Rate Inadequacy Increases for Texas Windstorm Insurer

In advance of its Aug. 6 board of directors meeting in Galveston, the insurer of last resort for wind and hail in counties along the Texas coast said it had determined its residential coverage rates are inadequate by 41.7 percent and its commercial rates are inadequate by 50 percent.

In releasing its Rate Adequacy Analysis for 2019, the Texas Windstorm Insurance Association noted that last year its analysis determined rates were inadequate by 32 percent for residential coverage and 37 percent for commercial coverage.

TWIA posted the rate analysis on its website to comply with legislation passed by the 86th Texas Legislature this year. It’s the first year the association has opened the rate analysis to comment from the public.

TWIA said its staff used standard actuarial industry methodologies to prepare the analysis. “It is an estimate based on professional judgement and statistical modeling of future weather events. Actual future events will differ from these estimates,” TWIA said in announcing the release of the rate analysis.

A proposed rate filing for 2020 was not included in the analysis, though the association’s board of directors was expected to propose a rate filing at the Aug. 6 meeting. The analysis is one of several factors considered in developing the rate proposal, which must be submitted to the Texas Department of Insurance by Aug. 15.

For an annual rate filing of 5 percent or less with an effective date that is more than 30 days after the filing date, approval by the insurance commissioner is not required.

An annual rate filing proposing a change of more than 5 percent is subject to approval or disapproval by the commissioner by Oct. 15.

In late May 2019, TWIA’s board voted to withdraw the 10 percent rate hike the association filed last year, which had been put on hold by Gov. Greg Abbott.

The board approved the rate increase in early August 2018, nearly a year after Hurricane Harvey devastated the state in 2017. The increase, if it had been allowed to go forward, would have been effective beginning on Jan. 1 of this year.

In addition to the governor’s opposition, coastal lawmakers also had balked at the proposed rate increase. In a letter to Commissioner Kent Sullivan they said the increase would be unfair to coastal residents still recovering from Harvey.