Windstorm association defers talk of rate increases
Association cancels meeting, adjusts agenda
Corpus Christi Caller Times
By Rick Spruill
CORPUS CHRISTI — The Texas Windstorm Insurance Association is delaying discussions about more rate increases.
The association announced Thursday the cancellation of an actuarial committee meeting scheduled Monday to make recommendations for an across-the-board rate increase on windstorm policies.
The association also has adjusted an Aug. 7 board meeting in Galveston. The agenda no longer includes discussion on whether to implement territorial-based rate increases in the 14 coastal counties, including Nueces, said Meg Mayo, association spokeswoman. The windstorm association also provides coverage for areas east of Highway 146 in Harris County.
“Since this is an extremely complex issue involving a broad span of stakeholders, it is felt that additional study and discussion is warranted to arrive at a solution that adequately addresses the interests of all stakeholders,” association board Chairman Mike Gerik said in a statement. “Accordingly, the Actuarial & Underwriting meeting scheduled for July 23 has been canceled and further board action on territorial rating is being deferred.”
The windstorm association has increased rates by 5 percent each of the past three years and is considering a new territorial rate structure that would charge higher premiums for policies closest to the coast.
State Rep. Todd Hunter on Friday sent a letter to Insurance Commissioner Eleanor Kitzman and association general manager John Polakconfirming a July 30 meeting in his Capitol offices with representatives from the Department of Insurance and the association.
Hunter told Kitzman and Polak that he wants to discuss the association’s funding and operations.
The association’s executive board, by law, is permitted to raise rates by up to 5 percent per year but can raise rates even higher with approval from the Texas Department of Insurance commissioner.
Board member Georgia Neblett, of Port Aransas, said Thursday that the board, made up of nine voting members and one nonvoting member, want more time to consider options in place of adding more rate increases to policies. Neblett has voted against the increases.
Longtime insurance professional and former state Rep. Gene Seaman, of Corpus Christi, recently was appointed to fill the other open seat designated for coastal counties.
Letters between state Rep. John Smithee, R-Amarillo, and Kitzman in late June agitated coastal lawmakers and business leaders who for years have been suspect of the way the association calculates risk when developing the financial models upon which it bases decisions affecting policyholders who have no choice in how they insure their homes and businesses against wind and hailstorm damages.
Smithee, longtime chairman of the House Committee on Insurance, has questioned whether the association would be able to pay claims arising from some of the worst-case scenarios involving major hurricanes striking developed areas of the Texas coast such as Corpus Christi and Galveston.
Coastal Bend lawmakers, including state Sen. Juan “Chuy” Hinojosa, D-McAllen, state Rep. J.M. Lozano, R-Kingsville, and state Rep. Connie Scott, R-Robstown, all expressed anger and concern over Kitzman’s comments that the association may not be able to meet its obligations in a set of limited circumstances and that the state is not legally obligated to pay claims should the association fail.
Lawmakers have said the association should hold off on any further rate increases or significant changes affecting policyholders until lawmakers reconvene in January and can address them as a matter of public policy.
Lee Otis “Otie” Zapp, a member of the Coastal Windstorm Insurance Coalition who was slated to make a presentation at Monday’s meeting, said the cancellations mean the association may be reconsidering raising rates, for now.
“All of this suggests that what has happened in the last few days is the association wants to take more time to study the big picture, including the political realities and public sentiments related to additional rate increases and pricing structures,” Zapp said Friday. Corpus Christi Caller Times
