Local windstorm insurance board member, legislators, against rate increase - Corpus Christi Caller

AUSTIN — Coastal property owners, including those in Nueces County, now face the third rate increase in three years for their state-owned and operated windstorm insurance —and another hike may be on the way.

The Texas Windstorm Insurance Association board of directors on Tuesday approved a 5 percent rate hike during its quarterly meeting.

The board also delayed a decision on whether to enact an additional increase that would depend on how far a property is from the shore.

That decision will be discussed at an Aug. 7 meeting in Galveston.

The increase for residential and commercial properties insured under the association is set to take effect Jan. 1. The association is a quasi-government agency that provides hail and windstorm coverage for residents and businesses in 14 coastal counties and a small part of Harris County.

Board member Georgia Neblett, of Port Aransas, cast the only vote against the latest rate increase.

She said should the board in August approve the additional increase over and above the one enacted Tuesday, it would need the OK from Texas Department of Insurance Commissioner Eleanor Kitzman before it could go into effect next year.

Neblett said the plan to adjust rates based on how far a coastal property is from shore does not make sense when considering the damage done by windstorms.

"The wind will not stop blowing between Port Aransas and Calallen," she said.

The board also approved 5 percent increases each of the last two years, and rates could climb even higher for some property owners should the board and commissioner agree to adjust them based on proximity to the water.

Meanwhile, the 14 coastal counties seeing the rate increases remain among the poorest in the state, according to 2010 U.S. Census data.

Thirty-five percent of people in Cameron County, the southernmost of the counties, live below the federal poverty line.

Overall, poverty rates among the 14 counties average 20 percent, according to census data.

John Polak, general manager of the association, said the agency is planning for future losses.

"We're trying to fund future losses. We're growing, our (number of properties covered) are growing and we need the money to pay those projected claims, expenses and replenish" a fund that can be used in case there's a large event and the current premiums are not enough to cover it, Polak said.

Polak said that fund was exhausted after Hurricane lke in 2008, a particularly devastating storm that has cost the association about $2.4 billion, including $60 million needed to settle policyholder lawsuits.

Neblett said the economic impact of the rate hikes on coastal families is being lost in the larger discussion surrounding the association's need to recover losses from a rare storm in anticipation for another one.

"The coast is an economic engine for the rest of the state," she said Thursday. "People who support that economic engine must live where they work, and these kinds of increases are very hard to bear for the middle class, whether a homeowner or a renter, because the increase is passed on."

Polak also noted that the windstorm association paid out $100 million in 2011, when there were no hurricanes. Instead, he said, Texas saw storms that brought damaging hail and wind.

Costly hail and wind storms in other parts of the state support the notion that windstorm insurance claims are not the exclusive domain of coastal property owners, said state Rep. Todd Hunter, R-Corpus Christi.

"It seems to me to be unfair that other areas of the state have weather disasters which impact private insurance and makes it harder for our area to get it," he said. "Are we part of an entire state or just a section of it?"

Hunter said the Legislature in 2013 once again will review the association's rate structure, a recurring theme for lawmakers who convene only in odd-numbered years.

Hunter said lawmakers also will discuss how the state can convince private insurance companies to again start writing windstorm policies in coastal counties.

Some support a state law requiring an insurance provider doing business in Texas to provide policies for coastal owners, an idea Hunter said would face significant legal challenges.

Another idea — pooling resources across state lines — continues to crop up during discussions of long-term solutions, he said.

The Associated Press contributed to this story.

18 May, 2012