COASTAL INSURANCE REVAMP GETS PRELIMINARY APPROVAL

Senator Bob Hall of Edgewood answers questions about his bill to ban the use of red light cameras in Texas.

(AUSTIN) — The Senate tentatively approved a bill Wednesday that seeks to strengthen the Texas coastal insurance pool that covers more than a quarter of a million Texas homeowners. The Texas Windstorm Insurance Association is a state-backed policy underwriter that acts as the insurer of last resort for homeowners that live in hurricane prone areas along the Gulf Coast.

Friendswood Senator Larry Taylor told colleagues that TWIA is in a lot better shape this session than it was just a few years ago. Last session, said Taylor, TWIA was mired in litigation from Hurricane Ike in 2008. This year, he said, the fund is much better off and has enough money to cover liability from a 1-in-100 year hurricane. Private insurance underwriters, once unwilling to accept the risk from writing windstorm insurance policies for Gulf Coast areas, are even starting to explore re-entering the coastal market. Though it is improving, Taylor said there still are some reforms that must be implemented.

Taylor's bill, SB 900, would first change the name of the agency to the Texas Coastal Insurance Agency and it would alter the makeup of the board of directors. The current nine member board is made up of four representatives from the insurance industry, four representatives from coastal areas, and one member from the inland part of the state. The practical effect of this, said Taylor, is that the single inland member ends up being the deciding vote in too many matters where coastal and insurance interests conflict. The new board will be made up of three insurance, three coastal and three inland representatives.

The bill will also give the Insurance Commissioner the ability to outsource the management of the renamed agency to a private third party. While the current management has been doing a better job, said Taylor, the threat of finding outside management will act as an incentive to maintain good management policies. It would also require the TCIA to have enough resources to cover a once-in-a-century possible maximum loss, which is about $4.9 billion.

Taylor responded to a number of questions raised about how inland insurance rates will respond to changes to coastal policies. For several sessions now, opponents of state-backed coastal insurance plans have questioned the fairness of inland homeowners having to pay more because people want to live in hurricane prone areas. Taylor answered these critics by saying that this already happens; all policy holders help bear the cost of a hailstorm in Dallas or a tornado in the plains. Also the size of the Texas insurance market, he said, means that cost is spread over a $15 billion industry. "Folks on the inland part of the state will never notice," he said.

In other floor action Wednesday, the Senate passed a bill to ban the use of red light cameras. These automatic devices photograph cars that run red lights so that cities can issue citations. Senator Bob Hall of Edgewood believes that these cameras violate due process and are intended more to raise city revenue rather than improve public safety. His bill, SB 217, would prohibit the use of these cameras statewide.

The Senate will reconvene Thursday, April 23 at 11 a.m.

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