When Hurricane Ike devastated a large section of the upper Texas Gulf Coast, it exposed not only the vulnerability of man-made structures to nature’s fury but the inadequacy of the measures put in place to deal with the resulting financial ruin.
The Texas Windstorm Insurance Association (TWIA) is an independently operated association of insurers overseen by the Texas Department of Insurance that provides insurance to people in 14 coastal counties who couldn’t otherwise get coverage because of hurricane exposure. But in the aftermath of Ike, TWIA fumbled the ball in spectacular fashion, offering pennies on the dollar to property owners who had purchased insurance policies in good faith. The resulting avalanche of lawsuits and mismanagement exposed an agency in shambles.
Coastal counties are facing an insurance crisis with the number of consumers forced into the Texas windstorm pool and insufficient financial reserves to pay claims in the event of a disaster. State Rep. John Smithee, chairman of the House Insurance Committee, warns that TWIA might not be able to pay claims if another major hurricane hits the coast.
The Greater Beaumont Chamber of Commerce and the Greater Port Arthur Chamber of Commerce will host a Coastal Windstorm Conference on Thursday, Oct. 11 from 9 a.m.- 1 p.m. at the MCM Eleganté Hotel & Conference Center.
Citizens and stakeholders are invited to join their elected state representatives, state senators, county judges, mayors and business leaders from Corpus Christi, Galveston, Beaumont, Port Arthur, and 14 other coastal counties, to seek solutions to the windstorm insurance crisis facing Texas.
“Understanding the problem is the first step to a solution. Joining and forming partnerships with those affected is the second step. We have got to lend our collective voice to encourage insurance options and affordable rates for our area. We need to create a climate to bring the private insurance market back to the coast where 40 percent of the state’s wealth is created and workers are needed to support industry and shipping,” said Jim Rich, president of the Greater Beaumont Chamber of Commerce.
“The increasing cost of windstorm insurance through TWIA and the dwindling number of private insurance companies that will sell windstorm insurance threatens the economic growth of the Gulf Coast. The 14 counties that are covered by TWIA must unite if we are to have any chance of developing a strategy to solve the problem,” said Bill McCoy, president of the Greater Port Arthur Chamber of Commerce.
The problems outlined by Rich and McCoy are real and the danger is imminent.
Smithee, in a recent letter to Texas Insurance Commissioner Eleanor Kitzman, warned that a “number of circumstances occurring over the past 18 months have resulted in a current financial condition of TWIA that is much worse than any of us had anticipated,” citing ongoing litigation costs of the remaining Ike cases; a lack of reinsurance; and a weak bond market that could make it difficult to sell bonds to help finance TWIA. Smithee, a Republican from Amarillo, has long insisted that coastal policyholders should pay higher rates.
According to Smithee, potential losses resulting from a Category 4 hurricane striking the Texas coast could cost billions more than could be paid by the association. He said if a Category 4 storm slammed Galveston, the cost could reach $14.2 billion. If a similar-sized storm hit Corpus Christi, the amount could be $14.3 billion.
Even “under a best case scenario, TWIA will have only approximately a little over $3.6 billion in resources to pay losses that could exceed $14.3 billion,” he wrote.
Conference speakers will include Charlie Zahn, a Port of Corpus Christi commissioner who chairs the Coastal Windstorm Task Force; Galveston County Judge Mark Henry; and a quartet of state legislators grappling with the issue including Rep. Todd Hunter (R-Corpus Christs); Rep. Craig Eiland (D-Galveston); Rep. Allan Ritter (R-Nederland); and Rep. Larry Taylor (R-Friendswood).
Cost for attendance is $30 per person. Registration includes admission to forums and discussions as well as lunch. For more information, contact the Greater Beaumont Chamber of Commerce at (409) 838-6581 or the Greater Port Arthur Chamber of Commerce at (409) 963-1107.