The Texas Windstorm Insurance Association is no longer a viable institution as the insurer of last resort, the state insurance czar Eleanor Kitzman announced late Friday, and she will begin a search to overhaul the agency.

Kitzman, an appointee of Gov. Rick Perry who took the job as Texas insurance commissioner in August, said in a press release that TWIA was “supposed to be the market of last resort for the 14 coastal counties that comprise Tier 1, but that is not the case anymore." TWIA's market share has tripled from 17.9 percent in 2001 to 57.2 percent in 2010, “and it continues to grow.”

TWIA was put into receivership in February 2011 after a stream of stories by Texas Watchdog, outlining six-figure payouts to state lawmakers in legal cases involving TWIA, six-figure severance payments to fired employees and an inability to handle a spate of lawsuits, including a massive settlement pushed along after an eyebrow-raising $25,000 campaign contribution to the state lawmaker serving as mediator. Also see this Texas Watchdog story about TWIA's failure to address fraud in its ranks.

A criminal fraud investigation by the Travis County District Attorney’s office is ongoing.

In her prepared announcement, Kitzman continued, “On July 1, 2008, TWIA had 247 open claims; 90 days and two storms later, it had over 65,000 claims and was simply overwhelmed. A fundamental restructuring of TWIA is necessary to address these and other operational issues.”

The agency issued a request for proposal in order to begin the restructuring of the agency. A spokeman for the Texas Department of Insurance declined to elaborate.

According to the proposal, TDI will appoint a group of TWIA stakeholders – qualifications for that panel will be announced soon -  to review the responses. No one who has had business dealing with TWIA in the past four years or "received payment from TWIA in any capacity” will be considered.

The process will, at least on its face, be transparent. A clause in the RFP reads, “All RFP responses become the property of TDI and may be subject to release to any requester under the provisions of the Texas Public Information Act, Chapter 552 of the Texas Government Code, and Attorney General Opinions issued under that statute.”

Responses to the RFP are due March 15, and the consultant is expected to be named by April 1. A June 1 date is the target for a preliminary report on how to move forward without TWIA as the public knows it.

Interim TWIA General Manager John Polak did not immediately respond to an email seeking comment.

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Contact Steve Miller at 832-303-9420 or stevemiller@texaswatchdog.org.

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Photo of damage following Hurricane Ike by flickr user simminch, used via a Creative Commons license.

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