Changes to How TWIA Provides Insurance

Summary of changes

Note: Although the change due dates listed in the table below reflect deadlines written in statute, the implementation of some of these changes are tied to external timelines (e.g. the creation of new rules by the Texas Department of Insurance, which are not subject to a statutory deadline). Where there are a series of due dates associated with a change, the earliest date is listed.

In the table below, we have included asterisks to indicate instances where the change due and implementation dates differ. Explanations are included in the Change Summary section of the tables as well as the expanded details further down the page.

Additional information about each change

Public availability of rate adequacy analysis

Change due date: June 10, 2019
TWIA must make a rate adequacy analysis publicly available on www.twia.org 14 days before its Board of Directors votes on the submission of a proposed rate filing to the Texas Department of Insurance. TWIA also must accept public comment on the rate adequacy analysis at a public meeting of the TWIA Board of Directors prior to their vote on a proposed rate filing.

How does this affect policyholders?
This law ensures greater transparency over the TWIA rate-making process. It also makes it easier for the public to provide feedback on a proposed rate filing.

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Emergency meetings for member assessments

Change due date: June 10, 2019
If TWIA estimates its ultimate financial losses arising from a storm may require an assessment on its member insurers, the TWIA Board of Directors is required to call an emergency meeting for the purpose of notifying member insurers of the need for an assessment.

What is a member insurer? A member insurer is any company licensed to write property insurance in Texas. They are required by law to be a member of Texas Windstorm Insurance Association and share in TWIA’s financial losses; their percentage of participation is based on the company's statewide policy/participation and policy/participation within TWIA's coverage area.

How does this affect policyholders?
No impact to policyholders is expected.

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Member company purchase of reinsurance

Change due date: June 10, 2019. Implementation of this change is dependent on the creation of new rules by the Texas Department of Insurance. TDI rules are currently pending and not subject to a statutory deadline.

TWIA’s purchase of reinsurance above its minimum required funding level (1 in 100 probable maximum loss) must be paid for by an assessment on member insurers of the Association. Reinsurance is the last level of funding TWIA may access in the event of a catastrophic storm. Learn more about TWIA’s funding structure. The amount of a member insurer’s assessment is based on the company's statewide policy/participation and policy/participation within TWIA's coverage area.

TWIA must notify each member insurer of the amount of their assessment. A member may not recoup their assessment cost through premium surcharge or a tax credit.

What is a member insurer? A member insurer is any company licensed to write property insurance in Texas. They are required by law to be a member of Texas Windstorm Insurance Association and share in TWIA’s financial losses; their percentage of participation is based on the company's statewide policy/participation and policy/participation within TWIA's coverage area.

How does this affect policyholders?
No impact to policyholders is expected.

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Claims deadline extensions

Change due date: June 10, 2019
Provides the Commissioner of Insurance the authority to extend policyholder claim deadlines at his discretion and extend claim deadlines applicable to TWIA arising from a particular storm up to 120 days.

How does this affect policyholders?
In the event of a storm, policyholders may be provided additional time to meet the claim deadlines in place to request additional payment, dispute their claim, and complete repairs.

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Replacement cost coverage claims

Change due date: June 10, 2019. These changes apply to policies issued or renewed on or after January 1, 2020.

Formalizes the handling of replacement cost coverage claims, allowing 545 days for a policyholder to provide proof of repairs and preserving the policyholder’s ability to request appraisal on the claim. Appraisal is the formal process for disputing the amount that TWIA paid on the accepted part of a claim.

If the policy provides replacement cost coverage, TWIA's notice of claim acceptance must notify the claimant of the deadline for completing repairs and submitting documentation and the deadline for demanding appraisal.

How does this affect policyholders?
Policyholders with replacement cost coverage have more time to complete their repairs and still be able to preserve their right to request appraisal on the claim.

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When funding sources can be used to pay claims

Change due date: June 10, 2019
Policyholder premiums earned in subsequent years cannot be used to pay for excess losses and operating costs that occurred during a past storm season. Requires TWIA pay for excess losses from funding sources, including the Catastrophe Reserve Trust Fund (CRTF), available before or accrued during the catastrophe year in which the losses occurred.

TWIA cannot use the proceeds from public securities or member insurer assessments made in the past to pay for excess losses that occur in subsequent years.

How does this affect policyholders?
This does not affect policyholders’ experience with TWIA, but it does affect how their premium payments are used to pay for TWIA claims and operating costs.

