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TWIA Wind Insurance Rate Analysis

twia rate analysis

It’s not surprising that storm-related insurance rates are increasing with the growing frequency of severe storms along the coast of Texas. Included among growing insurance claims in Texas are wind damage issues.   Nearly every year the Texas Windstorm Insurance Association (TWIA) gears up for their annual August gathering and their rate analysis determines that the current rate standard is inadequate.

In 2018, the TWIA analysis recorded a residential insurance inadequacy of 32% and a commercial insurance inadequacy of 37%. This year the projected inadequacies for residential insurance were 41.7% and 50% for commercial insurance. It doesn’t take an insurance guru to see how significant these changes are, but what does it mean?

Insurance companies and associations alike compare previous years’ data in order to determine what the standard rates should be for different kinds of insurance. Because insurance companies are a business, the ability to profit must take center concern in factoring in what and how to charge their policyholders. If an insurance company gives out too much money, they run the risk of stifling their ability to profit.

What Do Rate Changes Imply?

Once all relevant information has been gathered and analyzed, the TWIA can make a determination about what they think the rates should be for the next year. They base the proposed rate change off of last year’s data and the projected weather patterns in the next year. If the rate change is less than a 5% increase, it does not need to be directly approved by the Texas Insurance Commissioner. If the change is greater than 5%, then it must be signed off on by the Insurance Commissioner.

Rate adjustments for storm-related insurance policies indicate important information for both policyholders and insurance companies. Beyond the fact that policyholders will have to pay more, or that insurance companies will be charging more, rate enhancements make statements about the expected severity of weather and the climatological circumstances in the areas affected.

In Texas’s coastal communities, wind-related damage is expected to grow in frequency and severity. The weather trends over the last decade seem to follow this pattern to potentially devastating effect.

Throughout the state of Texas, especially the coast,  it’s vital for homes and businesses to have insurance for wind damage. The problems associated with wind damage are sometimes unavoidable no matter how seriously and strategically you plan. Unfortunately, even having insurance isn’t enough sometimes.

When insurance companies dispute the severity of wind damage, contacting a knowledgeable insurance attorney can help you secure the monetary assistance your policy entitles you to.




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