TEXAS
Texas Insurers Face $17.6 Million Assessment for FAIR Plan Deficit
AUSTIN, Texas //BestWire// - All property/casualty insurers writing residential property coverage in Texas are facing assessments to cover the Texas FAIR Plan Association’s $17.6 million deficit from 2023, according to a bulletin from the Texas Department of Insurance.
FAIR Plan leadership requested the assessment, which must be paid by carriers within 30 days after receiving notice, the TDI said. The plan has 40 days to report any noncompliant carrier. The commissioner must suspend or revoke the certificate of authority for noncompliant carriers until the assessment is paid in full.
Assessments will be calculated as a proportion of a carrier’s net direct premiums written in Texas during the previous calendar year when compared with the aggregate of direct net premiums written by all insurers in the state.
Insurers can recoup these costs through premium surcharges, the TDI said, noting state code does not allow for other reimbursement options, such as policy fees or including the expense when setting rates.
If a carrier decides to recoup assessment costs, it must surcharge every property policy it has in Texas. Carriers have three years to recoup assessment costs and can start the process any time during that period, the TDI said. However, insurers that decide to start the process late could potentially under collect.
The TDI said these surcharges are not limited to residential property policies and all property insurance policies are affected, including earthquake, farm and ranch insurance, farm and ranch owners insurance, flood, and wind and hail.
There are no regulatory notification requirements, but the TDI said insurers might have an interest in letting policyholders know what caused the additional costs.
The TDI said it is reviewing a separate request for an assessment to cover the plan’s 2024 deficit.
In October, the FAIR Plan and Texas Windstorm Association said they received more than 40,400 claims related to Hurricane Beryl (BestWire, Oct. 1, 2024). The FAIR Plan said it had $70.3 million in losses from the hurricane.
The five largest writers of homeowners multiperil coverage in Texas in 2023, based on direct premiums written, were: State Farm Group, with an 18.88% market share; Allstate Insurance Group, 14.87%; USAA Group, 10.23%; Liberty Mutual Insurance Cos., 8.43%; and Farmers Insurance Group, 7.33%, according to BestLink.
(By Steve Hallo, senior associate editor, BestWire: Steve.Hallo@ambest.com)