The Texas Windstorm Insurance Association’s actuarial and underwriting committee has recommended that four commercial hurricane catastrophe models be used to determine the association’s 1-in-50 probable maximum loss for the 2026 storm season.
The committee advised that the models from Verisk, RMS, Impact Forecasting, and Cotality should be included in the calculation. Under the proposal, the models with the highest and lowest probable maximum losses would each contribute 20% to the final figure, while the other two models would account for 30% each.
The committee also suggested that a 15% loss adjustment expense factor be included when the board sets the required catastrophe funding level.
The TWIA board is scheduled to make a decision on the probable maximum loss methodology at its meeting. The Texas insurance commissioner will have until Feb. 1 to approve the board’s approach or select an alternative.
TWIA secures funds to meet its minimum required catastrophe level by purchasing reinsurance, which supplements other funding sources established by statute. The association may also purchase additional reinsurance, with costs covered by assessments on member insurers.
The recommendation comes as the insurance industry faces mounting losses from severe weather events. This month, a series of powerful storms across the United States resulted in hundreds of millions of dollars in insured losses. These events tested the capacity of insurers and reinsurers, especially as they occurred late in the hurricane season and ahead of key reinsurance renewals.
Industry analysts report that catastrophe losses in 2025 are trending above the 10-year average, driven by a succession of convective storm outbreaks, hurricanes, and secondary perils across North America and other regions. This trend is prompting insurers to reassess their aggregate exposures and the adequacy of their pricing, particularly in flood-prone and coastal areas where coverage gaps persist.
For the 2026 budget, TWIA is proposing an 11% reduction, citing new state laws and a decrease in loss adjustment expenses related to Hurricane Beryl, which made landfall in July of the previous year. According to chief financial officer Stuart Harbour, the association’s budget currently includes a US$237 million placeholder for reinsurance costs.
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