Public Invited to Comment as TWIA Committee Considers Independent Rate Report and Rate Change Recommendation at September 22 Meeting

The Texas Windstorm Insurance Association’s (TWIA) Actuarial & Underwriting Committee will meet on Tuesday, September 22 to review an independent report on TWIA’s rate adequacy and make a report/recommendation to the Board of Directors.

The meeting will be held via Zoom and members of the public are invited to participate and provide comment (see additional details below). The agenda for the meeting is available here.

Independent Report

As required by statute, TWIA annually produces and publishes a rate adequacy analysis. The most recent TWIA rate adequacy analysis, completed in July 2020, indicates that TWIA’s current rates are inadequate by 44 percent for residential coverage and 49 percent for commercial coverage.

At its December 2019 meeting, the Board directed the Committee to retain an actuarial consulting firm to conduct an independent study of TWIA’s rate adequacy and the use of hurricane modeling in estimating potential losses in its rate-setting process. The Committee selected Willis Towers Watson (WTW) to conduct the study. The report is now complete and available for public review:

A comparison of the TWIA and WTW rate indications is provided below.

TWIA Rate Inadequacy Indications

[table td1=”” td2=”Residential” td3=”Commercial”]

[td1]TWIA 2020 Rate Adequacy Analysis[/td1]

[td1]Willis Towers Watson Report
using WTW-recommended method for projecting Probable Maximum Loss[/td1]

Some of the significant assumptions of the WTW study, and differences from TWIA’s analysis and methodology, are described below:

  • Both TWIA’s and WTW’s analyses use a 50%/50% blend of industry hurricane loss experience and model results in projecting hurricane losses.
  • In projecting loss adjustment expense (LAE), WTW relied on TWIA’s historical experience in Hurricane Ike and Hurricane Harvey to estimate a ratio of LAE to losses of 17.2%. TWIA’s analysis assumes a 15% LAE to loss ratio.
  • TWIA incorporates an assumption that a portion of modeled “storm surge” losses may ultimately be paid by TWIA (despite the policy exclusion of flood losses), while the WTW analysis does not include such a provision.
  • Both WTW’s and TWIA’s analyses rely on industry loss experience over the last 169 years in developing historical hurricane experience, although their methodologies differ. The WTW analysis relies on the number of years in which one or more hurricanes occurred, and TWIA bases its estimate on the number of hurricanes in the period.
  • With respect to developing the projection of hurricane losses using the leading catastrophe models, TWIA has used a 50%/50% blending of the two leading hurricane models to balance the differing results and inherent uncertainty. WTW used a 75%/25% blend of the RMS and AIR model results.
  • The WTW rate indications assume a 75%/25% blend of the two hurricane models to derive the 1:100 aggregate probable maximum loss.
    • For the 2021 rate indications, TWIA uses the reinsurance program placed as of June 1, 2020 as a basis for evaluating reinsurance costs.
  • The WTW report also highlights the potential improvement in hurricane model accuracy that could come from TWIA gathering more granular data on the building characteristics of properties it insures.

Rate Filing Recommendation

At its August 2020 meeting, the Board voted for the Association to file a 0 percent rate change in its annual required rate filing with the Texas Department of Insurance. Noting that TWIA may also make additional rate filings with TDI at any time, the Board directed the Committee to review the WTW report and make a recommendation to the Board.

The Committee will consider the report at its September 22 meeting and is expected to develop its recommendation to the Board. The Board will then consider the Committee’s recommendation at an interim meeting or its December quarterly meeting.

Public Participation and Comment

Members of the public are invited to submit written comments on the report or on the Committee’s report/recommendation to the Board via email at Emailed comments received by Noon CT on Friday, September 18 will be compiled and provided to the TWIA Board of Directors prior to the September 22 meeting.

Members of the public are also invited to provide comment on the report and on the Committee’s report/recommendation to the Board during the designated public comment portion of the meeting by logging on to the meeting via Zoom. Click here to register to attend the meeting via Zoom. The meeting will also be livestreamed via YouTube.

An archived recording of the meeting will be available on TWIA’s website at

If you are a member of the media, you may send inquiries to