The Texas Windstorm Insurance Association (TWIA) is set for another expansion of its policy count and exposure, as it readies to accept policyholders who’s cover is being cancelled due to the insolvency of Florida-headquartered insurer Weston.
As the wind and hail residual insurer for the state, the Texas Windstorm Insurance Association (TWIA) tends to pick up a glut of policyholders from insurers that go insolvent.
Weston Insurance headed for insolvency recently, as its assets were deemed insufficient and the carrier failed to secure sufficient reinsurance for the hurricane season as well, including failing to complete an already-priced catastrophe bond.
The insurer was subject to a rating downgrade from Demotech, which has now catapulted it towards this insolvency, with ramifications felt across all states it was operating in.
While the Demotech rating process has driven a very Florida focused discussion, given the challenges that state’s property insurance market faces, the ramifications of losing a rating can spread more widely, if the insurer is active outside Florida as well.
As Weston was, writing business in Texas, Louisiana and Mississippi as well as its home state of Florida.
Weston also participated in the take-out scheme run by both TWIA in Texas and Citizens in Florida, so for some policyholders it could be a case of returning back to the residual markets in each state.
But for others, with policies cancelled they will now become eligible for insurance through the residual markets, which is set to drive more exposure growth for TWIA, as well as for Florida Citizens.
TWIA’s policies in-force began to rise again through 2021 and into 2022, for the first time since about 2014, as the property insurance market became increasingly challenging.
Weston’s policies will drive the increase higher, raising TWIA’s exposure again and perhaps driving the need for additional reinsurance or capital next year, if the policies prove sticky as well.
TWIA said that Weston underwrote a significant number of windstorm policies in Texas coastal counties and so it is working with agents and policyholders that meet its eligibility requirements.