The Texas Windstorm Insurance Association (TWIA) board of directors has set the Association’s 1:100 probable maximum loss (PML) for the 2025 storm season at US$6.227 billion.
To meet its funding requirements, TWIA said that it plans to secure US$1.727 billion in reinsurance under the most favorable market conditions.
This will supplement US$2 billion in statutory funding and US$2.5 billion in existing multi-year catastrophe bonds and reinsurance, bringing TWIA’s total funding for the 2025 storm season to US$6.227 billion.
The board also received reports from staff, including financial updates for 2024 and plans to withdraw funds from the Catastrophe Reserve Trust Fund to cover claims from Hurricane Beryl.
In 2024, TWIA established a total funding of $6.5 billion for the 2024 storm season, including US$1.95 billion in traditional reinsurance and US$2.1 billion in catastrophe bonds.
Hurricane Beryl was the previous year’s most notable loss event, with the hurricane prompting the Texas Department of Insurance to issue multiple catastrophe bulletins, addressing claims handling, storm deductibles, and underwriting practices.
Also of note was the Smokehouse Creek Fire, a record-breaking wildfire in Texas which highlighted the state's vulnerability to diverse natural disasters beyond hurricanes.
TWIA noted that the 1:100 PML for 2025 represents the level of losses that would be expected to be met or exceeded in only 1% of scenarios.
This figure establishes the minimum amount of funding TWIA is required to secure under state law. Along with other statutory funding sources, it also determines the amount of reinsurance TWIA must obtain for the upcoming storm season.
The board also approved the use of a blended catastrophe modeling approach, incorporating Aon’s Impact Forecasting (50%), Moody’s RMS (25%), and CoreLogic’s RQE (25%). These models, which are commonly used in the property insurance industry, produced a base PML of US$5.415 billion using long-term assumptions.
The board also added a 15% adjustment for loss expenses, resulting in a total PML of US$6.227 billion.
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