| July 21, 2012 | 1 Comment

Coastal residents got some good news Friday when the Texas Windstorm Insurance Association announced it was delaying discussions about insurance rate increases scheduled for Monday.

 Windstorm insurance rates have gone up 5 percent for coastal property owners each year over the last three years and the actuarial committee associated with the TWIA board was scheduled to decide on new recommendations for an across-the-board rate increase on windstorm policies.

 It was the second set of state hearings cancelled after Coastal legislators led by State Rep. Todd Hunter, R-Corpus Christi, expressed concern about statements by some Texas officials on rate increases and the state’s ability to pay claims if TWIA goes under.

Concern is probably putting it mildly.  State Senators Chuy Hinojosa, D-McAllen, and Eddie Lucio, D-Brownsville, weighed in on the issue as did state representatives like Connie Scott, R-Corpus Christi and J.M. Lozano, R-Kingsville. Their response wasn’t pretty.

 In a letter, Scott blasted Insurance Commissioner Eleanor Kitzman as a pawn for big insurance companies after Kitzman made comments saying the state was under no legal obligation to pay for claims if TWIA ran out of money. Kitzman was responding to a letter from House Insurance Chairman John Smithee, R-Amarillo, and a longtime critic of those who live and work along the Texas coast.

 Lozano asked the Attorney General to investigate Kitzman’s comments. And he discovered that Kitzman didn’t plan to attend hearings scheduled in Austin and in Corpus.   Others jumped onboard, and the result was the cancellation of hearings about rate increases included in HB 3, legislation billed as windstorm reform. That so-called reform would have given the Department of Insurance the ability to raise rates on every insurance policy in the 14-county Tier One area where windstorm insurance is available through TWIA.

 In other words, as Lozano put it, people’s car insurance, farm and ranch insurance, homeowners insurance and commercial insurance could all skyrocket out of control because of where they live and work.

Those hearings were cancelled and Hunter, Lozano and the entire Coastal Bend delegation in the Texas House of Representatives – including Hunter, Lozano, Scott, Raul Torres, R-Corpus Christi, and Jose Aliseda, R-Beeville – signed a letter asking for no rate increase hearings until the legislature had the opportunity to deal with the issue in 2013.

The result was a 2-0 early bout decision for the lawmakers by getting rate hearings postponed, even thought they could pop up again at any time.

Chambers of Commerce from across the coast pitched in, and San Patricio and Nueces County officials, like County Judges Terry Simpson and Loyd Neal, had strong roles in the fight which is still continuing.

Hunter’s leadership on the windstorm issue is no big surprise to anyone keeping up with the longtime windstorm war in Texas. He has been the state’s top legislative expert on the issue for years and is currently chair of the powerful Calendars Committee.

But what was surprising to some, was the role of Lozano, a new Republican convert, who under Hunter’s tutelage teamed up with the senior member of the delegation to make a real difference in putting the brakes on the windstorm trash talk from state officials and the continuation of hearings on insurance rates that would have affected thousands of coastal insurance policies.

The team of Todd Hunter and J.M. Lozano has delivered a one-two punch against rising insurance rates for the time being – but don’t think the fight is over.  There’s some heavy hitters trying to knock out the Texas coast and it’s going to take this dynamic duo working with other legislators across the state to keep coastal insurance rates from going up across the board.            


Category: Texas Windstorm


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  1. My gut call is that we are going into the 2013 hurricane season with $1.7 billion in claims funding capability from TWIA (Texas Windstorm Insurance Association) as follows:

    TWIA Cash on-hand – $31 million – assumes no large storm losses prior to 6/1/2013
    CRTF (Catastrophic Reserve Trust Fund) – $205 million
    Class 1 post-event bonds – not marketable per TPFA (Texas Public Finance Authority) analysis
    Class 2 post-event bonds – $1 billion*
    Class 3 post-event bonds – $500 million**
    Reinsurance – no current funds available to purchase

    *The TWIA PIR attached indicates that if the class 1 bonds are not sold, then half of the class 2 bond repayment would be dependent on TWIA to repay (i.e., future revenue stream). This could also impact the marketability of the class 2 bonds.

    ** It is unclear to me if the Class 3 bonds could be issued without the Class 2 bonds being fully executed.

    This outcome is well below TWIA’s probable maximum loss risks. From TWIA provided data, the 75 percentile modeled storm results is $6.6 billion for Galveston and $5.5 billion for Corpus Christi from a Category 4 hurricane strike as of April 2012. By June 1, 2013, continued growth in number of policies will increase these risk by several hundred million.

    It continues to be my contention that TWIA is an insecure insurance entity without the ability to fund claims up to the expected losses from a category 4 hurricane strike on either of our two main coastal economic concentrations (Galveston or Corpus Christi). For reference, the claims from hurricane Ike and Dolly in 2008 to TWIA were initially $2.3 billion (but they have paid out more since 2008 due to ongoing litigation). This is an unacceptable situation for our coastal residents who depend on their TWIA insurance contracts to pay their claims and is an unacceptable economic risks for the coastal communities, the TWIA service area (the entire Texas coast) and the overall Texas economy. Texas is not safe!

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