Windstorm insurance agency responses to proposed reforms blow in several directions

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The Texas Windstorm Insurance Association, criticized for years for lack of transparency in its practices and less than adequate disclosure of board members’ financial conflicts, apparently has agreed to do better in both those areas as a result of a push by the state’s Sunset Commission.

However, proof of that agreement, and of board members’ actual intent to make changes, is hard to come by.

— A TWIA board member says the board agreed to the sunset recommendations, which include more training for the board and more disclosure of potential conflicts. But he also says that the board actually isn’t going to change anything — because the agency believes it already does those things.

— The Sunset Commission’s latest report on its TWIA findings includes “modified” recommendations in those areas. A Sunset Commission agent, speaking on background, said that means the TWIA agreed to move forward with the proposed changes on disclosures and training, pending passage of legislation to make it official. But such agreement by the TWIA board is not stated anywhere in the commission report, on the TWIA website, or in any official information released by the agency.

The little-known agency is considered the insurer of last resort in 14 storm-prone counties, for property owners who can’t get property insurance from other sources.

It’s the latest round in the TWIA board’s fight, now almost a decade old, against good-governance reforms pushed by members of the public and the Texas Legislature.

This round started in November, when the state’s Sunset Commission issued a report  strongly suggesting, among other things, that the agency be more transparent.

The Sunset report noted that “TWIA lacks certain good government standards that would enhance responsiveness, transparency, and accountability.”        

In addition to asking for release of more information on board members’ financial interests, the report suggested that board members receive ethics training and a full briefing on why and how TWIA was created, how board members can resolve conflicts of interest, and on laws regarding public information and public meetings.

In an initial written response to the Sunset Commission, TWIA General Manager John Polak said that the agency disagreed with the training and disclosure recommendations. The agency provides enough training and already has a “rigorous ethics and conflict of interest policy,” he said. Putting those requirements into law or requiring additional public disclosures aren’t needed, he said.

Polak said current agency rules require board members “to make annual certifications and disclose relevant conflict information.”

But an agency spokeswoman said in an email this week that “TWIA’s Board of Directors are not statutorily required to submit a financial disclosure form to TWIA.”

TWIA board member Joshua Fields said the sunset report suggested no changes to the way the board operates.

“We already fill out an application for the board, which goes through business dealings,” Fields said. After he was appointed, he attended ethics training in Austin.

The proposed new policy, while the agency has signed off on it, “just legislates what we have always done,” Fields said. “We don’t have a problem with that. Our position is that we are already doing it.”

The Texas Monitor last week asked TWIA’s media office for copies of conflict filings or “annual certifications” by the board members. The agency has said it will provide them.

The Sunset report noted that two board members “receive funds from TWIA or have ties with professional trade organizations involved in the insurance industry.” The report did not name the board members.

The report also found there is no rule in place that requires board members to divulge conflicts of interest that may benefit them personally.

Board member R. Scott Kesner, appointed in 2015, told Texas Monitor that, “I can’t recall any recusal on any of our votes.”

Kesner said he filed a financial report when he was appointed in 2015, although he doesn’t recall what it entailed.

TWIA over the years has repeatedly battled with members of the public over access to records and meetings. The agency in 2010 paid $545,000 in outside legal fees  to handle public records requests and problems that arose from the agency’s mismanagement of public meetings

The same year, a series of news articles led to the agency being placed into administrative oversight by the state. The problem was found through multiple public records requests that revealed the agency was settling bogus claims, had hired the relatives of employees, handed out pickup trucks as severance bonuses and failed to report fraud being committed by a relative of the manager of the agency’s catastrophe office.

In the 2011 special session, lawmakers passed a sweeping measure designed in part to ensure that TWIA complied with legal transparency statutes, including spelling out the posting requirement for the association’s board meetings. It also required the association to post a recording of its meetings, but today the postings of those recordings are incomplete. A review of the recorded December meeting at which the sunset report was to be discussed shows the recording cuts off before the public discussion of the report.

“The initial screen is just a preview,” said TWIA spokeswoman Alana Paige. “The file is huge, so you have to download it if you want to see the whole meeting.”

The five-gigabyte meeting video could not be downloaded by Texas Monitor, giving an error message and stalling.

No notice of the download version is posted with the archived meeting agendas and preview video. Part of the 2011 legislative reform of TWIA included a requirement that the agency post video its meetings.

The suggested reforms are part of an overall sunset bill that’s been filed for this legislative session.  According to Sunset Commission data, 94 percent of staff recommendations made in agency reviews leading up to the last legislative session were adopted by the commission and passed along in a bill for lawmakers to consider. Eighty percent of those recommendations became law.

The idea of making the stronger training and disclosure requirements a matter of law is still a touchy subject with board members.

“Is this needed? I don’t really have a comment on that,” Kesner said.

Steve Miller can be reached at [email protected].

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