Could Texas Windstorm Feud Feed Efforts For Federal Windstorm Program?

| July 2, 2012 | 0 Comments

Republican Congressman Farenthold Sends Representative,

Democrat Congressional Candidate Fil Vela Attends Windstorm Meetings

Windstorm insurance may be a state issue for now but for several years adding wind coverage to the current federal flood insurance program has been under consideration by  federal lawmakers … despite warnings from the Government Accountability Office that adding wind to the flood program could increase FEMA’s total debt.

The GAO report, completed in 2007 following Hurricane Katrina, says that a new federal flood and wind program could reduce the exposure of some insurers by insuring high risk properties that currently have private sector coverage. However, the unknown portion of the exposure currently held by state wind programs – nearly $600 billion in 2007 – could be transferred to the federal program.

And so I guess it should come as no surprise that a sitting Corpus Chrsiti Republican Congressman and a Democrat hopeful, who is expected to win in a neighboring Congressional district that includes coastal counties,  both either sent representatives or attended meetings involving a simmering storm gathering in Texas involving the state’s Insurance Commissioner, a Panhandle legislator and hundreds of thousands of residents who live and work along the Texas coast.

Civic leaders who attended meetings about rising windstorm insurance rates in Corpus Christi and Brownsville last week said a representative of Congressman Blake Farenthold, R-Corpus Christi, attended the meeting in his hometown, and that Democratic Congressional candidate Fil Vela, a Brownsville attorney, and presumed leader in a Democratic runoff in a neighboring South Texas district attended the meeting in Brownsville.

As homeowners in the 14 county area covered by TWIA, both the Congressman and the potential Congressman have an interest in keeping the rates low … but even more they may be looking at two things:

1.)    Charges of discrimination against coastal residents after comments by Insurance Commissioner Eleanor Kitzman that could get the state’s attorney general  involved , and could involve the federal justice department since the majority of the residents along the Texas coast who will be charged under the Texas windstorm plan are Hispanic. The rates are discriminatory whatever ethnic group you belong to, but minorities could give the discrimination charges even more impetus from the federal justice department..

2.)    Almost a year ago, the House considered HR 1264, the Multiple Peril Insurance Act, introduced by  Rep. Gene Taylor, D-Mississippi. That bill would have expanded FEMA  by adding windstorm coverage to the Nation Flood Insurance Protection Program (NFIP) and allowing the program to sell multi-peril and windstorm insurance policies to residential and nonresidential property owners.

The Texas windstorm rules proposed by the Department of Insurance may give supporters of the federal program additional fuel for their fire to come up with a federal program.

Under Taylor’s bill, a windstorm would have been defined as any hurricane, tornado, cyclone, typhoon, or other wind event.  Windstorm coverage would cover property damage caused by wind only and would be available to property owners who also purchased a flood insurance policy from through the NFIP.  Multi-peril coverage would cover both wind and flood damage.

Interesting enough, critics of the proposal (Including many national Republicans) used similar language to those in Texas who want coastal residents to pay more for their insurance. Supporters said the bill was necessary to protect homes in coastal areas and to save taxpayers money. Critics said most taxpayers do not live in the covered areas but would be forced to subsidize those who choose to do so, including wealthier property owners.

The Texas case shows that the cost of expanded insurance needs to be spread out to all policy holders. For example, people along the coast pay for catastrophic insurance for people who are covered from  tornados or hail storms, but those same people don’t share in the costs of hurricane or windstorm coverage.

Critics also charge that the NFIP, similar to the TWIA situation in Texas, is a “high-risk” federal government programs in need of comprehensive reforms. 

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Category: Texas Windstorm


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