CORPUS CHRISTI – Gov. Rick Perry today ceremonially signed House Bill (HB) 4409 which enacts necessary reforms to the Texas Windstorm Insurance Association (TWIA) that will ultimately reduce the burden of catastrophic storms on the state and eventually establish TWIA as an insurer of last resort. The governor declared provisions of the bill emergency items for the 81st Legislative Session.

“This legislation addresses a number of issues that have made it tough for insurance companies to remain engaged along the Texas coast, making it difficult for citizens to get the windstorm coverage they need and exerting upward pressure on insurance premiums across the state,” said Gov. Perry. “To me, this bill represents progress, incorporating sound business practices to improve the way we handle a critical issue that affects all Texans.”

HB 4409 eases previous funding restrictions on TWIA by allowing coverage of up to $2.5 billion in losses through various funding methods. Damage payments can now be funded by premiums, reserves, public securities, commercial paper and other market source financial instruments.

The legislation also allows TWIA to set variable rates among different rating territories taking into consideration the diverse impact a storm may have on any given area based on factors like proximity to the coast and computer modeling of risk factors. Moving away from a one-size-fits-all pricing approach and allowing rates to reflect risk moves TWIA toward compliance with sound insurance principles.

In addition, the bill requires the Texas Department of Insurance to maintain a list of insurers who voluntarily write windstorm coverage and develop incentives for insurers to voluntarily write coverage along the coast. This provision will assist consumers in searching for other providers before TWIA, with the goal of shifting the coverage burden away from the association and ultimately establishing TWIA as an insurer of last resort, as originally intended.

Provisions establish a legislative oversight board and require a review by the Sunset Commission in 2015. Increased public input is now required on TWIA’s board of directors, increasing the number of public members from two to four and decreasing the number of insurer representatives from five to four.

For more information about the 81st Legislative Session, please visit http://www.governor.state.tx.us or http://www.legis.state.tx.us/Home.aspx