Windstorm reform on ‘last hope’

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By John Tompkins - The Facts, May 29, 2009

A bill that would give the state’s windstorm insurance association options to replenish its funding pool might come down to a conference committee ironing out some compromises.

The Texas Senate passed an amendment late Wednesday night to House Bill 4409 that would give the Texas Windstorm Insurance Association authority to issue post-event and pre-event bonds and purchasing reinsurance, among others funding possibilities, to meet obligations.

“If we don’t get a windstorm bill out of this session, then we’ll be back,” said Sen. Mike Jackson, R-Shoreacres, who put the measure into his disaster management bill. “This is kind of our last hope to be able to work on this issue and hopefully, hopefully, resolve it in the few days that we have left.”

The regular session of the Legislature ends Monday.

Many of the funding options added to the house bill were taken straight from Senate Bill 14, Jackson said.

The bill is expected to go to a conference committee, which is made up of five members from the Senate and House of Representatives. They will meet over the next two days with officials from the Texas Department of Insurance and the Texas Windstorm Insurance Association to come up with a compromise bill that must be passed by both houses before going to the governor, Jackson said.

“It’s still a long shot,” he said.

Replenishing the fund is important because obligations from Hurricanes Ike and Dolly have drained it, said James Elbert, a Lake Jackson insurance agent and liaison to the windstorm pool board for the Texas Association of Insurance Agents.

“We spent all the money there was,” Elbert said. “All we have right now to pay for any storms are just the premiums themselves.”

The windstorm insurance association is a private, nonprofit agency created by the Legislature in 1971. Most homeowners have turned to the organization for windstorm insurance after private insurers mostly left coastal markets after losses from Hurricanes Katrina and Rita in 2005, officials have said.

Once all the obligations related to the more than 90,000 claims from Ike and Dolly are paid out, the windstorm insurance association will have used the $2.1 billion it had set aside, officials said.

And the association still receives up to 50 new claims daily related to Hurricane Ike damage, said Jim Oliver, the association’s general manager.

The amendments passed late Wednesday will allow the windstorm insurance association to move away from costly reinsurance and hopefully will keep premiums about the same, Jackson said.

The legislation would allow the windstorm association to issue bonds before or after a storm of up to $600 million, to be paid for through charges to TWIA policyholders and other property and casualty policyholders in Texas.

State Rep. Dennis Bonnen, R-Angleton, said the bill that could emerge from a conference committee should allow the windstorm insurance association to issue bonds.

“It’s also important it’s done fairly and right, Bonnen said. “This entire state benefits from the Texas Gulf Coast.”

Any compromise should prevent those insured along the Texas coast from carrying the financial burden of funding the pool through higher premiums, he said.

State Rep. Randy Weber, R-Pearland, said the Gulf Coast makes up 28 percent of the state’s economy and should not have to fund more than its share of the funding pool. Districts further inland file claims from damages they receive in storms, he said.

“We don’t require them to pay higher premiums from their hail storms,” Weber said.

Gov. Rick Perry has warned he could call a special session if windstorm insurance reforms aren’t enacted.

Senators barreled past a midnight bill-passage deadline with the help of a little legislative trickery: A Senate aide simply unplugged the chamber’s clock at 11:59 p.m. Wednesday, allowing senators to keep debating as though midnight had never arrived.

Senators approved adding the windstorm language to the bill on a 27-4 vote. It came after top leaders had been huddling all day in an effort to get the reforms moving.

Oliver said it’s likely the bill will be different if it emerges from a conference committee.

“I’m fine that they’ll do something, but I don’t know what,” he said.

Information from The Associated Press was used in this report.

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