TWIA pays out $120m on Beryl claims, files for 10% rate increase

As of August 5th, 2024, residual market insurer the Texas Windstorm Insurance Association (TWIA) had received over 27,000 claims for Hurricane Beryl and has made payment on more than 10,000 claims at a cost of roughly $120 million.

Hurricane Beryl, the earliest Category 5 storm ever recorded which made three separate landfalls in late June / early July, was fuelled by exceptional sea warmth, in what’s expected to be a very active Atlantic hurricane season.

TWIA’s actuarial team has provided a preliminary estimate of losses from Beryl claims at $400 million, including adjusting costs, but warns that this estimate could change as claims continue to be received and adjusted.

The residual market insurer has said that, combined with heavy spring storms, it expects claims from Beryl will require TWIA to “draw down a substantial portion, if not all, of TWIA’s Catastrophe Reserve Trust Fund, which stands at $451 million as of the end of the second quarter of this year.”

After battering the Caribbean and then Mexico’s Yucatán Peninsula, Hurricane Beryl strengthened again to a Category 1 storm and made its third landfall near Matagorda, Texas.

Insurance industry loss estimates for Beryl have varied, but point to a range of $2 billion to $4.5 billion. Cat risk modeller KCC pegged the privately insured loss from Beryl at $3.3 billion across the Caribbean, Mexico and the US, while CoreLogic estimated wind losses in Texas alone at between $2.5 billion and $3.5 billion.

Moody’s RMS said previously that insured losses from the storm will likely fall between $2.5 billion and $4.5 billion, and Verisk estimated insured losses to onshore property from wind in the US at $2 billion to $3 billion.

Alongside an update on Beryl and related claims, TWIA has revealed that its Board met yesterday and voted to direct staff to file a rate increase of 10% for both residential and commercial policies in its annual filing with the Texas Department of Insurance.

The filing was approved by a vote of 6 to 3, and must be made by August 15th and is subject to approval by the Texas Insurance Commissioner. If the 10% lift is approved, new rates are expected to go into effect for policies issued or renewed starting January 1st, 2025.

Despite only filing for a 10% rate increase on policies, TWIA’s 2024 rate adequacy analysis shows that the insurer’s current rates are inadequate by a huge 38% for residential coverage and 45% for commercial coverage.

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