Owners of wind turbines, gambling casinos and sexually oriented businesses such as adult video stores would be barred from buying windstorm insurance through the most common source under a bill filed Thursday in the Texas House of Representatives.
House Bill 272 would forbid the Texas Windstorm Insurance Association from issuing coverage on those three types of property even if they otherwise qualified for the policies. The association issues most of the windstorm coverage for property along the state’s hurricane-exposed coast.
Whether such a law would be a poison pill for casino development in Galveston was unclear Thursday.
State Rep. John Smithee, a Republican from Amarillo and chairman of House Insurance Committee, included the amendment in a bill proposing a major overhaul of the law governing the association’s operations and financing.
It was not appropriate for insurance ultimately backed by Texas taxpayers to be written on casinos and sexually oriented businesses, Smithee said.
The association pays claims by various means, including through assessments on private-sector insurance companies that are members of the association. The companies can reclaim some of that money through tax credits.
Members of the association were assessed about $300 million for claims filed after hurricanes Dolly and Ike, Smithee said.
Smithee said he included wind turbines in the bill because no actuarial formulas had been developed to determine how to value the machines.
The House Insurance Committee will convene a hearing Tuesday in Austin on Smithee’s bill, and one filed Wednesday by state Rep. Larry Taylor that also calls for sweeping reform of the windstorm association.
The windstorm association insures more than 200,000 residential and commercial policyholders in 14 high-risk coastal communities.
The insurance of last resort for the riskiest properties, the pool was formed in 1972 after Hurricane Celia struck the Texas coast and many insurance companies stopped writing business.
All property insurance carriers doing business in Texas must participate in the windstorm pool. That participation includes paying assessments if claims from a hurricane or other storm are beyond the windstorm pool’s available funds from premiums and other sources.
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