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Surplus lines

Change due date: June 14, 2019
As of June 14, 2019, eligible surplus lines insurers may provide windstorm and hail insurance in TWIA’s coverage areas. However, a policy declination from a surplus lines writer does not count toward TWIA’s declination requirement for coverage eligibility.

How does this affect policyholders?
This law authorizes additional insurers to provide windstorm and hail insurance in TWIA’s coverage area, providing property owners with more options to insure homes and businesses.

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Rules proposed to TDI

Change due date: September 1, 2019
Any changes to the rules governing TWIA’s policies, claims procedures, or core operational structures must be approved by the Texas Department of Insurance before they can be adopted. While TWIA has proposed new rules to TDI in the past, they did not provide for any timeframe in which TDI would consider or take actions on them. This law formally authorizes TWIA to propose rules for adoption by TDI and requires TDI to begin its review process within 30 days of submission.

This law also enables TWIA to request for TDI to host public hearings on proposed rule changes to gather feedback from stakeholders.

How does this affect policyholders?
This law allows TWIA to propose and more quickly receive feedback on new rules for adoption by TDI that may increase TWIA efficiency and generally benefit its policyholders and other stakeholders.

It also allows TWIA to request for TDI to hold a public hearing on the proposed rules to gather feedback. Such hearings will provide stakeholders an opportunity to comment on how the proposed changes would affect them.

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Maximum liability limits

Change due date: September 1, 2019
A filing by the TWIA Board of Directors to change the maximum liability limit is considered approved unless the Commissioner of Insurance issues an order disapproving or modifying the liability limits. The Commissioner's decision must be issued within 30 days of when TWIA files its proposal.

If the Commissioner disapproves or modifies the filing, this triggers a notice and hearing on the decision. Within 30 days of the Commissioner’s disapproval/modification, and with any new insight from the notice and hearing, the Commissioner will approve, disapprove, or modify the proposed adjustment.

What is a maximum liability limit? A policy’s maximum liability limit refers to the maximum amount of coverage a TWIA policyholder can purchase on their property.

How does this affect policyholders?
No impact to policyholders is expected.

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Board of Directors eligibility requirements

Change due date: September 1, 2019
The TWIA Board of Directors is appointed by the Texas Commissioner of Insurance and includes three members residing in the first tier coastal counties (TWIA coverage area), three residing more than 100 miles inland, and three insurance industry representatives.

This law creates new eligibility requirements for someone to be appointed as a public member of the TWIA Board of Directors, meaning they will be considered ineligible to represent coastal or inland communities if they or their spouse manages, is employed by, or owns more than 10% interest in a company that:

• Operates in the property and casualty insurance industry in Texas;
• Receives money from the Association other than claim payments; or
• Receives money from Association policyholders with respect to the policyholders’ claims.

Furthermore, they may not be appointed to the TWIA Board of Directors if they or their spouse receives a substantial amount of tangible goods, services, or money from the Association (excluding claim payments or authorized Board compensation for travel).

How does this affect policyholders?
This law strengthens the ethical considerations with respect to the TWIA Board of Directors, which votes on topics that impact TWIA policyholders.

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Disclosures by the Board of Directors

Change due date: September 1, 2019
This law requires Board members and Actuarial and Underwriting Committee members to disclose potential conflicts of interest related to a vote or discussion prior to a vote. Potential conflicts that require public disclosure include:

• Financial or personal interest in an entity that could financially benefit from the outcome of the discussion or vote; and
• Holding a TWIA insurance policy that may be affected by the discussion or vote.

During open meetings, Board and Committee members must disclose any conflicts prior to a discussion or vote. For meetings that are not broadcast, a publicly available agenda must disclose any conflicts for the Board or Committee members.

How does this affect policyholders?
This new law increases transparency about the affiliations of the Board of Directors and Committee members.

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Supplemental payment information in claims letters

Change due date: September 1, 2019. Information to be included in claims letters starting July 1, 2020, pending the creation of new rules by the Texas Department of Insurance.

This law formally authorizes TWIA’s supplemental payment process. Supplemental payments are additional claim payments made to the policyholder when the initial claim payment isn’t enough to pay for covered repairs.

It also requires TWIA to include information about supplemental payments in the Notice of Claim Acceptance and/or Denial letter, starting on July 1, 2020. This is the letter outlining TWIA’s claim decision after a policyholder reports damage on their property.

