Letter from Austin: TWIA considers alternatives to reinsurance
Four state senators, four representatives and a member of the public have been appointed to Texas’ Joint Interim Committee to Study Seacoast Territory Insurance, charged with examining alternative methods to provide coverage to coastal residents. Additionally, the committee will study the residual markets of windstorm and hail insurance in other states, as well as windstorm-related building codes and mitigation strategies.
Upon conclusion of the study, the committee will submit recommendations to the speaker and lieutenant governor.
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The Texas Windstorm Insurance Association considered potential rate increases as well as possible alternatives to reinsurance at its recent quarterly meeting. Earlier this year, TWIA purchased $636 million in reinsurance protection for the hurricane season. The committee considered shifting some of the risk to the catastrophe bonds, but the plan was rejected in light of the $700,000 price tag to have the bonds in place by spring of 2012. Insurance Commissioner Eleanor Kitzman has advocated attracting additional capital into the system, but has not provided a detailed plan to legislators to accomplish that goal.
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However, federal dollars on the order of $50 million may be coming to the coastline via an environmental restoration project. If landowners along the coast participate in ecosystem restoration as a part of the Gulf of Mexico Initiative by the U.S. Department of Agriculture’s Natural Resources Conservation Service, they may receive matching funds to double the investment protecting our deteriorating coastline. Such restoration of wetlands is vital to provide an effective buffer against the ravages of a hurricane or storm surge.
Last session, we advocated against TWIA offering coverage to development in these environmentally sensitive areas.
