TWIA Board Sets $6.5 Billion as 1-in-100 Probable Maximum Loss For 2024 Storm Season, Will Pursue $3.35 Billion in Reinsurance  

The Texas Windstorm Insurance Association Board of Directors met on February 20 and voted to establish $6.5 billion as the Association’s 1:100 probable maximum loss (PML) for the 2024 storm season.  

The 1:100 PML is the probable maximum loss for the Association for a catastrophe year with a probability of one in 100. This benchmark establishes the minimum amount of funding needed to meet TWIA’s statutory funding obligation for the upcoming storm season. In conjunction with the Association’s other statutory sources of funding, the 1:100 PML also determines the amount of reinsurance the Association must purchase.   

Over the past year, TWIA has added more than 25,000 policies and the total insured value of the properties it covers has increased by 26.4%. The Board’s decision to set the 1:100 PML at $6.5 billion represents an increase of $2.0 billion over last year’s $4.5 billion PML. 

Accepting the recommendation of it’s Actuarial & Underwriting Committee, the Board voted to use a 75%/25% blend of the RMS and AIR catastrophe models, respectively, using the model results based on long-term assumptions, to result in a base PML of $5.67 billion. (RMS and AIR are catastrophe models commonly used in the property insurance industry to project potential losses.) The Board also voted to include a factor for loss adjustment expense (LAE) of approximately 15% for a total PML of $6.5 billion. 

TWIA will pursue $3.35 billion in reinsurance on the most favorable terms that can be achieved in the market. This reinsurance funding is in addition to $2.45 billion in statutory funding and $700 million in existing multi-year catastrophe bonds. This will bring TWIA’s total funding for the 2024 storm season to $6.5 billion, meeting the statutory minimum. 

In addition, the Board: 

  • Received a report from staff on policyholder premium financing and directed staff to begin public outreach on TWIA’s interest-free installment payment options; 
  • Received a report from staff about recommended changes to TWIA’s operations and systems from ITS Consulting, Inc., a vendor previously retained by the Association to study processes used by TWIA and insurance agents in issuing policies. 

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The meeting materials and archived recording for the Board meeting are available on our Meeting Library page