Senate backs revised TWIA financing plan, adopts amendment to ease reinsurance pressure

The Senate on Monday passed a committee substitute to House Bill 3689 addressing funding for the Texas Windstorm Insurance Association (TWIA). Sponsors said the bill shifts some catastrophe financing from high-cost private reinsurance toward state-financing mechanisms, authorizes up to $500 million in pre-event financing and $1 billion in post-event financing, and creates a temporary catastrophic-surcharge mechanism to repay state-provided funds.

Senator Kolkhorst explained the measure is intended to provide a more predictable, lower-cost financing model for TWIA, replacing higher-cost securities and reinsurance arrangements that have increased policyholders' premiums. Debate centered on the size and structure of the financing, the interest and repayment terms (the transcript cites a modeled repayment at Treasury rate plus 2 percentage points), and protections to preserve and rebuild the catastrophic reserve trust fund.

Senator Middleton offered and the Senate adopted a floor amendment that changed the probable-maximum-loss assumption used for planning from a 1-in-100-year event to a 1-in-50-year event, a change sponsors said would significantly reduce reliance on expensive reinsurance and help refill TWIA's catastrophic reserve trust fund. Supporters said the amendment matched prior Senate work on similar reforms and would have increased the CRTF substantially had it been in effect earlier.

The measure won procedural and final passage after floor discussion and the Middleton amendment was adopted; recorded tallies in the transcript show committee substitute passage and final passage recorded with 28 ayes and 3 nays on votes cited in the floor record.