Contact Form


Email *

Message *


Wednesday, July 6, 2011

Texas Lawmakers Pass Sweeping Texas Windstorm Insurance Association (TWIA) Legislation

After weeks of negotiations during a legislative special session, the Texas Legislature finally passed a meaningful Texas Windstorm Insurance Association (TWIA) bill. Gov. Rick Perry placed TWIA on the special session agenda forcing legislators to solve problems that surfaced at TWIA after Hurricane Ike. Texas House members wanted to limit damages to the actual cost of a policy, lawyer fees and interest. However, Texas Senators wanted to keep the ability to sue TWIA for triple damage while adding on hefty interest penalties. House & Senate negotiators met roughly in the middle when forging a compromise on the bill.

The bill eliminates treble damages and an eighteen percent penalty interest. Insureds must file a claim within one year of the date of loss with extensions for good cause. Premium discounts are required for insureds electing binding arbitration. Insured must exhaust administrative remedies, including appraisal where appropriate, before a lawsuit can be filed. The bill will allow double damages under limited circumstances for knowing and intentional violations by TWIA; and impose deadlines for TWIA to complete investigation and notice of claims. A new expert panel is required to recommend how to settle disputed wind v. water claims and where evidence is limited (slab losses).

Other key provisions included in the bill:

Funding. Pre-event bonds can be authorized and the $2.5 billion in aggregate funding for bonds is the maximum in any calendar year. This clarifies provisions of the law passed in 2009. The TWIA board is authorized to purchase reinsurance and if TWIA does not purchase reinsurance, it has to submit an actuarial plan to pay losses in excess of $2.5 Billion.

Operations. TWIA is subject to open meeting and open records act. The insurance commissioner can be present in executive session meetings; TWIA must publish salary information for certain managers and contractors.

TDI Oversight. TDI is allowed to put TWIA into conservatorship. Random claim audits are required after 1,000 claims have been filed following a storm. TDI has authority to issue cease and desist order to inspectors. A study for a single adjuster program is required.

Agent Commissions. TDI must set agent commissions by rule; however, current commissions remain in place until technologies and efficiencies improve the process for the TWIA applications.

Loss Mitigation. Provides for alternative certification requirements for certain noncompliant structures and consumers building to higher code standards can receive premium discounts.

No comments: