Texas’ top insurance regulator told lawmakers on Sept. 24 that the insurance industry estimates there will be around 300,000 claims – including commercial property claims – stemming from Hurricane Ike, which hit the Texas coast on Sept. 13.
Around 40 to 50 percent of those claims – an estimated 120,000 to 140,000 – will go to the Texas Windstorm Insurance Association, state Insurance Commissioner Mike Geeslin told the Texas Sunset Advisory Commission at a hearing at the Capitol building in Austin.
Geeslin told the commission, however, that it is too early to tell how much the total dollar amount of Ike claims will be, noting that insurance adjusters are just now being able to access the heavily damaged areas along the coast. Geeslin said despite estimates being tossed around by catastrophe modeling firms, which have estimated the cost of the storm to be between $6 and $18 billion, it will take 30 to 90 days before the true impact of the hurricane will be known.
The commissioner said that as of the afternoon of Sept. 24, TWIA – the state chartered insurer of last resort – had fielded more than 46,000 claims from Hurricane Ike. “I estimate after talking to [TWIA] General Manager Jim Oliver that will be at 50,000 by days end,” Geeslin said. “These are coming in by the thousands on a half-day basis.”
Geeslin explained that TWIA estimates claims for the windpool will come in around $3 billion to $4 billion but noted that estimates at this point are “fluid.” It’s “sobering to realize how much the state is on the hook,” Geeslin said.
“TWIA has currently put up reserves for incurred losses of over a billion [dollars,]” Geeslin said.
In addition, TWIA’s board recently voted to assess member companies $430 million, although TWIA management was seeking $830 million. Around “$230 million of the $430 million will be subject to premium tax credits over a five-year period. This is just the initial assessment,” Geeslin said.
He pointed out that “this is the way the statute is designed to work,” and that a second or even a third assessment is going to be necessary in order to raise the cash to cover all of TWIA’s claims.
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