The Texas Windstorm Insurance Association (TWIA) was established in 1971 by the Texas legislature to provide insurance coverage to Texas’ 14 coastal counties frequently affected by hurricanes and other similar storms. It is funded through premiums paid by its policyholders, just like any other insurance company.
Per the association, TWIA also has the ability to issue bonds that are backed by policyholders, not the state. This and TWIA’s other alternative sources of funding come into play only when there is a major hurricane.
A coverage vacuum exists on the coast for wind and hail damage as private insurance companies have declined to offer much service, or service that can be afforded, to those areas — deeming the chance of payout by the businesses all too likely. Through June 2021, TWIA had 188,185 policies and brought in over $55 million in premiums so far that year. During 2020, that total was nearly $370 million.
It is meant to be an insurer of last resort, the final available option for individuals who cannot find insurance coverage elsewhere.
TWIA has been accused by officials on the coast of being less responsive to its policyholders than the industry it mimics. The Texas House Committee on Insurance held an interim hearing in January 2020 that focused on the TWIA, much of which maligned the association’s increasing rates charged to its policyholders.
Rep. Todd Hunter (R-Corpus Christi) has lobbied hard against TWIA rate hikes, including last year when the Texas Department of Insurance (TDI), which oversees TWIA, rejected the association’s proposal to raise rates 5 percent.
In 2021, the legislature passed Rep. Mayes Middleton’s (R-Wallisville) House Bill (HB) 769 that restricts when the association can vote on a rate increase and requires it to purchase reinsurance and catastrophe modeling from different companies.
The original version included a requirement that TWIA move its headquarters to one of the 14 counties it serves, rather than remain in Austin where it currently sits. But that did not make the final product.
Back in July, Rep. Briscoe Cain (R-Deer Park) sent an opinion request to the OAG inquiring whether Texas’ prohibition against state agencies lobbying on legislation. This inquiry, Cain said, is due in part to TWIA’s alleged lobbying efforts on the headquarters relocation provision.
“Records from TWIA indicate that, before HB 769 passed the House in late April of 2021, staff from the Association met with seven House members and the Speaker of the House on their ‘concerns’ with TWIA Headquarters relocation,” Cain’s letter reads.
“Shortly after House engrossment, staff from the Association met with staff of the Governor once, staff of the Lieutenant Governor once and staff of members of the Texas Senate or a Senate on six separate occasions to discuss TWIA’s ‘concerns’ with the relocation of their headquarters.”
He also contended that the premiums are “monies TWIA receives collected under the portents of state law” and thus classify as appropriated funds, despite not being directly appropriated by the legislature like the funding for its parent entity the TDI.
Cain asked three questions of the OAG:
- Is the TWIA deemed a state agency?
- If it is, did the meeting(s) violate the lobbying prohibition?
- How would that violation be punishable?
Citing the Sunset Advisory Commission, Paxton concluded “that ‘TWIA is not a state agency’ and that ‘TWIA employees are not state employees and do not receive state benefits.’”
To that end, in the opinion of the OAG, a court would not find the TWIA to have violated the state agency lobbying prohibition. Opinions by the OAG are non-binding analyses of law and assessment of the court’s likely position on the issue at hand.
Pursuant to the OAG’s assessment, TWIA may lobby directly or use its funds to contract out lobbying responsibilities.
“This Attorney General’s opinion is consistent with case law and previous opinions concerning TWIA,” TWIA Vice-President of Communications Jennifer Armstrong said in a statement to The Texan. “The Association is committed to providing lawmakers with the information they need to conduct oversight and enact legislation that enables TWIA to be there for our policyholders when they need us most.”
About the lobbying allegations outlined in Cain’s letter, Armstrong said, “Communications with lawmakers are conducted primarily by TWIA’s Communications and Legislative Affairs Department with assistance from other departments as appropriate.”
She stated that the organization neither engages in lobbying nor hires an outside lobbyist.
“A win for lobbyists. A loss for taxpayers,” Cain called the opinion. “It gives me renewed energy to continue fighting for reforms on behalf of ratepayers.”
Middleton echoed Cain’s displeasure.
“This AG opinion will allow TWIA to continue to try and defeat legislation that would reduce windstorm insurance rates that continue to burden Gulf Coast homeowners and small businesses,” he told The Texan. “Windstorm insurance costs are greater than the property tax bill for many Gulf Coast homeowners and small businesses.”
The association’s board is made up of individuals representing the areas of coverage along with three members representing the insurance industry and three inland representatives.
There were three other bills passed during the 87th legislative session dealing with TWIA, but HB 769 had the most ambition of reform with its attempt to move the association’s headquarters.
Correction: An earlier version of this article misstated the name of the Texas Department of Insurance. We regret the error.
Disclosure: Unlike almost every other media outlet, The Texan is not beholden to any special interests, does not apply for any type of state or federal funding, and relies exclusively on its readers for financial support. If you’d like to become one of the people we’re financially accountable to, click here to subscribe.
Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.