As part of the conference committee report passed this week, legislative members included a provision to allow an interim study on alternative ways to provide windstorm and hail insurance to the seacoast territory of the state.
The report specifies the committee shall:
“(1) examine alternative ways to provide insurance to the seacoast territory of this state, including through a quasi-governmental entity or by providing insurance coverage through a system or program in which insurers in this state provide insurance in the seacoast territory of this state in proportion to the percentage of insurance coverage provided in geographic areas of this state other than the seacoast territory;
(2) study the residual markets for windstorm and hail insurance in other states to determine if those markets operate more efficiently and effectively than the residual market for windstorm and hail insurance coverage in this state;
(3) study windstorm-related building codes and mitigation strategies to determine which codes or strategies are most effective;
(A) the appropriate scope of authority and responsibility for the entity to provide insurance to the seacoast territory of this state;
(B) an organizational structure to exercise authority and responsibility over the provision of insurance to the seacoast territory of this state;
(C) a timetable for implementation; and
(D) specific amendments to state laws and rules that are necessary to implement the committee’s recommendations under this subdivision; and
(5) estimate funding requirements to implement the recommendations.”
We at The Heartland Institute are committed to providing free market solutions to these questions during the interim. Many of our TWIA reform ideas can be found here, in our report offering a four-point solution for confronting the major problems facing TWIA:
* Create a new “Office of Residual Property Insurance Market Oversight” within the Texas Department of Insurance to oversee, monitor, and report on the activities of TWIA and the related Texas FAIR Plan Association.
* Require TWIA to have sufficient resources to cover two back-to-back events with a combination of cash and private-sector-recognized risk-transfer instruments such as reinsurance and private catastrophe bonds.
* Improve market competition by reforming rate regulation and Texas’s insurance regulatory bureaucracy, modifying nonrenewal laws, and improving the provision of information to consumers.
* Promote coastal conservation and safety by restricting subsidies for coastal development and, to the extent practicable, helping people of modest means to retrofit their homes.
Until next week,
Julie Drenner, Texas Director