How does this affect policyholders?
Policyholders have more information about how they can request additional money they may be owed for repairs during the claim process as well as the deadlines to request it.

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Contractors acting as public adjusters; public adjuster names

Change due date: September 1, 2019
A contractor may not act as a public adjuster or advertise to act as a public adjuster for any claim for which the contractor is or may provide contracting services (HB 2103); additionally, public adjusters must not use a different name than the one on their adjuster license unless they have a valid assumed name certificate (HB 2659).

How does this affect policyholders?
This law is intended to reduce any conflicts of interest for contractors acting as public adjusters on a claim, mitigating opportunities for insurance fraud.

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Deductible payments

Change due date: September 1, 2019 The proof of payment requirement applies to TWIA policies issued or renewed on or after January 1, 2020.
Several laws passed during the 86th Legislative Session authorize changes to the insurance industry as a whole with respect to deductibles. The deductible is the amount of money the policyholder must pay in a claim before any payment is due from the insurance company.

The changes that apply to TWIA include:

• Payment requirements: The Texas Insurance Code was amended to explicitly require property insurance claimants to pay deductibles required under the terms of their policy.
• Proof of payment: An insurer may require policyholders to submit proof they paid the deductible applicable to their claim before any withheld recoverable depreciation is paid. Recoverable depreciation is the difference between a property’s replacement cost value and its actual cash value. TWIA claims are paid in two parts: first the actual cash value and then the recoverable depreciation after repairs are completed.
• Consumer education: The Texas Department of Insurance, in coordination with applicable state agencies and stakeholders, must develop and implement a consumer education program about property insurance deductibles which include information on prohibited conduct.
• Update to the Business & Commerce Code: Code now stipulates contract language requirements related to deductible payments for claims of $1000 or more and outlines the offenses related to the payment of deductibles by a person other than a policyholder.

How does this affect policyholders?
Texas property insurance policyholders are explicitly required to pay the deductible applicable to their claim and may also be asked to submit proof they paid this deductible before any withheld recoverable depreciation is paid.

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New renewals process

Change due date: January 1, 2020

These changes intend to streamline the policy renewal process, allowing TWIA to offer renewals directly to policyholders and mortgage companies via US mail and accepting payment directly from them. The first renewal offer packages to TWIA policyholders were mailed in January 2020 for policies effective March 1, 2020.

The policy renewal packet contains a cover letter explaining the new process and the new TWIA policy contract, the renewal offer, and a payment coupon. The same renewal offer and payment coupon is mailed to the mortgage company of record, if applicable. Agents receive the same renewal offer and payment coupon as a document through Policy Center.

Renewal applications are longer be required. The renewal offer provides the policyholder and agent the ability to confirm coverage details and make any necessary changes as they normally would.

New Policy Renewal Process

• 60 days prior to renewal: Renewal offer mailed to policyholder with a copy to the agent of record and mortgage company.
• 25 days prior to renewal: Expiration Notice ( i.e. renewal reminder) mailed to policyholder with a copy to the agent of record in Policy Center with email notification.
• Policy expiration/renewal date: If offer and payment are returned prior to expiration, the renewal policy goes into effect.
• 10 days after policy expiration: Policy Lapse Notice mailed to policyholder and document generated for agent in Policy Center with email notification.
• If offer and payment are returned after the original policy expiration but before the renewal offer expires, the renewal policy goes into effect with a corresponding lapse in coverage.
• 30 days after policy expiration: Any pending policy renewal offer expires

How does this affect policyholders?

While the TWIA policyholder can still work with and submit payment through their agent, they also now have the ability to mail payment directly to TWIA or elect to cancel the policy before it renews.

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New policy contracts

Change due date: January 1, 2020
All new and renewal TWIA policies with an effective date on or after January 1, 2020 include updated coverages, terms, and conditions. Some of these updates are the result of laws passed in 2019, including provisions that:

• allow the Texas Commissioner of Insurance to extend claim deadlines for policyholders at his discretion after a storm;
• formalize the handling of and preserve the dispute deadlines for replacement cost coverage claims;
• change when a property’s replacement cost is estimated; and
• authorize TWIA to require policyholders submit proof they paid the deductible applicable to their replacement cost coverage claim.

The new policy contracts also include updates that align with standard industry practices. A summary of the major changes to TWIA policy contracts is available on our website.

