Wind insurance

We've talked before about the Texas Windstorm Insurance Association, and the possible calamitous effects that a storm like Ike could have on its finances. Looks like we'll be still talking about it for some time.

Rates for the thousands of property owners who buy coverage from the state's wind pool could soon climb beyond the 10 percent annual cap set by state law.

Texas Insurance Commissioner Mike Geeslin will consider a suspension of the cap at a Friday hearing ``to put all the options on the table,'' said Jerry Hagins, a spokesman for the Texas Department of Insurance.

The department was originally scheduled to consider the Texas Windstorm Insurance Association's request to boost rates 10 percent for homeowners and 16 percent for commercial property owners.

The state-created association, which sometimes asks for more than the law allows, requested the higher rates in August, before Hurricane Ike pummeled the coast.

Geeslin wants to discuss a suspension of the limits set on the wind pool's rates because Hurricane Ike and Hurricane Dolly will leave it with substantial losses, Hagins said.

In 2001, state lawmakers capped annual rate increases from TWIA at 10 percent to keep consumers from being hit with large hikes. The pool was formed to sell coverage for wind damage to coastal property owners who can't find it in the private market.

The law gives the commissioner the authority to remove or adjust the cap if necessary.

The windstorm association, which had 224,468 policyholders as of Aug. 31, has long complained that it needed higher rates to build reserves and cover a growing number of potential losses fueled by a Gulf Coast building boom and a drop in private insurers writing policies in hurricane-prone areas.

Lubbock Online has more.

And though it will be days - if not weeks - before government officials and insurers estimate the damage to both areas, for Republican state Reps. John Smithee of Amarillo and Carl Isett of Lubbock this much is certain: In next year's session, the Legislature will have to pass windstorm legislation that would prevent an insurance crisis in the event of another devastating storm.

"We have lived on borrowed time," said Isett who, as chairman of the Sunset Advisory Commission, the 12-member legislative panel that oversees all state government agencies, could influence the passage of such legislation. Typically, a state agency, board or commission is reviewed every 12 years, and the Texas Department of Insurance is in the current two-year cycle.

"We've got to fix windstorm," Isett said. "Our exposure is too big."

"We have to figure out how to deal with this," added Smithee, chairman of the House Insurance Committee and the author of last year's windstorm bill that was approved overwhelmingly in the lower chamber but was killed by Sen. Mike Jackson, R-La Porte (in the coastal area) in the final hours of the 140-day session.

[...]

"We ought to be the provider of last resort, but a lot of people are not even considering the private sector anymore," said Bill Peacock, director of the Center for Economic Freedom at the Texas Public Policy Foundation, an Austin-based think tank that advocates free-market policies.

The number of policy holders insured by the state-funded Texas Windstorm Insurance Association, or TWIA, increased from 68,756 in 2001 to 224,452 at the end of July, and the total exposure in total claims was $66.1 billion, Peacock said.

"It's a burden" for the state, he said.

What this means, Isett, Smithee, Peacock and others have long argued, is that the state subsidizes coastal residents because the insurance rates they pay are pretty much the same all other Texas home and business owners pay, even though they live in a higher-risk area.

I'm generally loathe to side with the TPPF, but I think they're right here. Folks who live on the coast, especially those in newer, high-end development, some of which probably never should have been built, should pay more for this type of insurance. We can argue over how great the differences should be, and how to be sensitive to folks whose land ownership goes back generations, but the economic argument is a strong one. If the end effect is to make new luxury condo development in certain places unaffordable, that's just too damn bad.

[Beaman Floyd, executive director at the Texas Coalition for Affordable Insurance Solutions,] and others are encouraged that last year, at a forum that the Texas Public Policy Foundation sponsored on the topic, Jackson said that although he killed Smithee's bill with the threat of a filibuster because he considered it unfair to his constituents, the two lawmakers were working to address those concerns. Jackson said he was likely to support Smihtee's bill next session.

Well, of course it would affect Jackson's constituents in a way they wouldn't like, but that doesn't mean it wasn't fair. Be that as it may, I do hope a sensible compromise can be reached, because this situation isn't going to get any better on its own. And while we're at it, perhaps we can also address the matter of requiring windstorm insurers to also cover flood losses.

Meanwhile, Galveston will be open again, sort of, starting on Wednesday.

Galveston residents will be allowed to re-enter the city beginning at 6 a.m. Wednesday, officials said today.

However, only those who live behind the seawall will be allowed to stay. Residents who live in the West End can check on their property, but must leave.

And for those who do stay, the city plans to strictly enforce its curfew, which is from 6 p.m. to 6 a.m., officials said. Violators risk a $2,000 fine.

"We're serious," Galveston City Manager Steve LeBlanc said today. "We're going to have order in this city."

State Rep. Craig Eiland announced that Gov. Rick Perry's office will send 150 state troopers to help with traffic enforcement, since no stoplights are working. Hundreds of stop signs are missing as well, Eiland said, adding that 800 have been brought to the city.

Residents will be stopped at a checkpoint and given information on paper letting them know what to expect, LeBlanc said.

I wish all those who go well. I can't imagine what you'll face.

Meanwhile, via email from City Council Member Sue Lovell, here's another opportunity to help:

Kathy Barton of the Health Department let us know that BARC (the Bureau of Animal Control and Regulation) now has a shortage of cages. If you can donate a cage or cages, please call the BARC phone number, 713.229.7300, to get information.

And finally, I had to go back to the office today to deal with a server issue. I drove home (mostly) the same way as I did Friday, to see if any of the nonworking traffic lights were back in operation. They weren't, which wasn't a big surprise. I did this time continue on Shepherd to West Dallas, and saw that this is a road to avoid for the next few days. Lots of downed trees, mostly around the cemetery, and a couple of severely-leaning telephone/utility poles, which blocked three lanes of traffic - Dallas was basically a one-way eastbound street just west of Dunlavy, which is to say right in front of the Regent Square development. That was being worked on as I drove past, and I would hope it would be fixed by Monday morning. But I wouldn't count on it, so if that's part of your morning commute, I'd suggest an alternate route for the time being.

Posted by Charles Kuffner on September 20, 2008 to Hurricane Katrina