TWIA filed for a rate increase on Tuesday as lawmakers waste no time firing back

Matt Pierce Briscoe

The board of directors of the Texas Windstorm Insurance Association voted on Tuesday to file a rate increase of 5% for residential and commercial policies with the Texas Department of Insurance.

At the Association’s quarterly meeting, the Texas Windstorm Insurance Association’s board directed staff to make the rate filing with the expectation that the change would go into effect no earlier than April 1, 2021.

TWIA continued to cite a so-called “independent study” conducted on behalf of the association by Willis Towers Watson. In that study, they this year found TWIA’s rates to be inadequate by 26% for residential coverage and 44% for commercial coverage. But on Tuesday, the board of directors erred for what they feel is a minimal increase. That move in itself has proven to once again call the association into question. 

 As required by law, it appears that the association may have violated open government laws once again by making a decision on a rate increase without giving proper public notice and for failing to allow adequate time for public comment on the issue. Early on a reference was made to consider an action item on the agenda regarding the Willis Towers Watson presentation. On the formally published agenda there was no action item—that indicated that there might have been two separate agendas floating around and that would have violated open government laws in the state of Texas. 

The decision had hardly been made before lawmakers began to take notice of the action and began measures to see to it that coastal residents remain protected from the powerful insurance lobby in Texas.

State Senator Juan “Chuy” Hinojosa made it clear on Wednesday morning that he felt the decision was inappropriate.

“They have gone tone deaf,” Senator Hinojosa said. “They are not looking out for the homeowners and business owners who are still struggling here. They are only looking out for themselves.” 

During the meeting Senator Hinojosa had asked that the board of directors take no action and allow the Texas Legislature the time to assess solutions dueling the upcoming session. The board blatantly ignored that request. 

“We have people out here losing their homes and businesses,” Senator Hinojosa said. “People cannot afford any rate increase and they decided to do it. I mean, it’s just not right.” 

From further up the Texas coast State Representative Mayes Middelton filed a bill on Wednesday that would, among other things, force the association to relocate their offices and operations from Austin to somewhere on the Texas Gulf Coast. The proposed bill says that The headquarters of the association must be located in a first tier coastal county or second tier coastal county.

“This would free them from the high priced leases up in Austin,” Rep. Middelton says. “It would also make their office staff live down here on the coast with us.” 

The proposed bill by Rep. Middelton also says that at the end of each calendar year or policy year, the association would use the net gain from operations of the

association, including all premium and other revenue of the association in excess of incurred losses, operating expenses, public security obligations, and public security administrative expenses, to make payments to the trust fund or pay public security

obligations, giving priority to the obligations with the highest interest rates. 

“It is really time to abolish them,” Rep. Middelton said on Wednesday. “What this does is it forces them to pay reinsurance and pay down their junk bond interest rates.” 

As for Senator Hinojosa, his plan is to approach Gov. Abbott to ask him to reverse the decision and do what is right for Texans. 

The Texas Windstorm Insurance Association has a repeatedly ignored the Texas Legislature in the past even after they passed House Bill 1900 during the last session. This time around they ignored Senator Hinojosa and 20 other state lawmakers who urged them to not file a rate increase. 

Back on September 18, 2020 lawmakers sent a letter asking for mercy from the association. They said in the letter that a rate increase during an unprecedented season of economic distress caused by the global coronavirus pandemic would only cause an additional and cruel financial burden on coastal residents and business owners. That request for mercy from the association and the board of directors went ignored Tuesday. 

“We do not have a director for the Texas Department of Insurance right now so I am planning on going to the Governor,” Senator Hinojosa said. “They ignored us (the legislature) on this but during the session they will hear us.”