NU Online News Service, June 28, 3:55 p.m. EDT
A 5 percent rate increase by the Texas Windstorm Insurance Association may lead to more stability for consumers, said an official from an independent agent association in the state.
Lee Loftis, government affairs director for the Independent Insurance Agents of Texas, said last week's decision by the Texas Windstorm Insurance Association would bring a little predictability and stability to rates for coastal clients who just last year suffered through some double-digit increases in the aftermath of Hurricanes Ike and Dolly.
"This takes it from the unknown and moves it to the known," he noted.
The Houston Chronicle reported last week that the Windstorm Association voted to file a 5 percent increase in rates, as allowed by statute, and does not need the approval of the state's insurance commissioner to go into effect.
The Texas Windstorm Insurance Association is the state's homeowners insurer of last resort.
In the past, explained Mr. Loftis, the Windstorm Association has filed what it considered actuarially sound rates only to see them shot down by the insurance commissioner. After a change in the law, the Windstorm Association can now file up to a 5 percent increase without prior approval.
Jerry Hagins, a spokesman for the Texas Department of Insurance, explained that the Windstorm Association can file a 5 percent increase without approval so long as it is done 30 days before the rate goes into effect and no single class has more than a 10 percent increase.
He said the department expects the association's new rate to be filed by Aug. 15, and so long as it meets the proper criteria, there is nothing to stop the increase.
Mr. Loftis said the new rate is expected to take effect Jan. 1.
For agents, Mr. Loftis said they will be feeling the heat from their clients, but he noted that there are not many alternatives for coverage along the coast. However, with a change in the allocation in surcharges, inland agents and companies will be less likely to push back on any increases since the brunt of any surcharges will now fall on windstorm policyholders.
Mr. Loftis said an uneventful hurricane season would be helpful, but admitted the current forecast for this season does not bode well.
"If we can get past this year, we would be in good shape," he said.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.