Before the end of the last Texas legislative session, the Texas legislature ended their Texas Windstorm Insurance Association (TWIA) reform stalemate and passed a comprehensive reform bill it hopes will better prepare TWIA for future catastrophes. The bill was sent to the governor, but he has yet to sign it.

The recently passed TWIA bill requires that claims be filed within a year, it establishes a task force that will examine wind insurance issues and TWIA operations throughout TWIA (and which will report back to the Texas legislature in 2012), and it limits policyholder lawsuits to twice the amount of damages if the policyholder can prove that TWIA intentionally withheld a legitimate claim.

Part of what the TWIA bill is attempting to do is limit litigation from the policyholder. By lowering the amount a policyholder can sue for, it discincentivizes people from suing TWIA when TWIA fails to fulfill its insurance obligations. Additionally, lowering the possible penalty TWIA faces for treating its customers improperly means that TWIA faces a smaller risk and is less incentivized to act appropriately.

Oh, and TWIA’s board of directors also voted to raise rates by 5%. And to make matters worse, TWIA’s board signaled that it plans on yearly 5% increases until it feels rates are adequate to cover potential claims.

All in all, TWIA’s policyholders appear to be much worse off going forward.

  • Insurance Veteran

    Having handled well over a thousand Ike claims for TWIA I agree with the need to limit frivolous litigation. The ease with which lawsuits are filed in Texas is ludicrous, they have legal puppy mills. In thirty seven years of claims handling I had never been sued. Was I surprised to work Texas. Furthermore unless there are hidden damages you don’t need more than a year to determine where they are. I agree that an insured is entitled to the full benefit of their policy and that sometimes insurers use faulty reasoning however the situation in Texas makes a farce of the alternatives.By the way why do you need more than twice the damages anyway?

  • Gerry

    I think we need to just get rid of TWIA. It should be covered under your homeowners policy. All they do is raise the rates, even when there has been no great wind damages. With the rates being where they are, they are certainly making money. And if an area hasn’t been hit with any big storms or claims, then the rates should be lower in those areas. My premium keeps going up and I have never filed a claim!