Department of Insurance rejects proposed windstorm insurance rate hike

HOUSTON – The Houston Chronicle reports that the Texas Department of Insurance has rejected a rate increase proposed by the Texas Windstorm Insurance Association that would have raised premiums on about a quarter-million residential and commercial properties along the coast. The proposed 10% rate hike would have been “unjust and unfair,” wrote TDI Commissioner Cassie Brown in her order rejecting the filing, which was posted to TDI’s website Monday. TWIA confirmed the news but did not immediately make a statement. The not-for-profit insurance association, an insurer of last resort, provides residential and commercial policies covering wind and hail damage to home and business owners in Texas’ 14 coastal counties, as well as the portion of Harris County east of Texas 146. As of March, there were about 250,000 TWIA policies in force in coastal Texas, a 37% increase from 2020.

TWIA’s board voted to seek the rate increase in August, after the association’s 2024 Rate Adequacy Analysis found that current rates fell significantly short of being able to cover expenses and losses. That analysis was released July 1, a week before Hurricane Beryl made landfall in Matagorda County, causing extensive damage in Texas and further complicating TWIA’s finances. As of last week, TDI’s order notes, TWIA had received 31,163 claims arising from Hurricane Beryl and paid more than $250 million to settle them. Ultimately, Beryl claims could wipe out TWIA’s Catastrophe Reserve Trust Fund, which had a balance of $451.4 million at the end of June. Proponents of the rate increase had argued that such a move was necessary given the association’s financial picture and the prospect of further extreme weather events, which have led many insurers to raise rates — or even pull back — in coastal Texas.