Texas Watch, a non-profit citizens advocacy organization active on property insurance issues, submitted an open records request to the Texas Windstorm Insurance Association (TWIA) today seeking information related to the amount TWIA pays in insurance agent commissions. This request comes on the heels of a just-released opinion from Attorney General Greg Abbott that TWIA is a governmental entity for purposes of open records.
TWIA commissions are significantly higher than those paid by private insurance companies. Whereas private insurers typically pay agents 7-10%, TWIA pays its agents 16%.
“Can we avoid a taxpayer bailout of the insurance industry simply by restructuring insurance agent fees? We need to find out just how much taxpayers and coastal homeowners could save if insurance agent commissions paid by TWIA were restructured to reflect those paid by private insurers.” said Alex Winslow, Texas Watch’s executive director. “The threat of a taxpayer bailout of the insurance industry following the next big storm is real. Restructuring agent commissions is one way to trim the fat, easing the burden on coastal homeowners and protecting precious taxpayer resources.”
Texas Watch also submitted a letter to the co-chairmen of the legislature’s windstorm oversight board, Sen. John Carona and Rep. Larry Taylor, suggesting they consider restructuring TWIA agent commissions. The Joint Committee on Oversight of Windstorm Insurance is required by statute to make recommendations to the full legislature on improvements to the windstorm insurance system, including ways to foster competition within the windstorm insurance industry.
“Insurance agents serve as the gatekeeper between policyholders and insurance providers. How can private insurance companies compete with TWIA when agents are being paid nearly double to sell TWIA policies?” asked Winslow. “One way to foster competition in the windstorm insurance market is to level the playing field on agent commissions.”
Under Sec. 2210.654 of the Insurance Code, the Joint Committee on Windstorm Insurance is obligated to report to the legislature by November 15th with recommendations for any legislative action necessary to address problems in the windstorm insurance system, as well as recommendations to “foster stability, availability, and competition within the windstorm insurance industry.” Despite the statutory deadline for the report, the committee’s report had not yet been issued as of the date of this release.