photo by Linda_Bisset/Flickr, used under a Creative Commons license
It’s like watching a hurricane build a house.
That’s how I would describe the attempt to write a comprehensive bill to address the issues at the Texas Windstorm Insurance Association (TWIA). Much of the ever changing language is due to the battle over tort reform issues such as treble damages and multi-district litigation courts.
Unfortunately, neither the House nor newly-released Senate version solve the financial dilemmas of insufficient rates or generous liability coverage limits. Without those two crucial components, the monopolistic system will continue to squelch the free market and remain a liability to taxpayers.
The silver lining seems to be a recommitment to the purchase of reinsurance and issuance of pre-event bonds to help depreciate the risk of the next hurricane season.
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The Texas House has yet to take up its fiscal matters bill which must pass in order to plug the holes in the state budget. One amendment would provide incentives to financially sound reinsurers to enter the Texas market. Current law requires foreign reinsurers, unlike domestic ones, to post collateral in the amount equal to the estimated claim liabilities. Such a use of capital discourages reinsurers from participating in the market since it would be better put to use writing more reinsurance. The proposed amendment would grant the Commissioner of Insurance the discretion to reduce the amount of collateral that certain institutions must post. This levels the playing field helps the insurance industry to thrive and grow, thus benefiting residents and homeowners throughout the state. The Commissioner would also have the ability to revoke a collateral reduction in the case of bad action or if the financial condition of a reinsurer worsens.
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According to the Houston Chronicle, dog bite claims have seen the biggest jump, up 5.3 percent from last year.
Until next week,
Julie Drenner, Texas Director
