In order to protect coastal residents, the Texas Windstorm Insurance Association (TWIA) rates must be actuarially sound. TWIA’s rates are woefully inadequate, and it cannot cover all of its liabilities if the coast was unfortunate enough to sustain two major events this year.
During last session, lawmakers put a band-aid on the funding problem. Instead of buying reinsurance, the law now requires a formula of bond sales, assessments, and payments from the bankrupt Catastrophe Reserve Trust Fund to cover losses by coastal customers. Because TWIA is a quasi-state agency, the taxpayers will end up paying the balance once this funding runs out.
By charging artificially reduced rates, TWIA not only puts its customers in jeopardy, but all of Texas taxpayers as well.