Lawmaker says Texas windstorm fund in precarious position

Check out this article below about our Texas Windstorm Insurance. What is the answer to this delimma???

Texas‘ primary coastal windstorm insurance provider might not be able to pay claims if a major hurricane hit the coast, and a leading state lawmaker wants residents to be aware of the consequences they would face if a disaster occurred.

State Rep. John Smithee, chairman of the House Insurance Committee, sent a letter Monday to Texas Insurance Commissioner Eleanor Kitzman about the precarious position of the Texas Windstorm Insurance Association, a quasi-governmental organization that acts as the property insurer of last resort for individuals and businesses unable to obtain coverage on the private market. It is commonly referred to by its initials, TWIA.

A “number of circumstances occurring over the past 18 months have resulted in a current financial condition of TWIA that is much worse than any of us had anticipated,” Smithee, R-Amarillo, wrote in his letter.

Smithee said the situation stems from a few factors: ongoing litigation costs connected to 2008’s Hurricane Ike; continued failure to adequately address rates, which are too low; a dearth of re-insurance; and a weak bond market that could make it difficult to sell bonds to help finance the association.

TWIA’s own records indicate that potential losses resulting from a Category 4 hurricane striking the Texas coast could cost billions more than could be paid by the association, Smithee warned.

Kitzman wasn’t available for comment.

TWIA is an independently operated association of insurers overseen by the Texas Department of Insurance. It provides insurance to people in 14 counties who couldn’t otherwise get coverage because of hurricane exposure. The association largely is paid for through premiums and debt. But in the event of a storm, assessments are paid by insurance companies, though the Legislature has limited the amount that could be assessed.

In his letter, Smithee said if a Category 4 storm slammed Galveston, the cost could reach $14.2 billion. If a similar-sized storm hit Corpus Christi, the amount could be $14.3 billion.

Smithee said TWIA couldn’t come close to covering damage of that magnitude, though he said it should be able to cover losses from a storm like Hurricane Ike, which he said cost the association about $2.2 billion.

Even “under a best case scenario, TWIA will have only approximately a little over $3.6 billion in resources to pay losses that could exceed $14.3 billion,” he wrote.

David Crump, a private citizen and insurance professional who has studied TWIA, said documents show that a storm doing $14.3 billion in damage is a remote possibility. “Their modeling indicates that it could happen, but it is such a low probability,” said Crump, who shared the data he collected with Smithee.

Realistically, he said, TWIA could be about $3 billion short if a Category 4 storm hit Galveston.

In Smithee’s letter, he asked Kitzman if she was aware of any emergency plan developed by the Texas Department of Insurance or by TWIA to be put into place if losses from a storm exceed the money available.

Smithee also asked if TWIA policyholders have been told that the insurer might not have sufficient resources to pay claims.

“It would seem only fair that policyholders should be made aware of the precise risk they are taking in purchasing insurance from TWIA,” Smithee wrote.

Additionally, Smithee asked Kitzman, who was appointed by Gov. Rick Perry last summer, if TWIA policyholders have been informed that the State of Texas has no obligation to help pay claims that cannot be paid by TWIA.

“In fact, in light of the State’s current budget situation, it is likely the Legislature would not have sufficient revenue available to pay claims even if a majority of legislators wanted to do so,” Smithee wrote.

Last year, John Polak, who was interim general manager of TWIA, said the association was healthier than it had been in a while. The association had purchased a reinsurance policy, and it had maintained the ability to buy bonds to help pay for possible damage.

TWIA’s solvency could also be bolstered by private insurers that can be charged assessments on past storms such as Hurricane Ike. But the fear some critics have with assessments is they could lead to higher premiums for policyholders in noncoastal areas.


By Tim Eaton


Published: 8:54 p.m. Monday, June 18, 2012

About padreeliteteam

Alta Monroe, Gayle Hood, Jules Wilk & Laurie Howell are a full-time professional and dynamic team known as the Padre Elite Team with RE/MAX 1st Choice in South Padre Island. Quality service for their clients is their number one priority. To them, it is about the client's needs and protecting their interests. Finding just the right property for their buyers or helping their sellers get their property SOLD is their goal. Helping clients step through the complicated process of buying or selling a property to a smooth closing is essential to them. A personal Bio on each of the team agents is posted on their website at The South Padre Island real estate industry is changing faster than ever these days. With the changes in the economy, there are new challenges with buyers, sellers, foreclosures, short sales, Internet marketing, our education, increases in inventories, changes in comparable sales, and frustrating politics. Alta, Gayle, Laurie, and Jules strive to stay on top of all of these changes and to keep in touch with their clients. Alta, Gayle, Jules & Laurie all hold designations they have acquired through eduction. These designations include CLHMS, CRS, GRI, RSPS, CPN, ePRO, SFR and RSPS. Gayle and Jules both hold the CLHMS (Certified Luxury Home Marketing Specialist) designation and they are the ONLY agents in the entire Rio Grande Valley that are members of the Institute of Luxury Home Marketing. This better qualifies them to share their specialized expertise with a luxury home seller or buyer. Making sure the buyer and the seller are represented correctly is a priority for this team. Investing in TREPAC (Texas Real Estate Political Action Committee) is important to this team since TREPAC has proven to be a major force in Texas by lobbying for Realtors and property rights for the consumer. For many years, the Padre Elite Team has been a major investor in TREPAC. Alta and Gayle have attended the National Association of Realtors Mid-Year Conference in Washington, D.C. often. The conference is primarily for Realtors that are Board directors or executives. It is a great way to stay on top of the current issues facing Realtors and homeowners in our country. They get to meet with their Senators and Congressmen to express their concerns. Last year they were invited to attend the Realtor PAC President’s Circle Conference in New York where they heard many famous guest speakers regarding current real estate issues. The Padre Elite Team also attends the RE/MAX International Conference each year to acquire more education and to keep up with the latest technology available to Realtors in the Marketplace. They have received numerous awards for being Top Producers in the real estate industry. Education is a priority for this entire team including their assistant, Grace. The GOOD news is that 2012, 2013, 2014 and now 2015 proved to be better each year for real estate sales in South Padre Island and the surrounding areas of Port Isabel, Laguna Vista/South Padre Island Golf Community, and Bayview. The real estate market is showing an increase in the number of sales and a leveling of values. Now that the market has hit the bottom, investors are finding that real estate is a great place to invest their money. It is still a buyer's market and a great time to buy. Alta, Gayle, Jules & Laurie all agree that it has been such a pleasure to live & work in a resort area such as South Padre Island. A hundred of your closest friends and family will visit when you live near the beach! Clients are always encouraged to contact them. For more information about this team and to view their blog, visit
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