Budget, commissions, and more also discussed
The Texas Windstorm Insurance Association (TWIA) board of directors recently convened for its final quarterly meeting in Corpus Christi, with the agenda including several key topics, from operational updates to the association’s reinsurance program for next year.
One of the critical actions taken by the board was to initiate the process for the 2024 reinsurance program. The board directed TWIA staff to collaborate with Gallagher Securities and other recommended entities to place the 2024 reinsurance program effectively.
The board also approved the association’s budget for 2024. The new budget anticipates an increase in policies in-force, reaching approximately 265,000 by year-end. Direct written premiums are projected to rise to over $815 million. Reflecting this anticipated growth, TWIA’s net operating expenses for 2024 are set at $40.2 million, an increase from $35.2 million in 2023.
Despite the rise in operating costs, the budgeted expense ratio – operating expenses as a percentage of earned premiums – is expected to decrease from 6.5% to 5.4%. Additionally, the budget forecasts that the Catastrophe Reserve Trust Fund will grow to $461 million by the end of 2024, up from the current $278 million.
The board also addressed the issue of commissions paid to insurance agents for TWIA policies. Currently, commissions are set at 16% for both new and renewal policies. After reviewing a study on these commissions, the board decided not to make any changes to the commission structure.
Another agenda item was the Automatic Adjusted Building Cost Factors, which impacts the coverage amount of TWIA residential policies. These factors are designed to adjust coverage limits in line with changes in building costs at the time of policy renewal. Starting in April 2024, most TWIA policy renewals will automatically see an approximate 12% to 13% increase in the policy’s limit of liability.
The meeting also included the annual performance evaluation of the general manager, which was conducted in a closed session. Subsequently, the board voted for a 3.25% salary increase for the general manager.
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