Texas Insurance Commissioner Julia Rathgeber has denied the Texas Windstorm Insurance Association’s request to increase the limits on commercial and residential property liability in 2014.
The wind-and-hail insurer of last resort sought slight increases for the liability limits. TWIA’s Board of Directors must consider a policy limit increase each year for the Houston and Corpus Christi areas. However, because TWIA operates under the Texas Department of Insurance’s administrative oversight, the request must be approved by the commissioner.
TWIA sought the increase because calculations showed an increase in construction costs, Rathgeber’s decision said. For dwellings and individually owned townhouses, TWIA sought to increase the limit by $43,000 to $1.816 million, its initial filing said. It also sought to raise the limits on the contents of an apartment, condominium or a townhouse by $5,000 from $374,000 to $383,000. And TWIA sought to increase the limits on commercial structures and their contents by $90,000 to $4.514 million.
“It was a conservative move on [Rathgeber's] part to keep TWIA from expanding its liability any further,” said Joe Woods, vice president of state and government relations at the Property Casualty Insurers Association of America. Currently, TWIA has about $80 billion in liability and increasing the policy limits for expensive homes and business would mean TWIA could face another $1 billion in liability, he said.
“It’s probably the most conservative thing to do,” Woods said. He said when an insurer is in a difficult financial situation, it should not expand its liabilities. “[The decision] makes perfect sense.”
Since Jan. 1, 2005, TWIA’s maximum liability limit for dwellings, movable property and commercial buildings has increased by 305%, 140% and 102% respectively, Rathgeber’s ruling said.
The liability increases sought were inflationary, but nonetheless would have resulted in increases for commercial and homeowners’ liability that are already too high, said Mark Hanna, spokesman at the Insurance Council of Texas.”We’re not trying to expand the wind pool,” Hanna said. “Raising the dollar figure does that, while we’re trying to go in the opposite direction.”
Texas state lawmakers this year failed to pass TWIA reform legislation designed to address its sagging finances and at one time its board had discussed the possibility of going into receivership. However, the agency’s financial condition has been on the mend in recent months and this summer TWIA projected that it would have a $14.7 billion surplus at year’s end (Best’s News Service, June 19, 2013).
Rathgeber’s decision follows that of former Commissioner Eleanor Kitzman, who denied a similar request in 2012.
The top five writers of homeowners multiperil insurance in Texas during 2012 were State Farm Group, with a 26.83% market share; Allstate Insurance Group, with 11.83%; Farmers Insurance Group, with 11.07%; USAA Group, with 8.66%; and Liberty Mutual Insurance Cos., with 7.08%, according to BestLink (www.ambest.com/bestlink).