History and Purpose
The Texas Windstorm Insurance Association (TWIA or Association) was established in 1971 by the Texas Legislature to provide wind and hail coverage to applicants unable to obtain insurance in the private market. The Legislature’s action was a response to market constrictions along the Texas coast after several hurricanes. TWIA is governed by Chapter 2210 of the Texas Insurance Code (Chapter 2210); however, it is not a state agency and does not receive funds from the general revenue.
TWIA is a residual insurer of last resort and as such is not a direct competitor in the private market. TWIA’s primary purpose is to provide an adequate market for windstorm and hail insurance in certain designated portions of the seacoast territory of Texas. The seacoast territory includes 14 first tier and 14 second tier coastal counties. The designated catastrophe area is that portion of the seacoast territory where the Commissioner of Insurance has found that windstorm and hail insurance is not reasonably available. It currently includes the entire first tier and a portion of Harris County (second tier).
TWIA operates as an insurance company by issuing policies, collecting premiums, and paying losses. TWIA is required by law to transfer its net gain from operations each year into the Catastrophe Reserve Trust Fund (CRTF), an account maintained by the Texas Comptroller dedicated to the payment of future TWIA catastrophe losses.
Mission and Vision
TWIA’s mission is to provide essential property insurance products and services to eligible Texas policyholders when no one else will. Our vision is to be respected and trusted by our stakeholders.
TWIA’s core values are the foundation of the Association’s operations, decisions, and actions. They are:
Service & Respect
We are committed to serving as a reliable, credible, and respectful provider
Efficiency & Stability
We are financially stable and can be counted on to fulfill our obligations
Integrity & Accountability
We are an ethical organization that is accountable to those we serve
Coverage and Eligibility
TWIA policies provide coverage for wind and hail losses only. No other perils are covered by TWIA policies. Applications for coverage, accompanied by the full annual premium, may be submitted to TWIA through an agent properly licensed through the Texas Department of Insurance (TDI).
In order to be eligible for a TWIA policy, applicants and properties must meet certain criteria defined by the Texas Legislature:
- Applicants must have been denied coverage by at least one insurer in the private market
- Properties must be located in the designated catastrophe area
- Properties must be certified as having been built to applicable building codes, with limited exceptions
- Properties located in specified flood zones (V zones) that were constructed, altered, remodeled, or enlarged after September 1, 2009 and that can obtain flood insurance through the NFIP must provide proof of flood insurance coverage
- Properties must be in an insurable condition as specified by the Association in the Plan of Operation
TWIA policies provide coverage for residential and commercial property located within the area designated by the Commissioner of Insurance. This area currently includes all 14 first tier coastal counties and parts of Harris County east of Highway 146. The specific counties are Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio and Willacy. When the property is located inside the city limits and east of Highway 146, the following portions of Harris County are also included: La Porte, Morgan’s Point, Pasadena, Seabrook, and Shore Acres.
Building Codes & Certificates of Compliance (WPI-8 or WPI-8-C)
Texas Insurance Code Sections 2210.251 – 2210.252 and 2210.258 - 2210.259 outline the building code and inspection requirements for eligibility in TWIA and provide for limited exceptions. In accordance with these sections, TWIA requires a Certificate of Compliance (WPI-8 or WPI-8-C) on all structures constructed, altered, remodeled, enlarged, repaired, or to which additions have been made on or after January 1, 1988. TDI administers the Windstorm Inspections Program and issues Certificates of Compliance (WPI-8) for ongoing improvements. Property owners can contact TDI before beginning construction in order to have a TDI appointed qualified inspector inspect their property and certify that it is fully compliant with the applicable windstorm building code.
Legislation passed in 2015 authorized TWIA to issue Certificates of Compliance (WPI-8-C) for completed improvements on and after January 1, 2017. A person seeking certification for a completed improvement must have a Texas-licensed engineer certify compliance with the applicable windstorm building code. The engineer will need to submit certain information to TWIA in order for TWIA to issue the certificate of compliance (WPI-8-C).
Properties must be in an insurable condition to be eligible for TWIA coverage (i.e. in good repair with no unrepaired damage or hazardous conditions). TWIA regularly inspects properties as part of its underwriting process to verify insurability. Properties may be inspected on-site by a vendor or remotely via high-quality aerial imagery. Inspections are used to determine the accuracy of rating information, discover any unrepaired damage, and identify any other conditions that affect the insurability of the property.
Current TWIA Statistics
As of December 31, 2017, TWIA policies in-force numbered 227,012 with insured building and contents coverage totaling $65 billion. 2017 written premiums were $423 million.
SB 900, passed by the 84th Texas Legislature, took effect September 1, 2015 and changed TWIA’s funding structure. TWIA’s current funding structure is, in order:
- TWIA premiums and amounts in the CRTF
- $500 million in pre-event Class 1 public securities
- $500 million in Class 1 company assessments
- $250 million in Class 2 public securities
- $250 million in Class 2 company assessments
- $250 million in Class 3 public securities
- $250 million in Class 3 company assessments
- Sufficient reinsurance, including both traditional reinsurance and catastrophe bonds, so that total funding is at least equal to a hurricane season with a 1% probability.
Class 1, 2, and 3 public securities will be repaid by TWIA premiums and surcharges on TWIA policies. Class 2 and 3 public securities, after a finding by the Commissioner of Insurance, may also be repaid by surcharges on coastal policyholders, if necessary.
TWIA secured $4.6 billion in total funding for the 2018 hurricane season.