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November 17, 2008

State windstorm coverage rates leap

By Sherry Koonce



By Sherry Koonce

The News staff writer

Citing catastrophic losses, including those from Hurricane Ike, the Texas Department of Insurance granted a rate increase for the Texas Windstorm Insurance Association, the state’s insurer of last resort for windstorm coverage.

Homeowners insured through the state’s windstorm insurance association, will pay an additional 12. 3 percent, while commercial policyholders will see a 15.6 percent. The rate changes begin Feb. 1 at the time of the policy’s renewal.

For Ester Benoit, the rate increase will make a hardship caused by Ike, even harder.

Benoit hasn’t reopened her seafood restaurant under the Rainbow Bridge since Hurricane Ike washed ashore two months ago. She’s waiting on an insurance settlement, while her employees wait on their jobs.

Now, she’s learned the cost of insurance is going up — possibly before she serves her first plate of fried shrimp from a remodeled building.

“This is not good news at all. Insurance was so high anyway, and now it’s going to be more expensive. This is going to be tough for business owners,” Benoit said.

And, that’s just the commercial end.

Business owners who have windstorm coverage through the state, could be hit twice if their homeowner coverage is also written by the state association.

“A double whammy,” Benoit said.

Port Arthur City Commissioner Martin Flood, who owns a construction business, said he expected an increase because of the storms, but was not prepared for one so large.

“I thought it would be 2 or 3 percent. That’s an increase, but this is a quantum leap,” Flood said.

The rate increases are part of a long-term goal to build the windstorm association’s strength, Mike Geeslin, Texas Department of Insurance Commissioner, said in a press release issued Monday.

“While some may argue that they need to be higher, we need to be mindful that tour coastal region is in recovery. Coastal residents are overburdened as it is,” he said.

To ensure that all claims submitted to the state’s windstorm association’s policyholders can be paid, state law permits the Association to assess member insurance companies if the Association’s funds are depleted.

These assessments may be offset by premium tax credits, which reduces the amount paid by insurers into the state’s general revenue fund.

To date, insurers have been assessed $530 million to pay claims from hurricanes Dolly and Ike. Of that, $230 million is subject to tax credits.

Mark Hanna, spokesperson for the Insurance Council of Texas said the agency agreed the rate increases were needed.

“We agree with Commissioner Geeslin that his decision today to raise both TWIA commercial and residential rates is he first step needed to fund the depleted Catastrophe Reserve Trust Fund,” Hanna said. “We hope that members of the Texas Legislatures will address this problem in a manner that will provide financial stability for the Windpool and its policyholders.”

skoonce@panews.com

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