Now that the legislative special session has ended, many across the state are taking stock of what was accomplished and deciding what needs to be accomplished in the next session. One of the major points of contention is what was done to reform the Texas Windstorm Insurance Association (TWIA), through House Bill 3 (HB 3). The Brownsville Herald article, “Changes to coastal windstorm insurance program praised, criticized,” reviews the reform efforts. Their verdict: everyone is happy that something was done, but no one is happy with what was done.
The Property Casualty Insurers Association of America is satisfied with the reform bill, which brings stability to TWIA by allowing it to sell bonds, before a storm occurs, to cover future claims. The PCI also feels that the bill fosters transparency, by streamlining the dispute resolution process and curtailing lawsuit abuse.
Despite some satisfaction with HB 3, there is still a great deal of criticism; particularly that the “streamlining process” makes it more difficult for policyholders to seek redress for TWIA failures. Another major area of criticism is that HB 3 allows TWIA to offer lower rates to clients that agree to binding arbitration, in which an independent third-party decides the outcome of disputes.
But whether what was done was good or bad, one thing that wasn’t done was working towards getting Texas out of the windstorm business altogether. Fortunately, there was an interim committee named to study this issue, so there made be some progress made between now and 2013. The Texas Public Policy Foundation has done extensive research on the debate surrounding TWIA and the windstorm insurance industry as a whole, in their publication, “Texas Windstorm Insurance,” and offers a number of recommendations on how the problems can be solved.
-Josh GrimesResearch Fellow, Center for Economic Freedom