Texas Department of Insurance rejects Twia’s 5% rate increase bid
The Texas Department of Insurance has rejected the Texas Windstorm Insurance Association’s (Twia) request for a 5% rate increase on residential and commercial rates as its rate adequacy analysis was not submitted early enough.
The state insurance department wrote in a letter than the Texas Insurance Code requires Twia to make its rate adequacy analysis publicly available at least two weeks before a board vote on the rate change.
It added that as a crucial Willis Towers Watson report, which was commissioned by Twia, was only available of November 30 and as the board was due to meet on December 8, the notice period was insufficient.
The Texas insurance department also said Twia had not adequately informed the public that the board would vote on the rate rise as the subject was omitted from its meeting notice. It added that Twia’s actuarial and underwriting committee had not recommended a rate increase.
The Willis report noted that Twia rates were inadequate by 26% for residential coverage and 44% for commercial coverage. Twia’s own actuarial analysis said rates would need to increase by 44% for residential policies and 49% for commercial policies to be actuarially adequate.
Twia noted that it has yet to decide whether to refile its rate increase. Its next meeting will take place on February 23.
In order to secure a rate change, various statutory requirements mean Twia must make an annual rate filing with the Texas insurance department on or before August 15, although it can make filings at other times. The rates are set by the Twia board of directors and subject to review from the state insurance department.
According to the Twia website, the organization secured 5% rate increases for residential and commercial lines between 2011 and 2016, and then again in 2018. However, it has not filed for any rate changes since 2018.
Twia was established in 1971 and had about $4.2bn in funding for the 2020 hurricane season.