How does this affect policyholders?
All new and renewal policies with an effective date on or after January 1, 2020 use the new TWIA policy contract. To support policyholder awareness and understanding of the new policy contract, we are mailing resources to them directly. This includes a Notice of New TWIA Policy Contract letter which explains the major changes.

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Replacement cost estimation

Change due date: January 1, 2020
Laws in effect before January 1, 2020 stated the type of loss settlement—replacement cost value (RCV) vs. actual cash value (ACV)—was determined at the time a claim is made. This new law says the type of loss settlement, RCV or ACV, is determined at the time a policy is issued. This applies to all new and renewal policies issued on or after January 1, 2020.

Replacement cost value is the amount of money needed to replace the structure or damaged personal property with a similar new product (i.e. depreciation is not deducted). Actual cash value is the amount of money needed to replace the structure or damaged personal property at its current market value (i.e. depreciation is deducted).

The past and new laws both require TWIA policies to be insured at 80% or more of the replacement cost value of the property to qualify for replacement cost coverage. Thankfully, most policyholders already meet this threshold. However, sometimes a policy is insured right at the 80% threshold when it is first issued, and over time, dips below for a variety of reasons. Unfortunately, in the past this meant after a claim, the loss was settled for the actual cash value which was a significantly lower claim payment than the replacement cost. The new law prevents this scenario from happening.

How does this affect policyholders?
This new law is great news for policyholders. It helps them know if their property is adequately insured. There can be a big difference between the replacement cost and the actual cash value of a property. Determining if insurance to value requirements are met at the time of policy issuance ensures that going into a claim, all parties are aware of whether or not their claim will be settled at replacement cost.

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Board of Directors training

Change due date: January 1, 2020
All members of the TWIA Board of Directors must complete training on Texas governmental and Association ethics and administrative policies and procedures, including:

• Enabling statute;
• Association programs, functions, rules, and budget;
• Rule-making authority;
• Most recent audit results;
• Open meetings and open records;
• Administrative procedure;
• Conflict of interest disclosure;
• Other laws applicable to the Board members in performing their duties;
• Applicable ethics policies adopted by the Association or the Texas Ethics Commission.

To facilitate this training, TWIA must create a training manual for Board members to review and acknowledge each year. Effective January 1, 2020, Board members cannot vote, deliberate, or be counted as a member in attendance at meetings until they have completed their annual required training.

This new law does not affect the privileges of Board members serving before the effective date of the act or their ability to serve on the Board through to the end of their term. Board members serve three-year staggered terms.

How does this affect policyholders?
Members of the Board of Directors vote on topics which impact TWIA policyholders; additional training ensures the Board of Directors make decisions in the best interest of policyholders and the Association.

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Depopulation

Change due date: March 31, 2020
Requires the Texas Department of Insurance to change depopulation rules to eliminate any requirement for agents or policyholders to make depopulation decisions during hurricane season (June 1 to November 30). Reduces the policyholder opt out period to no more than 60 days.

TDI has until March 31, 2020 to adopt the rules to implement this change, which will be applied during the fifth round of TWIA’s Assumption Reinsurance Depopulation Program.

How does this affect policyholders?
Streamlines the depopulation process for policyholders and their agents.

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Windstorm certifications for completed improvements

Change due date: June 1, 2020
Effective June 1, 2020, the Texas Department of Insurance began issuing Certificates of Compliance for completed improvements in addition to the Certificates of Compliance it already issues for ongoing improvements. The last day TWIA accepted applications for Certificates of Compliance for completed improvements was May 31, 2020.

As background, TWIA began issuing Certificates of Compliance for completed improvements on January 1, 2017 as the result of legislation passed in 2015. From January 1, 2017 to May 31, 2020, there were two routes to certification – one through TWIA and the other through TDI - and which one property owners follow was based on the construction status of the improvement to be certified. Starting June 1, 2020, there is only be one route to certification: through TDI.

TDI is provided additional oversight of the certification process for completed improvements such as engineers being required to affirm that a completed improvement is constructed in accordance with its design (i.e. the construction will be evaluated, not just its design). TDI is also allowed to:

• Deny an application if an engineer's evaluation is not fully documented; and
• File complaints to the Texas Board of Professional Engineers and Land Surveyors related to the engineering work of a professional engineer.

Windstorm Certificates of Compliance (WPI-8s/WPI-8-Cs) are an important eligibility requirement for TWIA as well as some private insurance companies. Certificates of Compliance issued by TWIA remain valid after June 1, 2020. Property owners do not have to re-certify their structures in order to remain eligible for TWIA insurance.

