On Tuesday, the board of the Texas Windstorm Insurance Association agreed to explore additional funding options, after the Legislature was unable to pass any reforms during the recent regular session which ended in May.
Various senators and representatives filed bills to restructure the financially unstable agency. However, none of them garnered enough support for a vote on the chamber floor. Thus, the board addressed the matter by arranging a meeting with new Insurance Commissioner Julia Rathgeber to discuss a $500 million bond anticipation note, a pre-event security provided by Bank of America Merrill Lynch. The BAN is part of the bonding mechanism authorized by the state Legislature in 2011 to pay claims after a storm.
Earlier this year, the idea of placing TWIA in receivership was discussed as a mechanism to stop the continual flow of lawsuits from Hurricane Ike, which made landfall nearly five years ago. However, the board rejected the proposal of bankruptcy in order preserve the agency’s credibility.
In addition to its financial woes, TWIA has been accused of failing to perform adequate inspections of rebuilds in order to ensure they are constructed to withstand severe weather and thus not continue to create unsustainable liability to the coast. The board agreed to strictly enforce the requirement that all its policyholders obtain certification that their buildings are up to code before TWIA will insure the property.
State Sen. Larry Taylor, R-Friendswood, stated the sentiment of the majority best when he said TWIA “is an insurer of last resort, it’s not a charity.”