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Windstorm Association Rate
Decision Issued
AUSTIN – Texas Insurance
Commissioner Mike Geeslin today signed a
Commissioner’s Order allowing the Texas
Windstorm Insurance Association (TWIA) to
increase rates for residential homeowners’ wind
coverage by 3.1 percent and commercial rates by
8 percent. In a public hearing last month, TWIA
had asked the Commissioner to increase
homeowners’ rates by 19 percent and commercial
rates by 24 percent.
Additionally, Geeslin signed an order allowing
TWIA to surcharge windpool applicants seeking
wind coverage through an approval process that
does not require the standard windstorm
inspection. The refusal of insurers to write
wind coverage causes existing structures to be
at risk of not being able to obtain wind
coverage except for the approval process. Those
homeowners who get coverage through the approval
process will pay a 5 percent annual surcharge to
the TWIA base rate. TWIA had asked for a
surcharge of 25 percent.
“This is the first step in a multi-year effort
to strengthen the financial condition of the
Texas Windstorm Insurance Association,” Geeslin
said. He noted that he supported an incremental,
gradual approach to strengthen TWIA in a manner
that does not put undue economic burden on
coastal homeowners.
Coastal policyholders should examine their
homeowner’s policies and their wind policies to
make sure they are fully insured to the value of
their homes. It is estimated that many
policyholders have not increased their policy
limits over the years as their homes have
increased in value and rebuilding costs have
increased. Geeslin wanted to ensure that
increased windstorm rates did not lead to
“sticker shock” for policyholders who must also
increase their coverage limits.
Geeslin noted that this action should be viewed
in the light of last year’s events along the
Gulf Coast and recent forecasts of a more
intense hurricane season in 2006.
“We have a long way to go to put TWIA on solid
footing,” Geeslin said. He also noted that
legislation is necessary to shore up the
windpool and protect the state’s general
revenue.
TWIA is the state’s insurer of last resort for
wind coverage in Texas coastal counties. The
pool currently has more than 100,000 policies in
force. That number could rise significantly in
light of Allstate’s recent announcement that it
will no longer write wind coverage for coastal
residents. The Allstate action affects
approximately 65,000 policyholders.
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