Earlier I wrote a post about the Texas Windstorm Insurance Association (“TWIA”) considering raising rates by 5%. Well, TWIA made it official: rates will go up 5% next year for thousands of homeowners covered by the state’s storm insurer of last resort.
The Houston Chronicle reports that TWIA has filed with the state’s insurance regulators for the rate hike. The new rates will apply to both residential and commercial policies. In a letter to regulators, TWIA claimed that rates need to increase by 28% for homeowners and 35% for commercial policies!
To make matters worse for policyholders, TWIA plans to seek 5% increases annually until it considers its rates adequate to cover potential claims. In other words, TWIA will keep raising rates for the foreseeable future; TWIA has not stated how long it will take until there is enough money. Under Texas law, TWIA is allowed to raise rates by 5% without needing approval from regulators.
This is bad news for TWIA’s 244,000 policyholders. But it may also be bad news for more people in the near future, as private insurers continue to reduce or eliminate windstorm coverage along the Texas Gulf Coast.