Wind insurance rates going up for coastal residents

The Associated Press

AUSTIN — Regulators have approved an 8.2 percent increase in premiums for residential policyholders along the coast insured by the Texas Windstorm Insurance Association.

Commercial property owners will see a 5.4 percent increase under the changes approved Thursday by Insurance Commissioner Mike Geeslin.

The windstorm association is a pool of all property insurers that serves as the insurer of last resort for coastal customers who can't find wind coverage in the marketplace.

The new rates take effect Feb. 1. For residential policyholders in Texas' 14 coastal counties, rates will go up about $84 on an average windstorm policy of $1,023, Insurance Commission spokesman Jerry Hagins said.

The windstorm association had asked for 10 percent increases for both residential and business policyholders. It said the increases were warranted because of a Gulf Coast building boom and a lack of private insurers offering wind coverage.

``Coastal TWIA customers must understand that the cost of rebuilding homes and business has increased dramatically, partially fueled by the enormous amount of residential and commercial construction along the Gulf Coast,'' said Jerry Johns, a spokesman for the association.

Reliance on the insurance association has jumped dramatically over the past two years, since hurricanes Katrina and Rita hit the Gulf Coast. The association now covers more than 213,000 structures, including more than 69,000 structures added this year.

``TWIA has become the market of first choice rather than the market of last resort,'' Johns said.

A committee of Galveston property owners opposed the increase, as did the Office of Public Insurance Counsel.

``The 8.2 percent is going to lead to excessive rates,'' said Rod Bordelon, executive director of the insurance counsel's office.

Geeslin ordered that 25 percent of premiums be placed in a catastrophe fund to cover claims in the event of a major hurricane.

The association generally keeps $80 million to $100 million available to pay claims, officials said, but if it runs out of money, the association can charge the state's private insurance companies.

In turn, the private companies can seek tax credits from the state.

The Texas Legislature has looked at ways to rework the windstorm insurance fund to brace for catastrophic losses but hasn't reached a solution.

Private companies still sell other types of property insurance along the coast.

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