Recently, Texans for Lawsuit Reform released a report showing that the Texas Windstorm Insurance Association (TWIA) paid out millions of dollars in settlement claims without regard for “the facts, the science, the insurance policies, or the law.”
“According to the report, tens of millions of dollars from Ike-related settlements and fees were paid at the discretion of the general manager of TWIA without any oversight or guidance.“
The settlement issue illustrates a larger problem with TWIA. Though originally founded as a last resort protection for high risk areas, TWIA has become the primary provider of windstorm coverage.
TWIA’s unbeatably low rates have evolved the program from a safety net into the primary provider of windstorm insurance. Ultimately, taxpayers are liable for TWIA’s burgeoning exposure of over $74 billion dollars. TWIA’s exposure rose 1200% since 1993.
Extensive misuse of the TWIA program warrants significant reforms. Texas lawmakers should return the Texas Windstorm Insurance Association to its original purpose of a safety net, a last resort measure.For more information about the Texas Windstorm Insurance Association, see our publication: Next Steps to Reforming Texas Windstorm Insurance.
-Ben SnodgrassResearch Fellow, Center for Economic Freedom