Insurance regulators have taken over administrative oversight of the Texas Windstorm Insurance Association, following an investigation that found the insurer failed to report payments to adjusters for work they never completed.
The Texas Department of Insurance has determined that the state-created but privately run insurer "is in a condition that makes its continuation in business hazardous to the public or to its policyholders, as it appears that its management does not have the experience, competence or trustworthiness to operate TWIA in a safe and sound manner" according to a letter by Texas Insurance Commissioner Mike Geeslin.
Geeslin noted the association knew it had paid outside claims adjusters for work they never did, paid claims based on those adjuster's reports, and failed to report it to the state's fraud unit. The association also failed to address other issues found by the deparment, such as accounting, personnel and communications concerns, according to the letter.
The association, which sells wind coverage to owners of hurricane-vulnerable homes who can't buy it elsewhere, has grown in recent years as private insurers have limited selling coverage along the coast.
TWIA must now submit all personnel decisions and expenditures to the insurance department for prior approval, as well as develop a plan to ensure better communication with its board of directors. TWIA must also give the department complete authority to examine and monitor its operations, including books, records, and other documents