The state’s insurer of last resort for windstorm damage along the Texas Gulf Coast has estimated its liability for the 2022 hurricane season: $4.2 billion in financing against potential claims.

Windstorm coverage — often referred to as hurricane coverage — is a policy purchased on top of homeowner and flood insurance in areas at high risk for wind damage. In Texas, the 14 counties along the Gulf Coast are considered being at high risk for wind damage.

Texas Windstorm Insurance Association, or TWIA, was created in 1971 when homeowners and businesses could not find windstorm coverage in the voluntary insurance market after Hurricane Celia. This year, premiums on a windstorm policy for the average home through TWIA was $1,650.


What You Need To Know

  • Texas provides an insurer of last resort for windstorm damage along the Gulf Coast

  • That insurer, TWIA, predicts it should be prepared for up to $4.2 billion in claims this hurricane season

  • Windstorm policies are on top of homeowner and flood insurance, with an average cost of $1,650 for homeowners

  • The Gulf Coast has had multiple Category 4 hurricanes, most of them unnamed, with the exception of Carla and Celia

The 2022 hurricane season kicks off on June 1. The National Hurricane Center’s Atlantic hurricane season forecast is due on May 24. The National Hurricane Center issues tropical forecast outlooks four times a day between May 15 and Nov. 30 for the Atlantic basin, which includes the Gulf of Mexico.

Several named hurricanes have hit the Texas coast since a hurricane leveled Galveston in 1900. The 1900 hurricane is considered the deadliest natural disaster in U.S. history. Larger hurricanes to hit the coast included Carla (1961), Celia (1970), Alicia (1983), Ike (2008) and Harvey (2017).

TWIA has funded liability as high as $4.9 billion, which it did during 2015, 2016 and 2017.

Windstorm coverage is not required in Texas, but it is a condition of many mortgages on properties along the coast. Currently, just over 194,000 properties are covered, down from a high just over 252,000 in 2014. TWIA actively tries to send policies back into the voluntary market, known as depopulation.

A nine-member board, made up of representatives from the insurance industry and residents along the coast, oversees TWIA. TWIA’s financing, dictated by lawmakers, starts with TWIA premiums and bonds issued by the Catastrophe Rescue Trust Fund. Subsequent funding alternates between public securities and insurance company assessments, plus reinsurance.

Coastal lawmakers frequently oppose premium hikes for TWIA policies. Rates went up 5% for 8 of the last 12 years, including 2022. Rate recommendations are based on an actuarial analysis of potential liability.

Windstorm losses are not as widespread as flood losses during hurricane season. Hurricane Ike, for instance, was a much more costly storm for wind damage that Hurricane Harvey. TWIA paid out $2.8 billion in claims for Hurricanes Ike and Dolly. Claims from Hurricane Harvey cost $1.7 billion. The total damages from Hurricane Harvey were estimated at $125 billion by the National Hurricane Center.