Texas Commissioner Rejects TWIA’s Proposed Rate Increase

Texas Insurance Commissioner Cassie Brown issued an order this week disapproving Texas Windstorm Insurance Association’s proposed 10% increase to property and commercial rates.

The Department Department of Insurance said in an Oct. 14 order that the rate filing met the criteria set forth in Chapter 2210 of the Texas Insurance Code, but the order cited rising and unaffordable insurance costs as a reason for the disapproval.

TWIA’s Actuarial and Underwriting Committee recommended the rate increase in July after the association’s actuarial staff indicated that TWIA’s current rates are inadequate by 38% for residential coverage and 45% for commercial coverage. The TWIA Board of Directors accepted the recommended rate increase by a vote of 6-3.

“The Commissioner’s order notes that the Texas Legislature will have the opportunity to address TWIA’s funding structure next year,” a TWIA spokesperson said in a statement. “We look forward to working with lawmakers to address these important issues to ensure that TWIA has the financial capacity to pay claims for our policyholders when they need us.”

TDI said it received nearly 500 public comments and all but three opposed any rate increase.

The chief financial officer for the Kingsville Independent School District, the city manager of the City of Galveston and president and CEO of the Galveston Regional Chamber of Commerce were among regional leaders who said the Texas coast is already struggling from high insurance costs.

One commenter said TWIA should reduce its agent commissions and find other ways to reduce costs before asking policyholders to pay more.

The rate disapproval comes as TWIA has emptied its reserve fund to pay for Hurricane Beryl claims. TWIA said it has received 31,163 claims arising from Hurricane Beryl through earlier October and has paid $259 million in claims from the storm. TWIA expects that paying claims arising from Hurricane Beryl will exhaust the Catastrophe Reserve Trust Fund, the balance of which was $451 million as of June 30, 2024.

TWIA’s chief actuary stated at an August 6, 2024, board meeting that a 10% rate increase would yield approximately $75 million per year for the CRTF.

Texas lawmakers are expecting to take up legislation to address TWIA funding during the 2025 legislative session, which begins in January.