February 17, 2012
The Texas Department of Insurance Announces Possible Restructuring of the Texas Windstorm Insurance Association
AUSTIN - The Texas Department of Insurance (TDI) issued a Request for Proposal (RFP) today to hire a consultant to explore options for restructuring the Texas Windstorm Insurance Association (TWIA). With this RFP, TDI is seeking assistance in identifying, evaluating and implementing restructuring options to reduce TWIA's exposure and improve service to policyholders.
Texas Insurance Commissioner Eleanor Kitzman says she believes TWIA's present structure is unsustainable. "TWIA was supposed to be the market of last resort for the 14 coastal counties that comprise Tier 1, but that is not the case anymore. In 2001, TWIA's market share was 17.9%. In 2010, it had more than tripled to 57.2% and it continues to grow," said Kitzman. "With no other significant source of funding to pay claims, this growth in exposure is an excessive burden on coastal citizens. Additionally, it is not reasonable to expect that any single organization can effectively manage the explosive growth in claims activity that occurs after a significant tropical storm. On July 1, 2008, TWIA had 247 open claims; 90 days and two storms later, it had over 65,000 claims and was simply overwhelmed. A fundamental restructuring of TWIA is necessary to address these and other operational issues."
Possible restructuring options include a member reinsurance program in which insurers would be allowed to reinsure some portion of TWIA policies rather than issue their own policies. Another option is a contractual servicing carrier program whereby insurers would be paid a fee to handle all servicing of TWIA policies.
In addition to the selected consultant, Commissioner Kitzman will name a technical advisory committee made up of stakeholders to provide input into the restructuring process. Qualifications for appointment to the technical advisory committee will be forthcoming.
Commissioner Kitzman said she expects the consultant and advisory committee to be named by April 1, 2012 and to have a preliminary report by June 1, 2012.
The RFP is available on the web at: http://www.tdi.texas.gov/general/asbids.html
For more information contact:
Last updated: 09/06/2014