Storm brewing over HB 911
News of House Bill 911, a proposed revamping of windstorm insurance statutes, has frightened and angered many Port Aransans and thousands of other coastal Texas residents, but state Rep. Todd Hunter, R-Corpus Christi, predicted that the bill won't become law.
"I believe it won't pass, because I think it's an over-reaching bill," said Hunter, whose District 32 includes Port Aransas. "I think the bill is more of a punishment to the coastal portions of Texas (than a solution)."
But Port Aransans and other coastal residents must act quickly to make sure the Legislature does away with the bill in its current form, which opponents say would make rates set by the Texas Windstorm Insurance Association far higher for coastal dwellers than inland residents and render it impossible to obtain windstorm insurance on many structures at all.
"We have to show (legislators) we care and show them the importance of the coastline," Hunter said. "Our strength will be showing them we're unified."
The bill was authored by Rep. John Smithee, R-Amarillo, chairman of the House Committee on Insurance.
Some provisions of the bill:
• Residential property would be insurable through the Texas Windstorm Insurance Association only if the property is a residential homestead property or is the primary home of a tenant of the policyholder. That means vacation homes could not be insured by the association.
• Condominiums, apartments, duplexes and other multi-family homes would not be insurable, and neither would hotels or resort facilities.
• Homes with building permits or plats filed on or after June 11, 2003, would not get insurance through the association.
• Homes not covered by flood insurance would not get new or renewal policies from the windstorm association.
• Homes and their furnishings could not be insured for more than $250,000.
• Government buildings could not be insured for more than $2.192 million.
• Windstorm policies would not become effective until after a 60-day waiting period.
Some of the bill's provisions would greatly reduce the policy holder base, but that base still would be required to buy at least $2 billion in reinsurance, according to an analysis of HB 911 by Otie Zapp Jr., president of the Galveston Windstorm Action Committee, a political action group. That could make windstorm premiums go up at least 50 percent, Zapp wrote in his analysis.
"What an awful bill that is," Port Aransas City Manager Michael Kovacs said during a meeting of the Port Aransas City Council on Thursday, March 19. "It would pretty much destroy the island."
If passed, the bill would be a "death sentence" for the island's real estate economy, said Realtor Keith McMullin, a member of the Port Aransas City Council. Agreeing with McMullin was Ann Bracher Vaughan, executive director of the Port Aransas Chamber of Commerce - Tourist Bureau.
"I think this could have a devastating effect," Vaughan said. "I mean, if people can't get insurance coverage, why would they be buying on the coast?"
Port Aransas has hired former state representative Hugo Berlanga to lobby on behalf of Port Aransas's interests specifically with regard to the windstorm insurance issue, Kovacs said.
Hunter said he is working with legislators representing areas throughout the Texas coast to mount a response that will shut down HB 911.
The bill was set to be heard by the House Committee on Insurance on Tuesday, March 24, but that later was postponed to an as-yet unscheduled date. It could be heard as soon as Tuesday, March 31, Hunter said.
Coastal residents must mobilize now and make their voices heard by the Legislature, Hunter said.
"I want the 14 counties on the coastline to get organized, so they can voice their opposition and also have input into the legislative process of the development of a good windstorm bill," Hunter said.
Kovacs said he and Mayor Claude Brown are writing a letter objecting to the bill and will send it to all of the members of the insurance committee.
City officials, Kovacs said, are putting together a strategy for how to respond quickly if the Legislature provides less than a day's notice of when the hearing on HB 911 will be held before the insurance committee. (That kind of thing does happen, he said.)
Kovacs said the city is hoping to be ready with buses available to take city officials and ordinary citizens to Austin for a show of force before the committee, even if word of the meeting comes at the last minute.
(Port Aransans interested in being put on a list for a possible bus ride may call Pat Garrett, executive assistant to the city manager, at city hall at 749-4111 or send an e-mail to email@example.com.)
A good windstorm bill would spread the cost over the entire state and "not focus on and punish the coastline," Hunter said. The state's Rainy Day Fund should be considered for relief too, he said.
Hunter said he has introduced legislation, HB 1219, that could help provide money in the windstorm fund, which was hit hard by claims from Hurricane Ike's devastation in the Galveston area last year. He said his bill would prevent the federal government from taxing the windstorm fund, Hunter said.
Lifting federal taxes "would leave millions of dollars in that fund, so we would have plenty of money to pay coastal claims, if we should need them," Hunter said.
"The IRS, a few years ago, issued an opinion that … the windstorm board needed to have, in statute, under law, a strong mechanism for how the board is appointed," Hunter said. "According to their ruling, if you have an authority figure like the governor or commissioner of insurance who appoints the membership, that under (the IRS) code, it would not allow them to tax us federally.
"Right now, you have recommendations that can be made to the governor, and the board itself can make its own recommendations," Hunter said. "The IRS said, 'Specify the membership making process (in statutes) so it's 100 percent clear how it works.' So, that's what we're doing."