Insurers face TWIA bills based on the year they're issued, not Hurricane Harvey (2017) market share

Legal Insights

By Matthew Sellers

Nov 25, 2025Share

On November 21, 2025, the Fifteenth Court of Appeals issued a memorandum opinion confirming that the Texas Department of Insurance may require the Texas Windstorm Insurance Association to calculate each member’s assessment share using market‑share data for the year the assessment is issued, not the year a storm occurred. The court rejected ASI Lloyds Insurance Company’s challenge to 28 Tex. Admin. Code § 5.4162(b) and left intact the method TWIA used for a contested third Class 1 assessment tied to Hurricane Harvey (2017).

Here’s what happened. Harvey’s insured losses resulted in excess losses for TWIA, and the association made three Class 1 member assessments between 2018 and 2020. ASI contested only the third assessment. For that bill, TWIA used ASI’s 2019 percentage of participation for the initial calculation and stated in the notice that the amount would be adjusted once ASI’s 2020 percentage was finalized. ASI argued TWIA should have used its 2017 participation share – the catastrophe year – and said using 2017 would have reduced its obligation by roughly $438,300. The court found the department’s rule valid and concluded there is no statute that requires TWIA to use catastrophe‑year market shares.

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The court’s reasoning focused on the statutory structure. It emphasized that the Insurance Code authorizes the commissioner to adopt a plan of operation for TWIA and to set how member participation is determined annually. The opinion cites Section 2210.052, which directs that participation be determined annually in the manner provided by the plan of operation, and Section 2210.0725(b), which ties Class 1 assessment proportions to that method. The judges explained that defining a “catastrophe year” – the year losses occur, regardless of when they are paid – does not prescribe which year’s market‑share data the plan must use to allocate assessments.

For insurance finance and risk teams, the ruling confirms an important timing reality. Market share can change in the years after a catastrophe. When TWIA bills based on assessment‑year data, a carrier that has expanded its Texas property book can face a higher assessment; one that has contracted may pay less. That timing gap means the ultimate cost of a catastrophe can remain uncertain until participation percentages are finalized, sometimes years after the loss.

Practical actions are straightforward. Treat TWIA exposure as a multi‑year liability for accrual and capital planning. Improve controls around net direct premium reporting for Texas filings, because participation percentages derive from those figures. Stress‑test liquidity for scenarios where market share shifts unfavorably between loss year and assessment year, and review contingent‑funding options to address potential assessment volatility driven by statutory timing. Note: TWIA may use catastrophe‑year figures only if the assessment is made during that year.

The decision leaves TWIA’s funding framework unchanged and confirms the department’s discretion to rely on assessment‑year data in the plan of operation. For carriers writing Texas property business, that is a planning reality to incorporate into pricing, capital and reporting.

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