NU Online News Service, June 17, 2:52 p.m. EDT

The Texas House of Representatives has passed legislation to reform the manner in which policyholders file claims and lawsuits against the Texas Windstorm Insurance Association (TWIA).

Meanwhile, Sen. Troy Fraser, R-Horseshoe Bay, has filed a bill, SB 44, to eventually do away with TWIA and require private insurers to step in.

"The Texas Legislature has spent the previous three sessions working on legislation to correct the association and its inherent funding problems," Fraser says in a statement. "I think after three sessions, we should recognize that TWIA is a problem that cannot be solved, and the association should be abolished."

The TWIA reform legislation passed by the House, authored by Rep. John Smithee, R-Amarillo, would allow policyholders to seek only actual damages and some other costs from TWIA, not punitive damages.

Additionally, the bill gives policyholders one year to file a claim with TWIA after a storm. Homeowners get two years to file a claim after a denial. Currently the time a homeowner has to file a claim after a storm "is not clear," says Joe Woods, assistant vice president and regional manager for the Property Casualty Insurers Association of America.

TWIA is still receiving claims from Hurricane Ike in 2008, Woods notes.

"There has to be a cut-off," Woods says. "It shouldn't take years and years to know if your roof is damaged."

These provisions are not retroactive and would take effect only for new and renewed policies with TWIA.

The House bill would also allow TWIA to raise capital with pre-event bonds. Currently the association can only turn to the bond market after an event.

Woods says this would allow TWIA to save money on the bonds and improve liquidity to pay claims following a storm. The association has just $100 million in reserve, he adds.

Special Reports /

Texas Senator Files Bill to Kill TWIA While House Moves Reform

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