Coastal insurer could be headed for receivership

The insurer of last resort for virtually all property owners along the Texas coast is considering going into receivership, a move just short of bankruptcy.

If officials for the quasi-governmental Texas Windstorm Insurance Association decide to pursue receivership, it could leave many coastal residents and businesses with no coverage as the summer storm season looms. It would also throw into question millions of dollars in pending claims from past hurricanes and potentially hamstring growth along the coast.

“To me, receivership is the last possible step that anyone should be talking about, ” said state Rep. Todd Hunter, R-Corpus Christi. “Some people liken it to bankruptcy. To me, receivership is inappropriate, and it is the wrong thing to do. Receivership could have financial implications for homeowners and commercial property throughout 14 coastal counties.”

TWIA, as it is commonly called, was created by the Texas Legislature in 1971 to provide windstorm and hail coverage to people unable to get insurance from the voluntary insurance market. The association insures against windstorm damage, and it has been struggling with solvency since it was hit with a barrage of lawsuits after Hurricane Ike slammed into the Texas coast in 2008.

More at http://www.statesman.com/news/news/coastal-insurer-could-be-headed-for-receivership/nWymS/ .

[font color=green]If TWIA falls into receivership, then claims that are currently filed but not paid may receive a fraction of the total loss. Current policyholders may find themselves with insufficient coverage which could cause foreclosures. The economic vibrancy of the entire coastal region could be in jeopardy as new construction projects grind to a halt due to the lack of underwriting capacity or increased premiums.

One of the funding mechanisms being considered to keep TWIA afloat is Senate Bill 1700 proposed by Larry Taylor (R)--Friendswood. This bill would backstop the coastal policies for this coming hurricane season with a $4 billion special assessment on insurance carriers and reinsurance companies which will certainly entail premium increases in the coastal area and most likely statewide.

Let us hope that the state does not suffer a hurricane this upcoming season or our Tea-publican representatives are going to appear very hypocritical voting for federal disaster relief aid after casting no votes on the New Jersey/New York relief package. Our Tea-publican state officials are not in a much better political position either.[/font]