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Jefferson Co. blasts windstorm insurance rate hike as ‘cruel’

October 8, 2018

A move by the Texas Windstorm Insurance Association to hike insurance premiums by 10 percent is “insensitive and unnecessarily cruel,” the Jefferson County Commissioners’ Court said in a resolution Monday condemning the proposed increase.

The state’s insurer of last resort says rates for residential and commercial policies are insufficient and said the increase will ensure the association, which covers more than 207,600 property owners, can respond to future claims. Hurricane Harvey losses were estimated to be $1.61 billion as of March, according to TWIA.

“We understand a number of coastal Texans are undergoing extraordinary hardship after Hurricane Harvey. It is certainly not our intent to worsen or minimize that hardship,” a TWIA spokesperson said in an email.

“At the same time, we have a responsibility to make sure we have the funds necessary to pay claims in future situations like Harvey, which is the purpose of moving toward rate adequacy.”

TWIA rates increased by 5 percent each year between 2011 and 2018, with the exception of 2017 when they remained unchanged. The insurance group said the rate changes are “consistent with the board’s desire to achieve rate adequacy through a series of smaller rate increases, minimizing the amount of increase affecting policyholders in any one year.”

Insurance Commissioner Kent Sullivan could approve or deny the rate increase by Oct. 15. If approved, the higher rate would go into effect on Jan. 1, affecting both residential and commercial properties.

According to the Texas Insurance Code, the association’s rates must “be reasonable, adequate, and not unfairly discriminatory.” The TWIA Board of Directors “deliberated at length and certainly did not take lightly the decision to propose a 10 percent rate increase,” the association said.

Jefferson County commissioners countered Monday that “other alternatives could be investigated to prevent such a hardship on policyholders.”

A 10 percent rate increase “will be detrimental to our economic development as employees seeking to locate here find it too expensive,” the resolution said.

Homeowners in Jefferson and 13 other coastal counties in the Texas Department of Insurance’s “designated catastrophe area” are eligible for a TWIA policy if they have been denied coverage by at least one private market insurer. Most mortgage companies in these counties require windstorm coverage.

“All 254 (Texas counties) share in the risk of windstorm,” said Jefferson County Judge Jeff Branick, who said he believed the coastal county designations were “artificial,” as though “the damage stops at the county line.”

Both Hardin and Orange Counties received damage in previous storms and hurricanes, but neither are designated as first tier.

The Bastrop County Complex fire was the “most destructive” wildfire in Texas history, according to the Texas Parks and Wildlife Department. The 32,000-acre blaze was “factored” into other insurance premiums across the state, Branick said.

“But they don’t share in the loss from our hurricanes,” Branick said of the 240 Texas counties not in the designated catastrophe area.

The resolution also called for windstorm reform, citing the state’s “vested interest in providing all Texans with a system of insurance coverage which is grounded in fairness and equity.”

Branick said he believed all of 14 counties would denounce the insurance hike.

The insurance association currently has 207,661 policyholders in the 14 coastal counties, with 27,883 policies in Jefferson County, 60,050 in Galveston County and 4,442 in Chambers County.

Phoebe.Suy@BeaumontEnterprise.com

twitter.com/PhoebeSuy

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