How does this affect policyholders?
Policyholders and the engineers they hire to help certify a structure must apply to TDI rather than TWIA for a Certificate of Compliance for completed improvements.

TDI administers the Windstorm Inspection Program and is a regulatory agency. Consolidating the certification process under TDI:

• Reduces property owner confusion on where to obtain a Certificate of Compliance.
• Provides additional oversight to the certification process for completed improvements.
• Makes all future Certificates of Compliance searchable on the TDI online database. Property owners with a Certificate of Compliance issued by TWIA (WPI-8-C) can contact us for a copy.
• Offers property owners local assistance for certifying completed improvements through TDI’s field offices in Beaumont, La Marque, Angleton, and Corpus Christi.

Certificates of Compliance issued by TWIA remain valid and property owners do not have to re-certify those same structures to remain eligible for TWIA insurance, unless they update the structures after being certified.

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Supplemental payment information in policy packets

Change due date: July 1, 2020
This law requires TWIA policy packets for policies issued or renewed on or after July 1, 2020 to prominently feature information about the availability of supplemental payments, the supplemental payment process, and associated deadlines.

How does this affect policyholders?
Policyholders have more information about how they can request additional money they may be owed for repairs during the claim process as well as the deadlines to request it.

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Funding study

Change due date: November 15, 2020
Creates the Legislative Funding and Funding Structure Oversight Board, composed of members of the Texas House and Senate, providing Board members with a mission to study TWIA’s funding structure and recommend legislative changes to resolve issues with it and to make it more sustainable. This report must be delivered to the Governor, Lt. Governor, and Speaker no later than November 15, 2020.

How does this affect policyholders?
The Legislative Oversight Board’s recommendations may be turned into legislation that has the potential to make TWIA’s funding structure more efficient and sustainable, so the Association can fulfill its duty to be there when our policyholders need us most.

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New premium payment options

Change due date: January 1, 2021 *The new payment options went into effect November 19, 2020. Visit www.twia.org/payments to learn more.
This law allows new payment options for our policyholders via credit card as well as in more than one installment.

Previously, TWIA was only legally allowed to accept payment from a policyholder’s agent by check or a premium financing service and the entire annual premium had to be paid at the time the policy was issued.

How does this affect policyholders?
Not only are policyholders able to make a payment to TWIA directly, but they also have additional options both in their method (credit card) and frequency (more than once a year) of payment. TWIA is glad to be able to provide this service; paying the annual policy premium all at one time has been a complaint of policyholders.

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TWIA and TFPA merger study

Change due date: January 1, 2021 *Deferred due to the COVID-19 pandemic.
Requires the Windstorm Insurance Legislative Oversight Board (created by House Bill 4409 in 2009) to evaluate a merger between Texas Windstorm Insurance Association and Texas FAIR Plan Association. The evaluation must consider:

• The affordability and availability of windstorm and hail insurance and residential property insurance throughout Texas;
• The advisability of merging the two Associations;
• Any efficiencies or inefficiencies from a merger;
• The funding necessary to ensure windstorm and hail insurance and residential property insurance are available after the merger; and
• Other items determined relevant by the Oversight Board.

The Legislative Oversight Board will submit a report to the Governor, Lt. Governor, Speaker, and the Texas Department of Insurance by January 1, 2021.

How does this affect policyholders?
No impact to policyholders is expected.

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Sunset review

Change due date: 2031
With the passage of this law, TWIA will be subject to another review by the Texas Sunset Advisory Commission in the year 2031.

Although TWIA is not a state agency, it was made subject to Sunset review through legislation passed in 2011; however, it is not subject to abolishment through the Sunset process. In advance of the 86th Legislative Session in 2019, TWIA was reviewed by the Sunset Advisory Commission; the resulting Sunset report recommended legislative action on six issues, many of which were included in Senate Bill 615 (TWIA’s Sunset Bill).

What is the Sunset Advisory Commission? The Texas Sunset Advisory Commission regularly studies the effectiveness of state agencies and programs and reports to the Legislature with recommendations to make these agencies and programs more efficient and effective.

How does this affect policyholders?
Each Sunset review provides an opportunity to improve the effectiveness of the organization under examination. New laws that impact TWIA and its policyholders may arise from Legislative recommendations identified during the 2031 Sunset review process.

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