The Texas Windstorm Insurance Association (TWIA), which serves as the state’s insurer of last resort for properties along the Gulf Coast, is considering a rate increase amidst concerns over the escalating impact of climate change on storm severity and associated damages.
At its upcoming meeting on August 6, the TWIA board of directors is set to vote on a proposal that would raise rates by 10% for both residential and business policyholders. If approved, the proposed increase would see annual premiums for homeowners, who currently pay an average of $2,300 annually, rise by $230.
TWIA’s senior legislative and external affairs specialist, Aaron Taylor, emphasized the board’s recognition of the financial strain such increases impose on policyholders. “Our board members are aware of the burden of insurance rates on our policyholders on the coast,” Taylor stated. “They also want to make sure that we have the financial sustainability and the financial resources to pay those claims when our policyholders need us.”
Established by Texas lawmakers in 1971, TWIA provides wind and hail insurance to property owners in the state’s 14 coastal counties, along with a portion of Harris County. Demand for TWIA coverage has surged in recent years, with policy numbers exceeding 252,000 as of March, a nearly 37% increase from 2020. This growth underscores the challenges coastal property owners face in securing private insurance coverage.
A recent analysis by TWIA indicated that current rates are insufficient to cover operating expenses and projected losses from claims, citing a larger policyholder base and escalating costs for storm damage repairs due to higher construction and labor expenses. TWIA last adjusted rates in 2022.
The potential rate increase comes as TWIA contends with the aftermath of Hurricane Beryl, which resulted in approximately 25,000 claims. TWIA’s chief actuary, Jim Murphy, anticipates total claims from Beryl to exceed $200 million.
State Representative Todd Hunter, a Corpus Christi Republican, voiced opposition to the rate hike, highlighting concerns for coastal residents and businesses. “It’s a terrible time and it’s terrible economics for coastal residents and businesses,” Hunter conveyed in a social media video posted on Friday.
The discussion around insurance costs in Texas is set against a backdrop of escalating premiums driven by extreme weather events and rising property values spurred by the state’s robust economic growth. According to an S&P Global analysis, homeowners’ insurance rates in Texas rose by more than 23% last year, outpacing increases in any other state.
Looking ahead, Lieutenant Governor Dan Patrick and House Speaker Dade Phelan have signaled a readiness to address Texas’ mounting insurance costs when lawmakers reconvene in Austin next year.
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