This blog post pertains to agents who have received offers through TWIA's depopulation programs.
In 2015, the Texas Legislature authorized the creation of two depopulation programs, the Voluntary Market Depopulation Program (Voluntary program) and the Assumption Reinsurance Depopulation Program (Assumption program). Both programs are designed to provide policyholders alternate options for wind and hail coverage in the private market.
You recently had the opportunity to review and approve offers through the Assumption program. We want to make sure you are aware that the Assumption and Voluntary programs run simultaneously, which means that it is possible for you to have offers made to a single policy from insurers participating through both programs. In other words, whether or not you approved any offers through the Assumption program, you may still receive notification of offers on these and other policies from carriers participating in the Voluntary program. Carriers who are participating in the Assumption program may also participate in the Voluntary program, and there are additional carriers who are only participating in the Voluntary program this year.
Use the following information to get more acquainted with the two different programs, so you can evaluate the best option for you and your policyholders.
Participation in depopulation
- Agent and policyholder participation in depopulation is strictly voluntary. Policyholders are able to remain with TWIA under either program. However, if you approved an offer through the Assumption program and a policyholder takes no action, the policy will transfer to the participating insurer.
- In both the Voluntary and Assumption programs, participating insurers must make offers through the agent of record, and nothing can happen in either program unless you enter into a contract with the participating company.
- In the Voluntary program, the insurers and agents communicate directly regarding offers, with no prescribed method, time frame, or format. In this year’s Assumption program, participating insurers uploaded proposed offers to the TWIA depopulation website for you to approve by October 31, 2017.
Timing and policyholder protections
The two depopulation programs are different in terms of timing and policyholder protections.
- The Voluntary program is ongoing, and participating insurers may make offers at any time; they must contact the agent of record at least 60 days prior to the policy renewal. Policies with approved offers can be written with the participating insurer when the TWIA policy term expires (the renewal date).
- The Assumption program requires participating insurers to make all intended policy offers during a specific period of time each year. For the 2017-2018 program, this time period has passed. The program will repeat annually. All policies with approved offers will be transferred on the same date (June 1, 2018), regardless of the TWIA policy term.
- Policies can always leave at any time through the regular market. It’s important to keep in mind that policies leaving through the Voluntary program or the regular market will be removed from the Assumption program.
Another key difference between the two programs are rates and comparable coverage.
- In the Assumption program, participating insurers must offer coverage and premiums that are comparable to TWIA for three renewal terms. A premium is comparable if it is not more than 15% higher than TWIA’s.
- In the Voluntary program, participating insurers are not required to offer comparable coverage and premiums and there is no renewal-related requirement.
Policyholders may return to TWIA at any time after accepting an offer of coverage from a participating insurer through either program. TWIA’s general eligibility requirements, including Certificates of Compliance, will apply.
Note that under both programs, insurers must make offers through the agent of record under the prevailing terms, conditions, and commissions of the agent. Under the Voluntary program, there is no renewal requirement. Under the Assumption program, the agent’s commissions would be guaranteed through three renewal terms.
Accepting offers through both programs
Before entering into a contract with a carrier, we recommend that you review their rates and coverage and determine if offers through the Voluntary program differ from the offers made through the Assumption program.
If you’re approving offers through both programs, you should also make your policyholders aware there are multiple companies that could contact them and send them offers. If you have any questions about how the programs interact, you may refer to our informational webpage twia.org/depopulation/. You may also contact Agent Services at email@example.com or call 1-800-788-8247.