On June 19 Governor Rick Perry signed House Bill 4409 which reforms the Texas Windstorm Insurance Association. Additionally, he signed House Bill 51 issuing $150 million in revenue bonds to help the University of Texas Medical Branch in Galveston recover from Hurricane Ike.

For property owners in the Texas Gulf Coast, the news came as a very welcome change. For months, adverse bills had been suggested that would restrict the coverage amounts and property types that could receive Texas Windstorm coverage.

House Bill 4409 enacts reforms to Texas Windstorm that eases funding restrictions and allows coverage of up to $2.5 billion in losses. Damage payments will now be funded by premiums as well as reserves, public securities, commercial paper and other market source financial instruments.

According to Governor Perry “This legislation addresses a number of essential issues that have been making it tough for insurance companies to remain engaged along the Texas coast. “This bill represents progress, incorporating sound business practices to improve the way we handle a critical issue that affects all Texans.”

Texas Windstorm Insurance Association was initially created to be an insurer of last resort. Other reforms in the bill will ultimately reduce the burden of catastrophic storms on the state, such as requiring the Texas Department of Insurance to maintain a list of insurers who voluntarily write windstorm coverage, and developing incentives for insurers to write coverage. The goal is to shift the coverage burden away from Texas Windstorm and return TWIA to an insurer of last resort as intended.

While the goal of more available private insurance for coastal properties might be years in the making, the current needs of homeowners has been satisfied by the signing of HB 4409.