Texas Windstorm Coverage Rates Rising to Build Catastrophe Fund
Texas Insurance Commissioner Mike Geeslin recently approved rate increases of 8.2 percent for residential properties and 5.4 percent for commercial properties covered by the Texas Windstorm Insurance Association, which is the state's insurer of last resort for windstorm coverage. The changes are effective Feb. 1, 2008. TWIA had requested a 10 percent increase for both in a filing in August.
The Texas Department of Insurance said much of the rate increase comes from raising to 25 percent the portion of the rate intended for adding to TWIA's Catastrophe Reserve Trust Fund. The catastrophe fund has not kept up with the growth in TWIA exposure during the past few years, with the association experiencing significant increases in new policyholders as private insurance companies pulled away from the designated catastrophe area. "This increase is a necessary part of our long-term strategy to improve the financial health of the Windstorm Association," said Geeslin. "Money put into the CRTF is available as a safety net to pay losses in the event of a major hurricane, unlike reinsurance that has been purchased the past several years."
He said other measures are under consideration, as well, including alternate funding sources, loss mitigation efforts, and administrative controls. The increase will mean the $1,023 estimated average premium for a residential TWIA policy will rise by $84 per year.