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Texas Wind Insurer’s Rate Denial Spurs Funding Concerns

Law360 Insurance Authority

The Texas insurance commissioner’s recent decision to deny a proposed 10% rate increase for the state’s windstorm insurer of last resort has been applauded by some for prioritizing affordable coverage for policyholders, while others remain concerned about the insurer’s funding and ability to pay claims.

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The suggestion that [Texas Windstorm Insurance Association (TWIA)] could first cut expenses by lowering agent commissions, which are in excess of the industry average, further underscores the point that there may be opportunities for the association to be more frugal and efficient in its operations, United Policyholders' Bach said.

But the burden of ensuring that TWIA has enough funds to pay policyholder claims needs to be shared by everyone — the association, its policyholders and Texas taxpayers — Alan Rubin, a principal at Blank Rome LLP and a co-leader of its severe weather emergency recovery team, said.

Cutting down agent commissions is a good place to start, but a rate increase and contributions from residents inland is still necessary, he said.

Rubin also emphasized the importance of pre-storm resilience planning in addition to response and recovery after a severe weather event. For example, he said, building codes should be updated to better address flood and wind hazards.

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“Texas Wind Insurer’s Rate Denial Spurs Funding Concerns,” by Hope Patti, was published in Law360 Insurance Authority on October 31, 2024.