Houston Chronicle publishes op-ed on TWIA problems

A protracted blue roof does not make for a happy voter

A protracted blue roof does not make for a happy voter

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.



Fox 26 Understands the Issue, the Houston Chronicle does not

Fox 26 in Houston will be airing a story tonight on the problems that will result from failure to develop (thus far) a sensible bill reforming TWIA that has broad political support. I’ll be in it. The story is particularly timely in that today’s failure of the legislature to address the only bill to emerge from a committee on the subject, S.B. 1700, is further evidence that time is running out.

And, might this be the time to criticize the Houston Chronicle and make yet more people annoyed with me? Perhaps so.  You can believe me on this issue, you can believe coastal legislators, or you can believe whom you want about the merits of various reform efforts,  but everyone who has bothered to look understands that the financial troubles — some would call it insolvency —  of the largest insurer on the Texas coast — right as hurricane season begins — is a pretty major issue. It affects tens of thousands of people in the Chronicle’s circulation area as well as hundreds of businesses and government bodies along the coast.  And, if what I am saying is right — which might just possibly be the case — the insolvency of TWIA following a significant storm this summer is going to affect every single person in Harris and surrounding counties. Indeed, on this issue, I suspect, some legislators who don’t like my reform ideas very much would probably agree.

And what coverage has the Houston Chronicle offered on this issue?  Nada.  Zilch. Less than the Corpus Christi Caller with its far more limited resources.  Less than even the Galveston Daily News. I know newspapers are really struggling right now and actually covering political news is a challenge, but I look at the Chron.com website right now and I see fascinating reports of a Fort Bend teenager bagging a large alligator, a story on the failure of an excellent restaurant to open in the Heights, and some local crime stories, but nothing on this issue.  And it’s not just this way today.  There has been silence from the Chronicle for the whole legislative session.  If a local TV station can cover this story competently, so too can Houston’s major daily.

P.S. For newer readers of this blog, please do not take my difficulties with the failure of the Senate to take up S.B. 1700 as support for that bill.  For reasons discussed elsewhere, I have serious problems with the bill.  My point is that the status quo is a disaster waiting to happen. A seriously amended S.B. 1700 could become the framework for a two-year patch up of TWIA. But if things don’t happen really soon, there will be no opportunity to get a bill through both houses of the Texas legislature, let alone one that could be in place before September 1, 2013.