History and Purpose
The Texas Windstorm Insurance Association (TWIA) or “Wind Pool,” was formed by law in 1972 to provide a market for windstorm and hail insurance in the coastal areas of Texas. The TWIA provides coverage only for those two perils for commercial or residential property risks located in the 14 "first-tier" Texas counties: Cameron, Willacy, Kenedy, Kleberg, Nueces, San Patricio, Aransas, Refugio, Calhoun, Matagorda, Brazoria, Galveston, Chambers and Jefferson. The Commissioner added a small area of Harris County (“second tier”) to the approved area in 1995.
TWIA issues policies in its own name and pays losses directly to the policyholders.
All insurance companies that write property insurance in Texas are required to be members of TWIA.
Where the Money Comes From
In a typical year, TWIA pays claims out of premiums paid by policyholders. If a deficit occurs due to catastrophic losses during a given year, TWIA can use accumulated retained earnings from previous years’ operations (the Catastrophe Reserve Trust Fund) and private reinsurance arrangements to offset the deficit. Under certain scenarios, member insurance companies can be assessed for additional funds to pay claims. After a certain amount has been assessed, insurers can recoup by offsetting premium taxes otherwise payable to the State of Texas.