Rate Change Ordered for TWIA

The Texas Department of Insurance (TDI) has granted a rate increase for the Texas Windstorm Insurance Association (TWIA), the state’s insurer of last resort for windstorm coverage.

Texas Insurance Commissioner Mike Geeslin approved rate increases of 12.3 percent for residential and 15.6 percent for commercial policies, effective Feb. 1, 2009. State law caps rate changes for the Windstorm Association at 10 percent, but the Texas Department of Insurance (TDI) has the authority to suspend the cap after catastrophic losses.

“These rate increases are a continuation of our long term goal to build up the financial strength of TWIA," said Geeslin. “While some may argue that they need to be higher, we need to be mindful that our coastal region is in recovery. Coastal residents are overburdened as it is."

To make sure that all claims by TWIA policyholders can be paid, state law permits the Association to assess member insurance companies if the Association's funds are depleted. However, these assessments may be offset by premium tax credits, which reduces the amount paid by insurers into the state's general revenue fund. To date, insurers have been assessed $530 million to pay claims from hurricanes Dolly and Ike, $230 million of which is subject to tax credits.

The Commissioner noted that TDI will continue to work with the Legislature on new ways to improve funding for TWIA that will lessen the reliance on state revenues and ultimately Texas taxpayers. "Adequate reserves cannot be rebuilt overnight," said Geeslin. "It's a gradual process that takes time, and the rate increase announced today is just one step."

TWIA policyholders would see the increase at the time of their policy renewal, beginning Feb. 1, 2009.

For more information about homeowners insurance and windstorm coverage, visit
HelpInsure.com (www.helpinsure.com) or call TDI’s Consumer Help Line at 1-800-252-3439.