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M e m o r a n d u m from Corpus Christi Chamber of Commerce
To: Chamber Membership
From: Foster Edwards, President & CEO
Date: 04/27/09
Re: Windstorm Day - May 5
Your Chamber is sponsoring Windstorm Day at the Capitol on May 5. We have invited all 14 area Chambers of Commerce to attend in hopes of having several hundred people at the Capitol. We have also invited Galveston area Chambers and groups from the Rio Grande Valley. We would like to have people from the entire Texas Coast.
To help increase attendance, the Corpus Christi Chamber has a free bus reserved for its members (call 881-1800 to reserve your seat).
Our entire delegation has been extremely helpful in fighting the huge premium increases that have been proposed in some legislation. Senator Juan “Chuy” Hinojosa has been a leader in the Senate and Representatives Abel Herrero, Solomon Ortiz, Jr, and Todd Hunter have done great jobs on the issue in the House of Representatives.
The schedule for the day is not firmed up but plans include a rally on the steps of the Capitol, meetings with key legislators, and a leadership meeting with the Lt. Governor and Speaker of the House. Suffice it to say it will be an all day event. You need to plan to leave early in the morning and get back in the evening.
Ride the bus, drive your car, carpool, or fly, but be there! We need for you to help in the fight to save the Texas Coast from draconian Windstorm Insurance Rates.
As we get more details about the day’s schedule, we will send them to you. If you have any questions please call me at 881-1800. Thanks and see you in Austin.
FROM SAN PATRICIO BOARD OF REALTORS 4-14-09
Click on the link below for a list of lawmakers (Texas House of Representatives Insurance Committee), and let them know how you feel about the citizens of the coastal communities paying the bulk of the cost of windstorm coverage for the entire state of TEXAS... http://www.house.state.tx.us/committees/320.htm Texas Association of REALTORS® issues position on windstorm insurance
One of the major issues of the legislative session is the fiscal condition of the Texas Windstorm Insurance Association (TWIA), the state-backed insurer of last resort for properties along the Gulf Coast of Texas. The TWIA is a pooled fund that offers Texans in 14 counties along the coast wind and hail coverage when they cannot get the insurance in the marketplace.
In 2008, following 24 years without a major weather event, the fund had accumulated about $500 million. However, claims from Hurricane Dolly and Hurricane Ike depleted the fund completely. The state's full liability exposure is over $60 billion with the potential liability from a single event estimated at about $10 billion.
Several bills are being considered to reform or revamp the TWIA: SB 14, HB 911 and HB 3853. The debate centers around whether Texans who live along the coast should have to bear the full burden of funding the insurance program or whether the whole state should participate in ensuring that insurance is available to property along the Gulf Coast. Many other issues, such as the amount of coverage available and types of structures insured, add to the complex debate.
During the Hill Visits, the Texas Association of REALTORS® announced its position on the debate and shared it with legislators:
The Texas Association of REALTORS® believes that all property owners in Texas must have access to risk related property insurance. Furthermore, the Texas Gulf Coast is vital to the Texas economy and a coastal catastrophe caused by acts of nature would greatly impact the fiscal stability and viability of the entire state. Therefore, property owners in the Gulf Coast region of Texas should not be expected to carry the entire financial burden associated with these types of weather related events. We encourage lawmakers to view all current legislative proposals related to windstorm occurrences as a constructive starting point to forge a workable compromise that achieves adequate insurance coverage for coastal property owners (including but not limited to homesteads, vacation homes, investment properties and commercial properties) while at the same time protecting the statewide marketplace.
Articles of Interest & Contact Information
Realtors Have Impact 4-1-09 6:17 p.m.
Elizabeth,
I was in Austin,Tx for Realtors Day at the Capital. We spoke with Todd Hunter. He would like for everyone to send emails to the Houston Association of Realtors for their support and let them know about the importance of this bill not passing. [email protected] and [email protected]
Thanks for your help. Pat Fenton
SB 14 Tabled
From: Tray Bates [mailto:[email protected]]
Sent: Wednesday, April 01, 2009 11:59 AM
To: Elizabeth Roberts
Subject: RE: WIND STORM ALERT!! UPDATE
Elizabeth,
We seemed to have a positive impact on the Senate Committee Hearing for SB14. There was such a large group of REALTORS and others from Corpus Christi with the Corpus Christi Chamber of Commerce submitting their opposition to the bill that they tabled the bill after much discussion. That means they will pick up the discussion another time and we all need to try to be prepared to make a run to Austin to attend the next meeting. The chairman for the committee Senator Fraser was making the argument that the rest of the state doesn’t feel it would be fair to help the people living on the coast to afford the lifestyle of living in their $2MM homes on the beach and suggests that a policy with a premium of $1000 with a 20% increase to $1,200 is not too much to bear especially when he is assessing the insurance companies the lions share of the burden this first year of his phased plan to build up a windstorm pool reserve. First of all I wish my windstorm policy was only $1000 and additionally he tries to allow us to forget we just had a 12% increase on residential premiums in February of this year. Our presence was noticed and it seems the Chairman made a point to approach Foster Edwards of the Corpus Christi Chamber of Commerce to set up a meeting to discuss our opposition to his bill.
