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In 2015, the Texas legislature authorized the Assumption Reinsurance Depopulation Program, allowing participating insurers to make offers on large numbers of Texas Windstorm Insurance Association (“TWIA”) policies.

The agent review period concluded on October 31 and 18,000 policies were approved by agents for possible transfer from the TWIA to participating private market insurers. Participating companies include Maison Insurance Company, United Property & Casualty Insurance Company, Weston Insurance Company, and The Woodlands Insurance Company.

Beginning on December 1, 2016, the TWIA and the participating companies will present offers to TWIA policyholders. Policies will automatically transfer to participating companies on June 1, 2017. Policyholders may choose to remain with the TWIA by opting out of the program by May 31, 2017.

“Depopulation will help TWIA’s financial stability by reducing its overall exposure to catastrophes by more than $5 billion. The increased competition in the insurance marketplace as a result of the participating depopulation companies will benefit all Texas policyholders,” said the TWIA’s chief actuary, James Murphy.

“We are very pleased with the success of the assumption program to date, and part of the success of this program is thanks to the participating companies and agents,” said the TWIA’s general manager, John Polak. “We understand that simply by fact of where they live, many Texas coast residents have not had a choice other than TWIA, and we are happy to be part of facilitating more choices for wind and hail coverage in our coastal communities.”

The legislature designed depopulation to provide more choice for wind and hail coverage to policyholders in the private market. The TWIA provides policy data to participating insurers who then make offers to assume, or transfer, TWIA policies. Acceptance of any offers by agents and policyholders is completely voluntary.

The insurers had to execute a non-disclosure and terms of use agreement (“NDA”) to access the TWIA policy data and identify policies. In addition, participating insurers had to submit supplemental documentation to the TWIA and the Texas Department of Insurance (“TDI”) for review.

This is the first time this kind of depopulation program has been implemented in Texas, but similar programs are already being used in Florida and Louisiana to transfer policies from the residual market back to the private market.

The TWIA was established by the Texas legislature in 1971 in response to regional market conditions following Hurricane Celia in August 1970. Its stated mission was to efficiently provide essential property insurance products and services for eligible Texas properties when no other options existed.

Learn more: www.twia.org.

About the author:
Victoria Prussen Spears, Esq., is Associate Director of FC&S Legal, Editor of the Insurance Coverage Law Report, and Senior Vice President at Meyerowitz Communications Inc.

Ms. Spears, a member of the team that conceptualized FC&S Legal, designed the FC&S Legal Web site, and drafted its descriptive content, produces the FC&S Legal Industry News column and acquires and edits content for FC&S Legals publications.

A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading Wall Street law firm before joining Meyerowitz Communications, where she consults on a variety of marketing, business, and strategic planning issues for clients.