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Texplainer: Does TWIA Have Enough Money?

Hey, Texplainer: Does the Texas Windstorm Industry Association have enough money for this year's hurricane season?

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Welcome to The Texas Tribune's "Texplainer" series, where we answer questions from readers like you. 

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Hey, Texplainer: Does the Texas Windstorm Insurance Association (TWIA) have enough money for this year’s hurricane season?

Gov. Rick Perry and some state lawmakers have said Texas can't afford to go through another hurricane season without changes to the way the TWIA works. In fact, the as-yet-unresolved battle over proposed TWIA reforms is one of the main reasons lawmakers are now in the midst of a special session. They are considering a bill that would limit the amount of damages and fees that policyholders and trial lawyers can recover if they sue TWIA. TWIA has spent millions on legal damages and fees, and that's one reason for the speculation that it couldn't afford future storms without changes.

The National Oceanic and Atmospheric Administration predicts the 2011 hurricane season — which started June 1 — could be worse than usual for the southern Atlantic and Gulf of Mexico region, which means many Texas coastal residents may need the financial support that TWIA provides: insurance for wind and hail damage.

Those folks will be happy to know that despite politicians' concerns John Polak, TWIA's general manager, says the agency has “plenty” of money to support Texas coastal residents if a hurricane rolls ashore.

The state-run insurer of last resort currently has about $100 million in cash and the capability to issue $2.5 billion in bonds, and Polak said TWIA has also purchased $636 million in reinsurance — insurance that insurance companies buy to protect themselves from liability.

TWIA covers hurricane damage almost exclusively in Texas. When Hurricane Celia swept over Corpus Christi in August of 1970, according to the TWIA website, many private insurers stopped writing wind policies for homeowners along the coast. The state stepped in and created TWIA as a financial buffer against hurricanes. It receives money through a pool of private insurers that cover property and casualty losses in Texas.  

The last major storm to hit Texas was Hurricane Ike in 2008. TWIA is still paying for the havoc it wreaked on Galveston and parts of Houston. The storm resulted in claims from nearly 93,000 people that totaled about $1.9 billion, Polak said. 

Bottom line: TWIA officials say they will be able to handle the active hurricane season that forecasters predict, but the agency only has about $7 million more on hand now than it cost to deal with one hurricane in 2008.


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