Senate Bill 44 by Sen. Troy Fraser (R- Horseshoe Bay)

[Lee Zapp Jr.]

With half the Special Session gone, Senator Troy Fraser filed 5 1/2 page SB 44 on June 16, 2011.  The bill would require the Commissioner of Insurance to CLOSE the 40 year old Texas Windstorm Insurance Association [TWIA], which has over $67 Billion of insurance in force through over 240,000 policies.  The Commissioner is charged to issue orders and adopt rules to 'phase TWIA out', and at the same time, 'phase the voluntary market in'.  The bill does not specify a required time period.

 

An interesting detail is that while TWIA offers policies in the Catastrophe Area only [the 14 first tier counties, plus the eastern edge of Harris county], SB 44 requires voluntary insurers to write their state market share in the 28 first and second tier of counties.  All insurers '...authorized to engage in the business of property insurance in this state... shall issue windstorm and hail insurance policies...' no specific sanction for failure is stated.  Presumably, unless an insurer is prepared to leave the state, it will write its market share.

 

TWIA has no outstanding securities debt at this time, but should it be necessary to issue securities before it closes, the bill provides that TWIA may be extended to the extent necessary to pay off the securities. 

 

Rates chargeable by the voluntary insurers are to be determined in the manner provided by Chapter 2251 Insurance Code.

 

By the way, nineteen Senators signed as co-author, 20 of 31 senators 'signed on'.  Since the bill will be assigned to a friendly Committee, and the Senate rules in the Special Session provide that a simple majority 'rules', quick passage in the Senate seems readily available.  This is such an about face from both HB 3, and SB 3, that it raises the question: Is the House on board with this radical solution?  Chairman John Smithee filed HB 3023 in the General Session, which would have ordered the Commissioner to close and sell TWIA, but had no provision to fill the resullting void.  The Chairman did not advance this bill in his own committee.

Comment submitted 6/16/11 by Coastal Windstorm Insurance Coalition, 4800 Seawall Boulevard, Galveston, TX

Lee Otis Zapp, Jr., Ph # 409-744-6655