Texas windstorm insurer outlines funding mix, reinsurance and new state loan backstop

Jim Murphy, chief actuary for the Texas Windstorm Insurance Association, told the Georgia House study committee on insurance that TWIA currently insures just over 280,000 coastal properties and relies on a layered funding program — premiums, a trust fund, public securities and carrier assessments, and substantial reinsurance including catastrophe bonds — to pay claims.

Murphy said the association, created by the Texas Legislature in 1971, is governed by the Texas Insurance Code (chapter cited in his remarks) and regulated by the Texas Department of Insurance. TWIA writes only wind and hail coverage for 14 coastal counties and a portion of Harris County and operates as a residual market insurer intended to provide coverage when the private market will not.

"We don't directly receive any revenue any money from the state of Texas, and, again, we're not a state agency," Murphy told committee members, explaining that TWIA operates like an insurer: agents submit applications, the association issues policies that meet eligibility requirements, it collects premiums and pays losses. He said annual operating costs run about 5% of premium, lower than typical private-market averages.

Murphy described TWIA's funding order:…