Letter From Austin: Alternate Ways To Provide Windstorm And Hail Insurance; Study To Come

by Julie Drenner on June 30, 2011

photo by tex1sam/Flickr, used under a Creative Commons license

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;

(4)  recommend:

(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

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  • Noveds07

    Ingleside had a hailstorm Jan 2011. Roofing companies knocked on my door for weeks afterwards wanting to look at my roof and assuring me they could have my roof replaced. I didn’t see anything wrong with the roof but finally relented. The roofing company called out a TWIA rep and they agreed the roof should be replaced. I went up there myself but could see no reason for it. During the next rain I went to the attic and could find no leaks. In the meantime I recieved a check for $24 from TWIA due to my 5% deductible. Nowu00a0TWIA demands I replace a roof that doesnt need replacing and I need to come up with $10,000 or they’ll drop me. Lessons learned: I took the 5% deductible because I was thinking hurricane, not hail. If you have a hailstorm with a high deductible never inform TWIA until you confirm for yourself that there is actual damage. There should be competetion when it comes to windstorm insurance in Texas and it should not include hail. Be wary of any roofer knocking on your door. What a costly mistake that was.

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