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No Windstorm Insurance Rate Hike for Now

State Rep. Todd Hunter addresses the Texas Windstorm Insurance Association Board of Directors at a quarterly meeting December 10 in Corpus Christi. The room was packed with people opposed to a 5 percent rate hike on the agenda. The rate hike was not approved. Courtesy photo

Coastal Bend home and business owners dodged another pending windstorm insurance rate hike when the Texas Windstorm Insurance Association voted against implementing a 5 percent increase for 2020. A local legislator also set up a House Insurance Committee hearing in January to discuss TWIA actions, while a state senator has asked the Texas attorney general for an injunction against further attempts by TWIA to raise rates.

The 5 percent increase was recommended by the association’s Actuarial and Underwriting Committee at a meeting in November.

This is the second time this year that the TWIA board has put an increase vote on its agenda but voted it down after being faced with strong local opposition. The board voted for a zero percent increase in August and then appointed an actuarial committee to study a rate adequacy analysis to make a recommendation before the December 10 meeting, which was held in Corpus Christi.

The meeting room during that quarterly session was packed with people speaking out against any rate increases.

“Our coastal crowd made an impression,” said Rep. Todd Hunter (R-Corpus Christi), a vocal opponent of an increase. “Coastal strength made the difference. Coastal teamwork delivered the message.”

The TWIA board voted against a rate increase and then directed the actuarial committee to work with staff to develop a request for proposals seeking outside help in reviewing the current rate analysis. The request is for an independent actuarial firm not based in Texas to review TWIA’s rate analysis and use of hurricane modeling to determine rate adequacy.

According to the current rate adequacy analysis, TWIA rates for residential customers are 41 percent inadequate and commercial rates are 50 percent inadequate. The work should be done in time for the board’s annual meeting in August when it typically addresses rate increases.

While TWIA works on its analysis, Texas legislators will hold committee hearings of their own. As chairman of the House Committee of Insurance, Rep. Eddit Lucio III (D-Brownsville) will hold the first hearing January 15 in Rockport to discuss implementation of HB 1900, which was approved during the 2019 legislative session.

HB 1900 made changes to TWIA to encourage operations efficiencies that should help “to prevent the pattern of rate increases perpetuated by TWIA in recent years,” according to a media release issued by Lucio’s office. The bill received significant bipartisan support, Lucio pointed out.

“Although the legislation passed, TWIA continues to seem determined to raise rates on coastal taxpayers as opposed to focusing on internal reforms to cut costs in areas like reinsurance,” Lucio said. “The committee on insurance stands ready to engage in discussions to improve TWIA’s efficiency and, ultimately, protect the coastal ratepayers affected by TWIA’s decisions.”

On the day of the most recent meeting, December 10, Sen. Larry Taylor, chair of the Senate Committee on Education, sent a letter to Attorney General Ken Paxton seeking an opinion on the legality of TWIA continuing to seek rate increases in the wake of the new legislation.

He began the letter with a mention of Hurricane Harvey, a Category 4 storm that struck the Texas coast in August 2017.

“Exactly one year later, the TWIA board of directors voted to increase rates by 10 percent on all residential and commercial policyholders in the midst of ongoing recovery efforts,” Taylor wrote. “Governor Abbott responded by suspending the Texas Department of Insurance Commissioners' authority to consider TWIA’s request to raise rates by 10 percent until June 16, 2019.”

The governor suspended the increase to give legislators the opportunity to pass legislation in the 2019 session, which they did with HB 1900 and Senate Bill 615.

“Since going into effect, the new laws call into question the validity and legal standing of recent actions and actuarial analysis by TWIA and its third-party vendors responsible for assisting the association with vital statutorily required administrative, financial and actuarial functions,” continues the letter. “These questions must be weighed heavily against the recently enacted legislation and the premise by which TWIA has based its administrative actions and fiduciary duties. Such conflict renders any action at this time by the TWIA Board to increase rates against its policyholders as improper.”

The four-page letter includes six “outstanding legal questions” for the attorney general to consider. It concludes with a request for temporary injunction against TWIA and its Board of Directors “from taking any further action on policyholder rates until your office is able to sue an official legal opinion on the questions raised in this letter…”

The United Corpus Christi Chamber of Commerce noted at the meeting December 10 that rates have already increased by 71 percent in the past 11 years. Hunter told reporters before the meeting that the current system of windstorm insurance is unfair to the coast.

“We are all tired of paying for tornadoes and hailstorms across the state,” he said. “We have not had a hurricane in 48 years when Harvey came along. It is time to quit punishing the coast.”

“We are all tired of paying for tornadoes and hailstorms across the state,” he said. “We have not had a hurricane in 48 years when Harvey came along. It is time to quit punishing the coast.”

Hunter, who is one of three names being bandied about as the next possible speaker of the Texas House of Representatives, wants to implement statewide catastrophic insurance that would involve ratepayers across the state to help pay for disasters similar to fire, hailstorms, and tornadoes.

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