Department of Insurance a 10 percent rate increase for residential and commercial properties that would go into effect next year.

In an announcement on its website, the association said that at its most recent quarterly meeting TWIA’s board made the decision to increase rates for 2019 upon the recommendation of the Actuarial and Underwriting Committee. TWIA said its rates are currently inadequate by 32.2 percent for residential policies and 37.3 percent for commercial policies.

The proposed rate increase must be approved by the insurance commissioner. If approved, it will go into effect Jan. 1, 2019. New business and renewal policies issued in 2018 would not be subject to the rate increase until the policies renew in 2019.

In the letter to Commissioner Sullivan, members of Texas’ coastal legislative delegation said the 10 percent rate increase would be “unfair, excessive and unreasonable” for coastal residents who continue to struggle to recover from Hurricane Harvey, which made landfall in Texas in late August 2017.

“The restoration of businesses and homes is ongoing, and local tax bases face uncertainty as their values depend on residents’ capacity to adjust to higher costs associated with building, and now insuring, those structures. The lingering economic effects of Harvey have negatively impacted many TWIA policyholders and any rate increase at this pivotal point would be unfair and unreasonable,” the letter states.

The coastal legislators noted that TWIA has “an unprecedented $4.9 billion available to pay Hurricane Harvey losses.” That amount is far greater than TWIA’s total loss estimate from that hurricane of $1.6 billion, the letter points out. According to the delegation, until the association’s “current level of funding [is] proven to be inadequate to pay projected losses,” a rate increase should be denied.

Lawmakers who signed the letter to Commissioner Sullivan are: Sen. Larry Taylor, District 11; Sen. Paul Bettencourt, District 7; Sen. Brandon Creighton, District 4; Sen. Sylvia Garcia, District 6; Sen. Juan “Chuy” Hinojosa, District 20; Sen. Joan Huffman, Texas Senate District 17; Sen. Lois Kolkhorst, District 18; Sen. Eddie Lucio Jr., District 27; Sen. Judith Zaffirini, District 21; Rep. Dennis Bonnen, District 25; Rep. Greg Bonnen, District 24; Rep. Joe Deshotel; District 22; Rep. Wayne Faircloth, District 23; Rep. Ryan Guillen, District 31; Abel Herrero; District 34; Rep. Todd Hunter, District 32; Rep. Oscar Longoria, District 35; Rep. J.M. Lozano, District 43; Rep. Eddie Lucio III, District 38; Rep. Geanie Morrison, District 30; Rep. Rene Oliveira, District 37; Rep. Dade Phelan, District 21; and Rep. Ed Thompson, District 29.

TWIA filed a request to increase the existing maximum liability limits on windstorm and hail policies insuring residential dwelling and individually owned townhouses and associated contents; contents of apartments, condominiums, or townhouses; commercial structures and associated contents; and governmental structures and associated contents. 

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