NEW WINDSTORM INSURANCE PLAN PASSES SENATE
|Senator Troy Fraser of Horseshoe Bay describes changes to his bill to reform the Texas Windstorm Insurance Association.|
(AUSTIN) — Senators gave approval to a plan to reform the Texas Windstorm Insurance Association (TWIA), the insurer of last resort for coastal residents and businesses. The current balance in the catastrophic reserve fund, intended to offset claims following a large hurricane, currently stands at zero, and virtually all insurance written along the coast is under TWIA. This means the state could be responsible for $68 billion in claims in the event of a catastrophic storm, said Senator Troy Fraser of Horseshoe Bay, who believes reforming TWIA is critical. "I said before the session started, we have to pass two bills this session, one is the budget, and the other one is the TWIA windstorm bill, and I still believe that," he said. His bill, SB 14, has undergone substantial revision from the version introduced in committee, as Senators from coastal regions worked to address their concerns.
The version passed Thursday removed provisions from the original bill that would have placed surcharges on coastal policy holders to replenish the catastrophic fund and bring TWIA into solvency. Claims would now be covered through the issuance of bonds before or after the storm. Bonds could also be issued to purchase reinsurance for TWIA insurers. For storm claims up to a billion dollars, bond repayment would come from a $400 million assessment on TWIA member companies, and a surcharge on coastal property and casualty policies. Once damage claims pass a billion dollars, the rest of the state would have to help out, with about 30 percent of that bond repayment coming from a surcharge on policies state wide.
This bill represented the culmination of weeks of negotiations with Senators representing coastal districts. When Fraser laid this bill out in committee in March, he said few would like it. The original bill put most of the responsibility for rebuilding the catastrophic fund on coastal policy holders, a move many coastal Senators described as punitive. The final bill package drew broad support, with only four Senators dissenting. "We've come a long way and we've got a bill before us that is not punitive, and it makes common sense," said Senator Mike Jackson of LaPorte. The bill now heads to the House for consideration.
The Senate will reconvene Friday, May 1 at 9 a.m.