The Texas Windstorm Insurance Association (TWIA) board of directors has approved a US$40.27 million operating budget for 2025, up slightly from US$40.24 million in 2024.
A significant component of the budget includes US$485 million allocated for reinsurance, an increase from the US$397 million spent on reinsurance in 2024. The additional reinsurance funding is aimed at addressing a depleted catastrophe reserve trust fund and a growing exposure base.
TWIA’s reinsurance program for the past year provided aggregate loss protection ranging from US$2.45 billion to US$6.5 billion.
For 2025, the association plans to purchase additional reinsurance, though the final amount will depend on the board’s determination of the 100-year probable maximum loss (PML), according to James Murphy, TWIA’s chief actuary and vice president of enterprise analytics.
In a report from AM Best, Murphy noted that the reinsurance purchase will need to replace at least US$450 million previously held in the trust fund.
The reinsurance allocation comes in the wake of Hurricane Beryl, which TWIA projected would cost US$455 million – essentially depleting the association’s catastrophe reserve trust fund. TWIA expects US$492 million in total losses for the fiscal year, leaving it with a projected US$442 million deficit.
In addition to the storm’s impact, TWIA cited a 10% increase in policy count and a 20% year-over-year rise in insured exposure as factors necessitating the reinsurance budget increase.
Beyond approving the budget, the board addressed administrative matters. It approved a 3.5% salary increase for general manager David Durden and discussed filling the vacant board chair and vice chair positions. TWIA anticipates these vacancies will be resolved at its next meeting in February.
During its last meeting, the association reported that it anticipated higher reinsurance costs in 2025 due to the need for additional coverage following the depletion of the Catastrophe Reserve Trust Fund. The fund was used to pay losses and adjustment expenses stemming from Hurricane Beryl, along with rising policy exposures.
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