TWIA pushes for major PLM increase to $6.5bn for 2024 storm season
Texas’ insurer of last resort, the Texas Windstorm Insurance Association (TWIA), has recommended that its board of directors set $6.5 billion as the association’s 1:100 probable maximum loss (PML) for the 2024 storm season.
TWIA’s Actuarial & Underwriting Committee met on February 13 and voted unanimously on the limit for 2024.
Over the past year, TWIA has added more than 25,000 policies and the total insured value of the properties it covers has increased by 26.4%. The Committee’s recommendation to set the 1:100 PML at $6.5 billion represents an increase of $2.0 billion over last year’s $4.5 billion PML.
Earlier this week, Intelligent Insurer reported that TWIA may need a 66% increase in limit for its pending reinsurance programme should it structure its PML estimate as it did for 2023.
The 1:100 PML is the probable maximum loss for the Association for a catastrophe year with a probability of one in 100. This benchmark establishes the minimum amount of funding needed to meet TWIA’s statutory funding obligation for the upcoming storm season. In conjunction with the Association’s other statutory sources of funding, the 1:100 PML also determines the amount of reinsurance the Association must purchase.
The committee voted to recommend the TWIA Board use a 75%/25% blend of the RMS and AIR catastrophe models, using the model results based on long-term assumptions, to result in a base PML of $5.67 billion.
Additionally, the committee voted to recommend the board include a factor for loss adjustment expense (LAE) of approximately 15% for a total PML of $6.5 billion.
The committee considered written and verbal public comment and catastrophe model results presented by Aon, TWIA’s catastrophe modeling vendor, in making its recommendation.
The committee is expected to present its recommendations to the TWIA Board when it meets on February 20 to determine the Association’s statutorily required 1:100 PML for the 2024 storm season.
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