AUSTIN—State Representative Craig Eiland (D-Galveston) and the Joint Interim Committee to Study Seacoast Territory Insurance met in Austin Wednesday to hear testimony on the Committee’s charge of 1) examining alternative ways to provide insurance to the seacoast, 2) study the residual markets for windstorm and hail insurance in other states 3) study building codes and mitigation strategies; and 4) make recommendations to the legislature.
The Committee is made up of Chairmen Senator John Carona and Rep. John Smithee; Senators
Juan "Chuy" Hinojosa, Joan Huffman, and Tommy Williams; Representatives Craig Eiland, Todd Hunter, and Kenneth Sheets; and Public Members Thomas Braniff, Bill Cooney, Shane Howard, and Robert Pinkerton.
The Committee heard testimony from Eleanor Kitzman, the Commissioner of Insurance, John Polak the Executive Director of TWIA and the Office of Public Insurance Counsel. The committee also heard from many members of the public including Galveston City Councilwoman Marie Robb and Galvestonian Otie Zapp and many members from the Corpus and South Padre area.
“We got lots of documents and lots of data today. Some of the positive things that I think came out of the hearing is that people insured by TWIA are not your millionaires with beach homes sitting around drinking margaritas in swimsuits and flip flops. We drove home the fact that 1.3% of all homes insured by TWIA are in excess of $500,000, so they are definitely not the major problem. In fact, the majority of homes insured by TWIA (52%) are valued at less than $150,000. And over 80% are valued at less than $250,000.” Eiland said.
“We also heard evidence that we have seen a 37% increase in homeowner premiums in the last 6 years and 41% increase for businesses. And the Commissioner said that there was really no dispute that 20% of the policies in TWIA had adequate rates but the private market still would not cover them.” Said Eiland.
“Finally, I think that it is beginning to be understood that increasing rates alone in the 14 coastal counties is not going to significantly help TWIA’s funding situation. In fact, it was noted that Florida and North Carolina’s rates are about 70% of what our rates are and their companies are in better shape.” Eiland added.
“There are lots of opinions and ideas out there right now, and I think that the coastal delegation of legislators will have our own package of TWIA reform legislation and we will be meeting on October 11 in Beaumont with the Coastal Chambers of Commerce to try to begin getting consensus on that package.”
The Commissioner of Insurance issued two fundamental questions that must be answered before we can really go forward with any real changes to TWIA and coastal insurance. “1. How broad do you want to spread the risk and 2. Do you want to use policyholders money or state funds to shore up any shortfall in claims paying ability?”