CONTACT: Camille Garcia, Director of Communications and Public Affairs 512-713-4262

At their December meeting, the TWIA board of directors made a responsible decision to protect TWIA’s ability to pay its policyholders before the next huge storm hits the Texas coast. Since July 2020, and again in September and November, TWIA’s board has received multiple reports from its actuaries and an independent actuary that its rates are inadequate for the risks they insure. These reports indicated rates were inadequate by as much as 44% and 49%, for residential and business risks, respectively, and the most recent report found rates inadequate by 26% for homeowners and 44% for businesses. After months of discussion, review, and debate, on December 8, 2020, the board approved a modest 5% rate increase.


“Unfortunately, TDI rejected the rate increase and based their decision on procedural errors by TWIA, to the delight of some coastal stakeholders who oppose any rate increase regardless of the evidence and need to protect TWIA’s financial stability. However, TDI’s rejection did not speak to the appropriateness of the approved rate increase nor did TDI address TWIA’s need to operate like an insurance company and its responsibility under the law to maintain adequate rates. It’s disappointing to see this decision when the TWIA board attempted to meet its legal duty and the modest rate increase would help provide additional funds to strengthen TWIA’s ability to pay losses after the next hurricane.” says Albert Betts, Executive Director, Insurance Council of Texas.


In our opinion, TWIA’s board balanced the financial difficulties caused by COVID-19 with the business needs and obligations of TWIA as an insurer and approved a fair result. Obviously, the TWIA board will have to determine what its options are given TDI’s decision, but we would urge the board to again give careful consideration to TWIA’s obligations to its policyholders and the legal requirements as an insurance company.


Given the potential for large losses, the board has a duty and responsibility to ensure TWIA has funds available to pay claims. In addition, by law, the board has to ensure that TWIA’s rates are adequate, among other requirements. Unfortunately, some leaders along the coast have urged TWIA to ignore its financial responsibilities and continue to disregard the expert advice they receive on the rate issues. Those who argue that raising TWIA rates places an undue burden on gulf coast residents, need to remember that living along the coast brings an added responsibility to carry and pay for insurance coverage to protect against the enormous risk of loss due to hurricanes. TWIA funds its losses through a combination of premium revenue and reserves, loans and bonds, up to $1 billion in assessments against Texas insurance companies, and reinsurance. This rate increase would help to lessen the need for TWIA to fund losses via additional bonds and debt. If TWIA has to assess insurance companies to pay losses, this ultimately means that Texas policyholders across the state bear the cost.


TWIA, a legislatively created insurer of last resort in 14 coastal counties, writes wind coverage for homes and businesses along the coast who are otherwise unable to obtain that coverage from a traditional insurer. TWIA provides wind coverage for approximately 44% of the policyholders along the coast. When a storm hits the coast, hurricane-force winds can destroy buildings, tear up roofs, and toss about vehicles, causing billions of dollars in damages. The last major storm to hit Texas, was Hurricane Harvey in 2017 which caused $1.7 billion in losses for TWIA, and previously in 2008, Hurricane Ike, caused more than $4.2 billion. After Hurricane Harvey the insurance industry paid over $372 million to TWIA to help pay claims in addition to approximately $9 billion to pay for losses suffered by their own customers.


Obviously, no one wants to pay more for the necessities of life, like homes, rent, food, clothing and so many other elements of daily life. But that should not mean neglecting the financial needs of TWIA and ignoring legal requirements for TWIA insurance.


Although created by the state, TWIA is not a state agency, it is an insurance company. One of the primary responsibilities of the TWIA board is to follow sound insurance principles and meet the standards imposed under the laws governing TWIA. ICT and its member companies thank the TWIA board for voting to strengthen the financial well-being of TWIA and follow their legal obligations and fiduciary responsibilities.



As the conversation continues, we encourage the TWIA board to remain committed to their role in maintaining TWIA’s financial well-being. ICT’s member companies remain committed to helping pay TWIA losses through up to $1 billion in assessments as required by law, and are committed to coastal Texans and businesses by writing the majority of wind and hail coverage along the coast.


We also want to remind Texans living along the coast that TWIA is not the only option for wind coverage. Despite messages to the contrary, many insurance companies are offering wind policies, often at competitive rates, for coastal residents. Consumers have choices regarding coverages, premiums/rates, and payment plan options. Residents are encouraged to compare prices through www.helpinsure.com a website presented by TDI and the Office of Public Insurance Counsel.


For more information, contact Camille Garcia, Director of Communications and Public Affairs at Insurance Council of Texas, 512-713-4262 or cgarcia@insurancecouncil.org.


The Insurance Council of Texas is the largest state insurance trade association in the country consisting of approximately 400 property and casualty insurers writing business in Texas. For more information, see our website insurancecouncil.org, follow us on LinkedIn and Twitter for up to date news and information.


2801 South IH 35, Austin, TX 78741 * PO Box 15, Austin, TX 78767-0015 * 512-713-4262

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