Although not as substantial as those sought by the Texas Windstorm Insurance Association, Texas Insurance Commissioner Mike Geeslin signed an order on Nov. 15 giving TWIA rate hikes of 3.7 percent for commercial property risks and 4.2 percent for residential property above those in place on Sept. 1 of this year.
TWIA is the insurer of last resort for windstorm risks along the Texas coast.
The order rejects TWIA’s request for higher increases, stating, “the petition to approve a rate change that is more than 10 percent higher higher or lower than the rate for commercial or 10 percent higher or lower than the rate for non-commercial windstorm and hail insurance in effect on the date the filing is made is DENIED.”
The approved changes go into effect Jan. 1, 2007.
“Any form of rate relief is welcome given the number of policies currently written by TWIA,” said Jerry Johns, executive director of Southwestern Insurance Information Service and a spokesperson for the windstorm association. “As of Oct. 31, there were 135,848 residential and 12,374 commercial policyholders in the windstorm association with an exposure of $39.5 billion. TWIA has become the market of first choice rather than its intended purpose of being the market of last resort.”
The Insurance Council of Texas, a trade group that represents more than 500 property/casualty insurance companies operating in Texas, expressed disappointment with the order, however. “Keeping windstorm rates artificially suppressed is simply going to make TWIA the insurer of first resort and drive all of the other insurance companies away from the coast,” said ICT spokesperson Mark Hanna. “TWIA’s exposure has already reached $40 billion and there’s no end in sight. This growing dilemma has serious financial implications for Texans in every corner of the state.”
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