Texas property owners could be in for a rude awakening if another major storm hits along the coast. The Texas Windstorm Insurance Association (TWIA), which provides basic storm coverage to residents along the Texas coast (and in Harris County) who can't get other insurance, is running low on cash. This week, Texas Attorney General Greg Abbott declared that the state is not legally bound to cover TWIA claims if the agency runs out of money. Abbott says state law mandates TWIA only pay claims from revenue generated by the agency itself. Mark Hanna with the Insurance Council of Texas wasn't pleased with the decision. "When the attorney general says it's "their" problem, basically he's talking about everyone who lives along the Texas coastline, including probably every resident of Harris County," he tells KTRH.
Right now, TWIA reportedly has about $500 million on hand to cover storm damage, but that isn't nearly enough to handle the likely rush of claims from a major storm. For instance, TWIA has already paid out about $2.7 billion in claims from Hurricane Ike. "We haven't had a hurricane since Ike, that's been five years," says Hanna. "Unfortunately, we still have claims and lawsuits coming out of Ike."
In the meantime, TWIA is looking at other means of funding. "All we can do right now is try to sell some bonds, have some reinsurance in place, and with the premiums going into the TWIA fund, hope they have time to accumulate," says Hanna. The agency reportedly could sell off some $1.5 billion in bonds to raise money, but it remains to be seen if that, along with incoming premiums and other revenue sources are enough to reach the $3.45 billion TWIA wants to have in its reserve fund. Mother Nature can also lend a helping hand. "At that same time, we have to hope we don't have another Hurricane Ike roll around," says Hanna.