Texas denies windstorm insurer's request for rate hike amid financial concerns

The Texas Department of Insurance has denied the Texas Windstorm Insurance Association's (TWIA) request to increase policyholder rates by 10%. The decision was influenced by public comments, with only three out of 492 supporting the rate hike. Commissioner Cassie Brown stated that a rate increase "would be unjust and unfair because of the hardships a rate increase would impose on the coast."

TWIA claims it will need to deplete its financial reserves due to losses from Hurricane Beryl, as current rates do not match the rising claims from natural disasters. This marks the fifth denial in six years for TWIA's requests, with a previous approval for a 5% increase in 2022.

The rejected increase would have affected new and renewed policies starting January 1, 2025. TWIA serves over 270,000 policyholders as an insurer of last resort along the Gulf Coast, covering hail and windstorm damages across 14 counties.

TWIA argues that rate increases are necessary to maintain reliable claim payments, accommodate growing policyholder numbers, and keep up with construction costs. They state their rates are below state averages and warn that further denials could lead to special fees passed on to insurers and their policyholders.

According to TWIA's actuarial staff, current rates are "inadequate" by 38% for residential coverage and 45% for commercial policies. The association has paid over $259 million for Hurricane Beryl damages, expecting related claims to exhaust its $450 million reserve fund. Texans have filed more than 31,000 claims due to Beryl.

Texas legislators aim to address rising insurance costs in the upcoming legislative session starting January 14, 2025. Lt. Governor Dan Patrick and House Speaker Dade Phelan have committed to finding solutions during this session. Legislators involved in the public comment period also seek involvement in TWIA's funding discussions.

A resolution would benefit residents statewide as Texas homeowners face high insurance costs averaging $4,437 annually. While not as severe as Florida or Louisiana, Texas' exposure to hurricanes and tornadoes ensures ongoing challenges in managing insurance expenses.