As I said before we want the Texas legislature to look at this problem as a Texas issue and not a coastal issue. About 24% of the population of Texas resides in the coastal area and about 50% of the GDP for Texas is created in the coastal area. Also, our refineries supply the fuel for the major airports in Texas and if our coast gets hit with a devastating storm it will dramatically impact the economy for the entire state.
Thanks,
Tray E. Bates CCIM SIOR
Bates & Branscomb Commercial Real Estate
Coastal Realtors Storm the Capital 3/30/09 3:45 p.m.
Elizabeth,
I am in Austin today at meetings preparing for a Hill Visit tomorrow and will be at the committee hearing in the morning. The Texas Association of Realtors has strengthened it's stance on Windstorm and 1600 Realtors will be at the capital tomorrow with a position that "all property owners in Texas must have access to risk related property insurance. Furthermore, The Texas Gulf Coast is vital to the Texas economy and a coastal catastrophe caused by act of nature would greatly impact the fiscal stability and viability of the entire state. Therefore, property owners in the gulf coast region of Texas should not be expected to carry the entire financial burden associated with these types of weather related events."
Thanks,
Tray E. Bates CCIM SIOR
Bates & Branscomb, LLC
Commercial Real Estate
101 N. Shoreline Blvd., Suite 580
Corpus Christi, TX 78401
361-852-2700 Office
361-884-1335 Fax
361-548-1636 Cell
[email protected]
HB 911: A Bill that Divides Not Unites
By
Todd Hunter
State Representative
District 32
Picture a couple in the Coastal Bend area purchasing a new home. Given the current nationwide mortgage situation, they are going to have a difficult time getting an affordable home loan.
Now imagine that they cannot afford windstorm insurance; getting a home loan just got even harder. Banks are understandably hesitant to make loans on houses that are not insured against wind or hurricane damage, and eventually that couple accepts that they just can't buy a house right now.
This situation could be become a very real problem if HB 911, an alleged insurance reform bill recently introduced becomes law. HB 911 proposes drastic changes to the way residents fund the Texas Windstorm Insurance Association (TWIA), as well as the amount of protection it actually affords. All coastal residents should be concerned about the bill's impact on the coastal economy.
The Texas Legislature created TWIA in 1971 with the stated purpose providing Texas citizens adequate wind and hail coverage when it is not available in the insurance market place. TWIA is vitally important to the Texas coast because it protects it from losses incurred by hurricanes. Simply, it is a statewide pool funded by insurance carriers authorized to provide insurance in Texas.
HB 911 would require residents of coastal counties to pay higher insurance premiums than other counties throughout the state. This risk should be divided evenly. Furthermore, under this bill, policy limits for all structures would be reduced across the board, meaning that in the event of a hurricane, people's protection would be reduced. Finally, certain types of residential units, such as second homes and rental properties, might not be covered at all.
Requiring coastal residents to pay a disproportionate share of insurance premiums is tantamount to geographic discrimination. Some opponents say that folks that choose to live on the coast should pay for their choices. When you cut insurance coverage or make it unaffordable along the coast, then you are treating coastal schools, businesses and families unfairly. It is the wrong message to say that if a hurricane devastates your community and your schools, tough luck, you're on your own.
HB 911 also hurts coastal businesses. It proposes to reduce the maximum coverage for
commercial buildings. This not only discourages new commercial investment and development at a time when it is most needed, it could spell disaster for existing commercial enterprises.
The bill's logic is flawed for another reason. The bill overlooks the benefits bestowed on the State as a whole by our petrochemical, port and tourism industries up and down the coast. Coastal communities taken together are all major contributors to the Texas and even the national economy. The coastline provides a strong economic benefit to the State and is a strong provider for our economy. We should be promoting our regions not damaging them.
