A bill that modestly affects future eligibility for insurance sold by the Texas Windstorm Insurance Association has now passed the Texas Senate and the Texas House and should be heading to Texas Governor Rick Perry for signature. S.B. 1702 extends until 2015 the time by which owners of some property that does not comply fully with usual TWIA building standards must obtain “alternative certification.” Property that has non-compliant roofing, exterior openings and exterior wall coverings may thus gain a reprieve. It also appears to provide, however, that after 2015 property worth more than $250,000 must meet regular certification requirements rather than alternative certification.
The bill, my reconstruction of which is contained in this earlier post, appears to trade somewhat greater TWIA losses in the short run against the possibility of loss reduction in the future. This is so because under existing law alternative certification would have been required as early as August 30, 2013. By relaxing the time in which non-compliant property must at least obtain alternative certification, the bill would appear to increase slightly TWIA’s exposure to tropical cyclone losses over the next few years at a time when, by all accounts, TWIA’s finances are in very poor condition. If TWIA survives until 2015, however, its exposure to losses thereafter may be somewhat limited since property valued at $250,000 or greater will need to come into full compliance. Either way, however, the effect of S.B. 1702 is likely to be small and should not be confused by anyone with significant reform of this very troubled insurance program. With the regular session of the 83rd Legislature coming to a close on Monday, however, S.B. 1702 appears to be all that has been accomplished.
We await seeing if Governor Rick Perry adds windstorm insurance reform to the agenda for a special session as his Lieutenant Governor, David Dewhurst, has, in addition to others, now suggested.