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| Breaking News |
Monday 15th June 2009: 09:42 |
Texas lawmakers decide not to buy reinsurance for 2009
The Texas Windstorm Insurance Association may be leaving itself open to massive losses from hurricanes after deciding against buying reinsurance for this year’s program.
The decision by Texas lawmakers, which the Houston Chronicle says could save the pool up to $200m per year, will also limit private insurers to monster losses from hurricanes.
Last year, Hurricane Ike practically flattened the coastal city of Galveston, costing over $2bn, according to reports. According to the Chronicle, the new bill from the Texas lawmakers “gives [TWIA] new tools to deal with losses that exceed the fund’s balance, including short-term state loans and bonds.”
The paper added that the TWIA would also “rely less on assessments against private insurance companies, who would be on the hook for no more than $800m instead of the unlimited potential under current law.”
There is also added measures, including rate caps of 10% on hurricane rates when there isn’t a hurricane that year.
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