Texas House Bill HB696

Texas 2015 - 84th Regular

Caption

Relating to the operation of the Texas Windstorm Insurance Association; affecting surcharges.

Impact

A significant aspect of HB 696 involves amendments to the Texas Insurance Code that lay out detailed conditions under which public securities may be issued. This includes provisions limiting the amount that can be raised through these securities to specific caps during catastrophe years. The implications of these changes are expected to streamline the processes by which the TWIA can mobilize financial resources following major weather events, which in turn aims to enhance the reliability of windstorm insurance coverage in coastal areas. Additionally, the bill mandates a biennial study that will assess market incentives for insurance coverage, potentially impacting the overall framework for insurance options available to residents in high-risk zones.

Summary

House Bill 696 aims to modify the operation of the Texas Windstorm Insurance Association (TWIA) with a focus on addressing surcharges and funding mechanisms for insured losses caused by windstorms and hail. One of the core proposals within the bill includes the establishment of new assessment and premium surcharge protocols that insurers must follow to ensure the association's financial stability. By enhancing the association's capacity to collect surcharges, the bill seeks to secure adequate funding to pay for losses incurred during catastrophic events. This directly aligns with the state's broader obligations to mitigate the financial impact of severe weather on residents and their properties.

Contention

Discussions around HB 696 haven't been without contention. Critics express concerns that the enhanced authority and financial tools provided to the TWIA could lead to higher premiums and assessments for policyholders. These stakeholders argue that frequent insurer assessments, particularly during times of extreme weather volatility, could place an undue financial burden on residents requiring windstorm insurance. There are also doubts about the effectiveness of the proposed funding mechanisms in addressing the long-term needs of the state's coastal areas, which are becoming increasingly susceptible to severe weather events due to climate change.