A study commissioned by the Independent Insurance Agents of Texas, and reported on by Insurance Journal includes this food for thought:
The IIAT says the study’s results underscore the need to revamp the funding structure of the Texas Windstorm Insurance Association, the insurer of last resort for windstorm insurance for homes and businesses in 14 coastal counties. It’s been estimated that if a Category 3 storm were to hit the Galveston-Houston area, TWIA could see losses in the $5 billion to $6 billion range, an amount to which it is not prepared to respond under its current funding structure. After about the $1 billion mark, property/casualty insurance companies that operate in the state would be hit with unlimited assessments to cover the remaining losses. Those insurers could then recover the amount of those assessments through premium tax credits, which could in effect remove about $5 billion from the state’s operating budget over the course of several years.
Consider that thought in conjunction with Florida’s move to no longer require Citizens to charge uncompetitive rates. Shouldn’t there be a concern that political pressures will oblige Citizens to charge an inadequate rate, and/or not develop the surplus that would be required by an analogous private insurer? And, if so, what sort of fallout could there be after the next big storm?