There’s a worthwhile article in the Corpus Christi Caller written by Rick Spruill. It addresses both the serious funding problem faced by TWIA today and the solutions being developed by coastal legislators and some coastal interest groups. The article relies extensively from some of the blog entries here at http://catrisk.net, including ones here and here.
I’ve sent an e-mail to Mr. Spruill on the article and want to post that email here.
I agree that this (http://m.caller.com/news/2012/dec/26/texas-windstorm-insurance-association-could-face/) is an intelligent and important article. Moreover, even though it contains some criticism of what I have said on http://catrisk.net, it is a balanced presentation. Two comments, neither of which reflect negatively on Mr. Spruill’s article:
1) I don’t think Todd Hunter’s comment that Chandler “wants TWIA policyholders to pay for everything ” is quite right. I want TWIA policyholders to pay for a much larger proportion of the losses their insurer is likely to pay and for that coverage to either be real (i.e. backed up by viable financial structures) or for very clear warnings given by TWIA and TDI to policyholders about the probabilities and consequences of TWIA insolvency. Although in concept I agree that TWIA policyholders should pay for TWIA risks — I understand that there will be a period of transition required. But the direction of the transition should be towards the assumption of responsibility, not towards shirking it. I would not be averse, for example, to some sort of grants or subsidized credit being made available, for example, for hardening coastal properties (“mitigation”) and would much rather see money from people other than TWIA policyholders going to reduce the scope of the risk rather than used to bail them out after a fairly foreseeable disaster occurs. I agree that our Texas economy is all interconnected and that if the coast were to suffer a hurricane in which a substantial number of policyholders had large claims against an insolvent insurer, it would hardly be only the coast that suffered.
2) The article is correct that my computations do not take account of the double dip that TWIA policyholders with automobiles (and non-wind policies) would incur. I don’t have the data that would permit quantification of this complication in part because the Zahn Coastal Taskforce plan is not explicit enough about what sort of insurance would be subject to surcharge. I wish I did have the data. If anyone (like TDI) does have relevant data and would share it, I’d be happy to revise my conclusions. And I will add a caveat to the existing posts reflecting this matter. I do not think, however, that inclusion of this complication will alter the fundamental conclusions of my analysis.
Best wishes to all for a happy, healthy and hopefully hurricane-free New Year.