Taxpayers will be responsible for at least $6 million in Hurricane Ike-related claims made to a Texas-subsidized insurance program. The so-called windpool insurance provider is still swimming through unprocessed claims, according to a Wednesday article in the Houston Chronicle.
Although the Texas Windstorm Insurance Agency (TWIA) lowered its claim assessments from $4.2 billion to $2.7 billion this week, the revised assessment was based on less than 10 percent of the Ike claims made so far, the Chronicle reported. The Association has received about 77,000 of an expected 92,000 claims. The program—which provides coverage for wind damage to those who would otherwise be uninsured—covers claims up to $2.1 billion; the state is responsible for the rest.
Although the program and others like it along the Southern U.S. coast have been touted for helping homeowners who might not be able to afford insurance, others decry what they see as publicly subsidized encouragement to build in areas threatened by extreme weather.
"We're engineering increased vulnerability to storms," Seth Chandler, a University of Houston insurance law specialist told ClimateWire last month. "By having low insurance rates, we are supporting coastal development."
Program mismanagement, political manipulation of rates, overuse, and an inability to adequately hedge risk plague the plans in many states, according to the ClimateWire report. Yet encouraging coastal development can also provide much-needed tourism revenue and fund infrastructure.
Regardless of the system’s merits, the Texas program will have to navigate some troubled waters, according to the Chronicle report. That includes payouts of more than 70,000 known Ike claims at an average of $30,000 each and another $5.3 million the Texas Department of Insurance wants the program to pay for the building inspections the Association requires from its policyholders. Those woes, along with earlier losses from Hurricane Dolly, could leave the program adrift, according to comments by Association Director Jim Oliver in both articles.
"It's too early to tell what the losses will really be," he told the Chronicle.
Jolie Breeden is the lead editor and science communicator for Natural Hazards Center publications. She writes and edits for Research Counts; the Quick Response, Mitigation Matters, Public Health, and Weather Ready Research Award report series; as well as for special projects and publications. Breeden graduated summa cum laude from the University of Colorado Boulder with a bachelor’s degree in journalism.