Funding 101

Funding Highlights

  • TWIA losses and operating expenses are paid from the following funding sources: TWIA premiums and other revenue, the Catastrophe Reserve Trust Fund (CRTF), public securities, company assessments, and reinsurance
  • TWIA is not a state agency and does not receive General Revenue funds or any other state funds for operations
  • TWIA has never been unable to pay claims since its inception in 1971
  • Funding for the 2019 hurricane season is approximately $4.2 billion

Authority & Legislation

Texas Insurance Code Chapter 2210 provides the funding structure to be used to pay TWIA’s insured losses and operating expenses. TWIA’s funding sources, as outlined in statute, provide a combination of public securities and company assessments and requires total funding in an amount not less than the probable maximum loss for the Association for a catastrophe year with a probability of one in 100.

Important Provisions

Current law provides that insured losses and operating expenses be paid from the following funding sources, in order:

  • TWIA premiums and other revenue
  • The Catastrophe Reserve Trust Fund (CRTF), an account held by the Comptroller containing the net gains from TWIA operations from prior years
  • $500 million in 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
  • Additional funding in the form of reinsurance such that total funding is at least equal to a 100-year hurricane season.

All Classes of public securities are backed solely by TWIA revenues and are not obligations of the State of Texas. Class 1, 2, and 3 public securities are 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 property and auto policies.

2019 Hurricane Season Funding

TWIA’s 2019 catastrophe funding program, effective June 1, 2019 to May 31, 2020, provides access to $4.2 billion in total funding, an amount in excess of the statutory minimum funding. The funding program includes our deposit of $111 million into the Catastrophe Reserve Trust Fund as a result of 2018 operations and $2.1 billion in reinsurance.