Also, coastal counties are not the only ones that have weather disasters. Tornadoes and hail storms can ravage other areas of our state. Sometimes these weather events can be extremely costly and expensive. These tornado and hail occurrences can impact insurance coverage, claims and premiums. The coastline has not promoted any legislation to focus on insurance rates and coverage for those specific areas. Such risks should be handled statewide and not by a particular region.
Granted, TWIA is impacted because of the huge effect of hurricanes Katrina and Ike, but imposing additional burdens on coastal communities is not the answer. In fact, it could ultimately make the situation worse if it scares off businesses and families eager to move into coastal areas and rebuild the damage done in recent years. It decreases the amount of people paying premiums into the system and it will decrease TWIA's effectiveness at its stated goal of helping Texans protect their homes and businesses.
Let's be one state, not a divided one on this important issue. Legislation should be uniting not dividing.
If you need to contact us or need information on legislation, please call the Capitol Office at 512-463-0672 or the District Office at 949-4603.
TERRIFYING FEATURES IN HB 911
Hundreds of thousands of Texas Coastal Property Owners have been discriminated against by the cumulative action of individual insurance companies licensed to sell their product in the state of Texas. The Texas Windstorm Insurance Association [TWIA], created by the Texas Legislature as a ‘shared market’ of all Texas insurers, has filled the vital economic need for windstorm insurance.
All Texas’ insurers, collectively, accepted 100% full responsibility from 1971 to 1979, but have been rapidly escaping responsibility ever since. Now, even though accelerated additional insurer withdrawal has caused a five fold increase of TWIA exposure since 2000, proposed HB 911 would reward insurers by eliminating all insurer responsibility other than serving as a ‘pass through’, collecting from policyholder, paying to funding source or reinsurer.
Coastal property owners, however, would be terrorized by changes such as these:
· The first 60 days of a TWIA policy would provide NO COVERAGE.
· Over 40,000 secondary residences now insured would become uninsurable.
· Over 20,000 primary residences could not be insured to their current value.
· Over 2,400 businesses and governmental structures could not be insured to their current value.
· Over 100,000 homeowners’ basic loss of use coverage would be terminated.
· Over 13,000 business’s business interruption coverage would be terminated.
· Many thousands of existing policies eligibility would become questionable [WPI-8].
· The greatly reduced policyholder ‘base’ would be required to buy at least $2 Billion reinsurance from reinsurers who know they are legally required to buy it. [2008, $1.5 B cost $184.5 Million, more than 50% of TWIA gross premium]. This alone could add over 50% SURCHARGE to TWIA premium.
· In addition to reinsurance, TWIA policies would be surcharged to repay a $1.5 Billion loan [terms unknown]; if, like reinsurance, 1 year repayment is required, this SURCHARGE WOULD BE ABOUT +450% of 2008 PREMIUM [5 year, +100%; 10 year, +55%].
· If losses exceed $1.5 B loan and $2+ B reinsurance, additional loans [terms unknown] would be required, repayable with [? %] ADDITIONAL SURCHARGES.
· Current law: rates must be developed using actual experience; would be nullified by HB 911; instead, use of simulated models would be required [in TWIA’S 2009 rate filing, a models exhibit indicated an increase of +52% residential rates], as would a loading for the Catastrophe Reserve Trust Fund [CRTF]; 2009 rates are loaded +15% for CRTF.
· Commissioner of Insurance would no longer hear from several actuaries before determining a correct rate. Instead, TWIA would file its rate, use it immediately, with NO competitive pressure to moderate its cost. TWIA policies cost would be the addition of this unilaterally determined rate PLUS annual reinsurance and loan payment SURCHARGES.
RECAP: Under HB 911 Substantially Fewer people could insure--for much lower amounts of coverage only. Those few would have to pay [100% 2009 rates, +52% simulated ‘models’ +50% reinsurance, +450% [or +100% or +55%] ? loan repayment, + ?% additional loans, if needed = between +257+% and 652+%, if 2008 level of business continues--improbable] paralyzingly higher costs.
If HB 911 passed, what public response could be expected? Would many ‘go bare’?, would they just leave? Will loans be possible? If insurers damage the coastal economy with this bill, could the second tier of counties [Houston] be next? How hard is it to get windstorm coverage in Houston today?
Coastal Windstorm Insurance Coalition [“C W I C”] By Lee Otis Zapp, Jr., GWACI, March 16, 2009
