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TWIA’s next rate hike move after TDI rejection unsure

The Texas Windstorm Insurance Agency has not decided whether it will renew its bid for a 5 percent rate hike after the board-approved increase was recently rejected by the Texas Department of Insurance. The board voted 6-2 on Dec. 8 to increase rates for both its commercial and residential customers. TDI announced its rejection of the increase in a letter Jan. 8.

“It is unknown at this time whether the TWIA Board will consider re-filing the rate increase,” reads the TWIA release. “The Board is next scheduled to meet on February 23, 2021.”

According to the TDI letter, failure to adequately notify the public of a possible vote on raising windstorm insurance rates doomed the increase approved at the board’s last quarterly meeting.

The rate hike vote, which was not specified on TWIA’s agenda, was based on a rate analysis sent to the board by its actuarial committee. TDI further said the public was not given adequate time to study the analysis.

“Because TWIA failed to make the analysis available to the public for at least 14 days before voting on a rate increase, the rate filing is rejected,” wrote Doug Slape, TDI chief deputy commissioner. “TWIA’s meeting notice also failed to clearly inform the public that the board would vote on a rate filing.”

The 6-2 vote to raise rates came at agenda item No. 8, which read: “Presentation and Review of TWIA Actuarial and Underwriting Committee Meeting Rate Recommendations — Debbie King*.”

An explanatory asterisk at the bottom of the document stated: “indicates item on which General Manager believes the TWIA Board of Directors is likely to take action. However, the board may take action on any item that appears on this agenda.”

An outside firm, Willis Towers Watson, conducted the rate hike analysis, reporting to the actuarial committee that its study showed residential rates were 26 percent inadequate and commercial rates 44 percent inadequate.

Despite that, the committee voted not to send a rate increase recommendation to the board. The committee recommended further study; the board voted to raise rates.

A group of 20 legislators, including state Rep. Todd Hunter (R-Corpus Christi) immediately sent a letter to Gov. Greg Abbott asking him to abate the rate increase, which he has done in the past. The process didn’t need to get that far, Hunter said.

“The first step was for TWIA to file for a rate increase and then TDI to act by saying yes or no,” Hunter explained. “The governor’s involvement wasn’t triggered yet. TDI acted correctly (in rejecting the rate increase).”

The letter to Abbott from the legislators questioned the legality of the vote based on the vague agenda wording. Corpus Christi Business News asked TWIA about that accusation the day the letter was sent.

“The TWIA Board and staff are advised by counsel that the agenda as posted on November 25, 2020 gave proper public notice that the Board would receive a report on rates, and additionally indicated that the General Manager expected that the Board may take action on that item,” responded TWIA Vice President Jennifer Armstrong by email. “Counsel advises that the agenda, meeting, and vote are in compliance with the Texas Open Meetings Act.”

The 20 legislators, including Hunter, said the agenda and the board’s action was an example of how not to be open to the public.

“(The rate increase vote) was not clear or you would have had a thousand public comments coming in,” Hunter said. “If the public knew the board was going to consider a rate hike, they would have been there to protest.”

Which is exactly what has happened in the past. Hunter and other Gulf Coast legislators, working closely with their chambers of commerce, have organized multiple protests against proposed rate hikes, including for meetings in August 2019, August 2020, and December 2019. The groups have held rallies, organized email campaigns, and accompanied dozens of protestors to speak out against rate increases at TWIA meetings.

Legislators plan to introduce legislation during the 87th legislative session, which begins Tuesday, Jan. 12, to further regulate and restructure TWIA. One possibility is to introduce a catastrophic insurance program that would include windstorm insurance in statewide policies for fire, floods, and other disasters.

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