The Texas Department of Insurance listened to the lobbyists and not the people when it recently issued rules allowing surcharges on area residents in the case of catastrophic weather events, coastal officials said.
“What we asked for in three public hearings is to give the legislature an opportunity in January [2015] to address this issue, and [the insurance commissioner] did not see fit to do that,” said Charles Zahn, chair of the Texas Coastal Windstorm Task Force. “We think it’s totally unfair.”
A Port Aransas lawyer, Zahn has served as chair since the inception of the task force in 2012, when he was appointed by State Rep. Todd Hunter (R-Corpus Christi), who formed the organization. Since that time, he has been up and down the coast educating and lobbying people in 14 counties. He made 39 trips to Austin during the 2013 legislative session to enlist support beyond the Gulf Coast.
“I’m starting that process again,” Zahn told Corpus Christi Business News after TDI’s action. “It’s going to take a big lobbying effort. Our local elected officials are with us. We have to go to other legislators and help them understand this is a statewide problem, not just a coastal problem. We need insurance we can count on and insurance we can afford.”
Zahn uses the 2012 fires in Bastrop as an example when explaining this tough topic in his lobbying efforts.
“The first bill that came out the last legislative session appropriated about $650 million for fire loss in Bastrop,” he pointed out. “Bastrop is a part of Texas, its people are Texans, and we don’t mind helping take care of them — we’re Texans also. TDI is discriminating against the coast when they won’t do the same here.”
Local officials share concerns
TDI said the new rules were issued in an effort to replenish the coffers of the Texas Windstorm Insurance Association as provided by a law passed by the Legislature during the 2011 session. Created in 1971 to provide windstorm and hail coverage to coastal residents unable to obtain policies from the voluntary insurance market, TWIA has not always had sufficient funds from premiums to pay claims. Coupled with legislation from 2009, TWIA now has the power to issue bonds to provide additional money to pay claims.
Hunter reacted immediately to the agency’s decision in May.
“These rules are unfair to our 14 coastal counties,” Hunter said in a statement. “These rules amount to a tax only on coastal residents.”
Hunter was especially outraged TDI did not take into account the comments and opinions of area residents at three public hearings held before the decision.
“It seems that the public comments made at the hearings held in Beaumont and Corpus Christi were ignored,” he said. “I am disappointed that the Texas Department of Insurance did not allow the Legislature to handle this, since in my opinion this is a legislative policy matter.”
Even the chair of the TWIA, the entity that will be levying the surcharge, agreed “the rules in general are unfair.”
“The coast has been singled out,” Georgia Neblett of Port Aransas told the Business News, adding she has formed a legislative committee to look into alternatives once the 2014 storm season is over this fall. “Beyond giving suggestions, that’s all we can do. The TWIA board has no control.”
Hunter vowed to organize coastal communities to fight the ruling. He pointed out that it goes against the principles of how insurance works: Damages for a few are supposed to be paid for with premiums from the many.
Both he and Zahn have set their sights on the 2015 legislative session for redress. Hunter urged anyone with property along the gulf to contact legislators across the state to seek their support.
Zahn was a little more pointed when asked about what people can do now that the rule has been officially approved.
“Pray to God, seriously, that we don’t have a catastrophic event and then that the Legislature will go into session and resolve it,” he said.
The Texas Department of Insurance answered questions from the Business News about the insurance ruling via email recently, which were printed in the July issue of the newspaper.
