It’s by me. So as not to infringe the Houston Chronicle’s copyright, I’m just going to publish an excerpt of it here. But you can (and should!) read the whole thing by clicking on this link.
Chandler: Legislature should fix state’s storm insurance model
By Seth J. Chandler | July 6, 2013 | Updated: July 6, 2013 6:59pm
This hurricane season is looking very bad for property owners on the Texas Gulf Coast. That’s not just because climate experts are predicting more storms than average, but also because the coast’s largest windstorm property insurer, the state-sponsored Texas Windstorm Insurance Association, is on the edge of insolvency. Unfortunately, Gov. Rick Perry declined to add windstorm insurance reform to the agenda of the Legislature’s first special session and isn’t likely to add it to the ongoing second.
Texas cannot wait until 2015. The governor needs to show leadership and force legislators to try to avoid a calamity even if a positive outcome and a grand fix is not a sure bet.
What could break the impasse? Coastal legislators must recognize that it is simply not sustainable to keep the market out forever and ask inland insureds, who have problems of their own, to pay heavily and in perpetuity for the special risks found on the Texas coast. It doesn’t matter whether that is done directly with surcharges or indirectly through assessments or forcing insurers to sell policies at a major loss along the coast.
The alternative of providing coastal insureds with lower-priced insurance that does not pay when the time comes does their coastal constituents no favors. Inland legislators must recognize that it will take some time to wean the coast off the existing system. And everyone should realize that the law covering how much “extracontractual damages” victims of insurer misconduct should receive does not matter much when the insurer cannot pay its contractual obligations. If a long-term solution cannot be reached, the Legislature could at least clean out bugs in the statute that could reduce the odds of an insurance disaster for a few years.
Pity the governor and legislators who, after a storm leaves blue tarps on unpaid policyholders’ roofs and forces inland Texans to pick up the pieces, explain that they were awaiting the perfect time for legislative action or holding out for something a little better.
Chandler is Foundation Professor of Law at the University of Houston Law Center and principal of the blog catrisk.net, which addresses catastrophic risk transfer in Texas.
P.S. This op-ed is indeed similar to one published a few weeks ago in the Austin American Statesman. But is was originally behind a pay wall and is now almost impossible to find. I appreciate the Statesman for consenting to the repetition.