The home insurance situation in Texas is about to take a turn for the worse as the Texas Windstorm Insurance Association (TWIA) considers a rate increase to better align with the challenges posed by extreme weather.
During a board meeting on August 6, TWIA’s directors will vote on a proposed 10% hike for both residential and business policyholders for the year 2025. This date also serves as the final opportunity for locals to voice their opinions on the potential rate adjustment, according to The Texas Tribune.
TWIA acts as the insurer of last resort, covering windstorm and hail damage for homeowners in designated disaster areas along the Texas Gulf Coast who can’t secure policies from private insurers. However, it’s important to note that flood damage isn’t part of its coverage.
As of June 30, TWIA’s average residential premium was reported at $2,300—meaning this proposed increase would add $230 to that amount.
This rate hike recommendation came from TWIA’s Actuarial & Underwriting Committee after they found that current rates only cover 62% of residential needs and 55% of commercial needs.
If the increase gets the green light from the board, it will then require approval from Texas Insurance Commissioner Cassie Brown.
The impact of Hurricane Beryl has already been felt along the Texas Gulf Coast, leading to significant damage claims. TWIA reported 16,000 windstorm insurance claims linked to Beryl, expecting payouts to exceed $200 million. Currently, its Catastrophic Reserve Trust Fund holds $450 million, as noted by Texas Scorecard.
Additionally, the Texas Fair Plan Association, another insurer for those unable to obtain private insurance, saw over 4,100 claims after the hurricane as well, according to Taylor from TWIA.
Neither TWIA nor the Texas Fair Plan receives state backing; they both rely on premiums, reinsurance, and other financial sources.
Counties affected by the potential TWIA rate hike include: Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio, Willacy, and certain parts of Harris County east of Texas 146.
By the end of March, TWIA had over 252,000 policies in force, reflecting a nearly 37% increase since 2020.
Texas State Representative Todd Hunter has expressed his disapproval of the proposed increase, urging coastal residents to share their concerns via email to [email protected], stating, “This is a terrible time for such an increase. Together, we can make a difference.”
Currently, Texas homeowners already encounter some of the country’s steepest property insurance rates. According to LendingTree, the average home insurance cost in Texas stands at $5,180 annually for a home valued at $400,000, while the national average is only $2,801.