Reforming the Texas Windstorm Insurance Association (TWIA) was a major issue in the recent special legislative session. TWIA was founded to provide low cost windstorm insurance for people living on the Texas coast. However, TWIA’s rates, which are far below the market rate, have forced many private insurers out of the area. As TPPF has documented, in Next Steps to Reforming Texas Windstorm Insurance, “Its unrealistically low rates have made TWIA an unbeatable competitor which is crowding out the market…”
While the effort this session to rectify some of TWIA’s shortcomings is a positive step in the right direction, it missed the major problem: the state of Texas should not be in the windstorm insurance business in the first place. TPPF has noted the problems with government initiatives like this: “As we have seen in state after state along the Gulf Coast, state-run systems end up helping no one.”
There is one ray of hope: Section 60 of the TWIA bill (HB 3) calls for the creation of an interim study committee to look into alternative ways to provide insurance to the seacoast or whether Texas should remove itself from the business altogether. Hopefully, this will help this issue to be resolved sometime in the near future.
Josh GrimesResearch Fellow, Center for Economic Freedom