The Texas Windstorm Insurance Association has about $4.2 billion at the ready for the 2019 hurricane season.
That’s enough funding to cover more than twice the losses sustained during Hurricane Harvey. Those losses are now at about $1.6 billion.
The funding stack looks like a multi-layered cake, consumed from the bottom-up, as claims mount.
The bottom layer comes from policyholder premiums held in a “Catastrophe Reserve Trust Fund (CRTF).” This year, the association says the CRTF is at $117 million.
The second layer is a $2 billion mixed bag of policy-backed bonds and assessments on private insurance carriers.
The third layer contains $2.1 billion in catastrophe bonds and reinsurance. Reinsurance is how insurance carriers insure themselves against extreme losses.
TWIA funding has long been a question. Some argue policy premiums are inadequate to meet large storm strikes in back-to-back years. Others say TWIA policies are already too expensive.
But how to remedy the problem remains an open question at the state capitol.
TWIA voted a 10% rate increase last year but was rebuffed by Governor Greg Abbott. He later called on the legislature to keep TWIA affordable, and viable, for the Coast.
Lawmakers responded. A bill headed to Abbott’s desk calls on members from both houses to study TWIA funding in the interim between legislative sessions. They are to report back their findings in advance of the 87th Legislature, set to begin in 2021.