County residents may face auto insurance surcharge - Brownsville Herald: Local News

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County residents may face auto insurance surcharge

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Posted: Thursday, March 6, 2014 4:00 pm

A Texas Department of Insurance proposal to hit Cameron County motorists with a surcharge on their auto insurance policies to shore up the Texas Windstorm Insurance Association was the subject of a TDI public hearing in Corpus Christi on Wednesday.

The public can submit comments on the proposed rule until 5 p.m. Monday, March 10.

The fight over how to bolster TWIA, buried by claims stemming from Hurricane Ike in September 2008, began soon after the storm that devastated Galveston and caused more than $19 billion in damage.

“This all happened after Katrina and after Ike,” said Ruben O’Bell, chief of staff for Rep. Eddie Lucio III, who attended Wednesday’s meeting. “That’s when they hit the panic button.”

The fear is that post-Ike TWIA would be overwhelmed and unable to adequately cover claims in the event of one or more Category 4 or 5 hurricanes. As of 2009, neither Texas insurers nor the state are legally obliged to make up any shortfall stemming from such an event.

At the center of the debate over who should pay for claims that exceed TWIA’s reserves is whether the burden should be shared among all Texas residents or borne exclusively by residents of the state’s 14 coastal counties.

Despite arguments by state Rep. Todd Hunter, R-Corpus Christi, Lucio and others, the latter approach appears to have the most traction.

“This is a long fight that’s been happening over several sessions,” O’Bell said. “You have (legislative) members who don’t live along the coast who think it’s a coastal problem, and coastal members who say TWIA is a statewide problem.”

The worst bills (from the standpoint of coastal interests) filed over multiple sessions didn’t get anywhere, he said. Hunter has been keeping Lucio and the rest of the Rio Grande Valley legislative delegation in the loop on TWIA developments, O’Bell said.

“Hunter is leading the charge in the conversation between the coastal delegation and TDI, so we’ve been partnered up with him in trying to fight this proposed rule,” he said.

While there’s been talk of a surcharge on all types of insurance policies, the proposal TDI is pushing now strictly involves auto premiums, O’Bell said.

The specific proposed rule changes can be found at the TDI website, Go to “Quick Links,” click “Rules/Codes,” then click “Proposed and Adopted Rules-2014.”

Those who think the burden should be shared by everyone argue that the coast is a big economic generator for the whole state (think Houston), and that it’s only fair considering coastal residents share the risk of insuring damage from natural disasters elsewhere in Texas — tornadoes, wildfires and the like.

“We are hoping for a strong coalition of folks from every county from Orange down to Cameron that can submit testimony against the rule,” O’Bell said. “We’re hoping that it’s going to have enough of an impact at least to allow us to go back to the table to figure out a sensible plan.”

He said the surcharge would have a negative impact on economic development in Cameron County. Also, many county residents already have a hard enough time making ends meet without an additional charge on their car insurance, O’Bell said, adding that it could exacerbate the county’s problem with uninsured motorists.

He said he doubts TDI will implement the new rules until it’s collected additional public input in addition to Wednesday’s meeting. In the meantime, Lucio is trying to keep the issue in the public eye, O’Bell said.

“My boss is trying to do everything he can do to let everybody know this could be bad,” he said.

Submit comments on the proposed rules to

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