Texas Commissioner of Insurance Cassie Brown has denied Texas Windstorm Insurance Association’s (TWIA) proposed 10% increase in residential and commercial rates for 2025.
In her disapproval order, Brown said: “Insurance Code § 2210.355(c) requires that rates must be reasonable, adequate, not unfairly discriminatory, and nonconfiscatory as to any class of insurer...
“The TWIA rate requirements in Insurance Code § 2210.355 do not include ‘fair’ and ‘just’, but these requirements should be read in conjunction with Insurance Code § 560.002. Doing so means requiring TWIA rates to meet all the requirements in both sections and disapproving filed rates that do not, even if those rates meet some of the requirements.
“The evidence gathered from the comments shows that a rate increase would be unjust and unfair because of the hardships a rate increase would impose on the coast. The ‘fair’ and ‘just’ requirements of Insurance Code § 560.002 have not been met.”
The above means the proposed rate hike is disapproved, even though certain statutory and actuarial requirements – including posting TWIA’s rate adequacy analysis and providing all interested persons a reasonable opportunity to review the filing and submit written comments – were complied with.
It was noted that at existing premium levels, a 10% rate increase would yield approximately $75 million per year for the Catastrophe Reserve Trust Fund.
TWIA’s chief actuary, however, had said that while a 10% rate increase would be a step in the right direction, it would not establish rate adequacy. According to TWIA’s rate adequacy analysis, its current rates are inadequate by 38% for residential coverage and 45% for commercial coverage.
Meanwhile Brown stated: “TDI (Texas Department of Insurance) recognizes that coastal Texans are still recovering from Hurricane Beryl, and increases in rates at this time would exacerbate the burdens they are facing.”
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