Dozens of insurance trade group members spent a day lobbying Texas legislators yesterday urging them to find a proper solution to bankroll the state's badly depleted windstorm pool that acts as insurer of last resort for coastal properties.
David A. Sampson, president and chief executive officer of the Property Casualty Insurers Association of America, said that PCI member company representatives gave lawmakers the message that it is essential they resolve the funding situation at the state-sponsored Texas Windstorm Insurance Association.
Interviewed by telephone at the state capital in Austin where PCI companies convened, Mr. Sampson said the group is advocating that TWIA be given a $1 billion loan from the state's $9.2 billion rainy day fund so it can purchase reinsurance.
He said TWIA has "virtually no funds left after the hurricanes that hit the state last year. After Hurricane Ike last year, Mr. Sampson said the TWIA had a shortfall in funding that required an emergency assessment of insurers.
With the next hurricane season three months away, the legislature, meeting since Jan. 12, has made no progress on legislation, Mr. Sampson said, even though Gov. Rick Perry has tagged it an emergency item to make it a priority for the session.
The hangup, he explained, is that central state legislators are concerned about having their constituents' policies assessed with a surcharge for coastal policies that are "underpriced."
"We believe insurance coverage ought to be actuarially sound…ultimately you have to end artificial rate suppression," said Mr. Sampson. "There is a tendency by government to underpriced risks for political reasons," he remarked.
He said that several measures have been introduced related to the TWIA, and PCI has been meeting with bill sponsors and committee staff "to make sure we understand them. Right now it's unclear what they do."
Under Texas law, on a rotating basis, every government branch is assessed every seven years by a sunset commission as to whether it should be modified or eliminated. This year the state insurance department is up for scrutiny and Mr. Sampson said his group is voicing its concerns during the process.
No one is pushing for elimination of the department, he said, "but we're concerned there will be an effort to add provisions to restrict underwriting tools." He mentioned efforts to ban rates based on credit scoring, occupation, education and geographic location.
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