This is a terrible time to advocate for increasing property insurance rates along the Gulf Coast, akin to punching someone right after he’s been hit by a bus. Hundreds of thousands of coastal residents struggled with no electricity and major storm damage after Hurricane Beryl made landfall on July 8.

But it’s true: Many property owners in the high-hazard coastal zone pay less for their insurance than they should, compared to the known risks and costs. And their discount could raise costs for the rest of us.

That’s because their homes or commercial structures are insured through the Texas Windstorm Insurance Association. After Hurricane Celia struck Corpus Christi in 1970, coastal property owners had trouble finding affordable insurance that included wind and hail coverage. Texas lawmakers responded by establishing the Texas Catastrophe Property Insurance Association, now TWIA, which offers only policies for wind and hail damage.

TWIA acts like a nonprofit insurance company. Properties insured by TWIA must lie within one of 14 counties or one section of Harris County. It is an insurer of last resort: Property owners must have been declined by at least one private-market insurer before applying to TWIA. The properties must be built to applicable building codes and meet a few other criteria.

When it was created, TWIA was a reasonable way to address the coastal property insurance problem. It tried to help property owners without competing with standard insurers or expecting all Texans to routinely subsidize insurance along the coast.

That was half a century ago. The situation has changed.

Hundreds of thousands more people now live in the TWIA coverage area. For example, Pearland, in Brazoria County, had a population of 6,444 in 1970. It has more than 130,000 residents now.

Population growth means more property that needs insuring. TWIA’s direct liability has increased from about $300 million in 1971, to $21 billion in 2004, to $99 billion this year, according to the Texas Department of Insurance. Almost 70% of TWIA’s direct insurance in force is for property in Galveston, Nueces and Brazoria counties.

Meanwhile, the weather is becoming more extreme and erratic. An extended windstorm, called a derecho, battered the Houston area in mid-May, shattering windows in skyscrapers, tearing off roofs and leaving thousands of customers without power for days.

A month later, Tropical Storm Alberto brought heavy rain, wind and waist-high storm surges.

Then Hurricane Beryl hit. CoreLogic, a property analytics firm, estimated Beryl caused between $2.5 billion and $3.5 billion in wind-related, insured losses in Texas.

Faced with repeated heavy losses in a region or state, private insurers normally increase rates. (The rate is the cost to insure each $1,000 of exposure. On a $200,000 homeowner policy, a rate of $7.50 would lead to a premium of $1,500. Premiums can rise even when rates remain flat because of factors like inflation, an aging roof, etc.)

This is a simplification, but insurers consider a rate “adequate” if projections show it will cover predicted claims and expenses, including re-insurance and profit. If standard insurers cannot charge adequate rates, they may stop writing policies for a particular hazard or withdraw from that geographic market.

Texas insurers routinely raise rates. Average rates for private-market homeowner policies have gone up every year since 2012, according to the Texas Department of Insurance. They’ve jumped recently: 10.8% in 2022 and 21.1% last year.

Not so for TWIA policies. Intense lobbying from coastal politicians, residents and some business groups stymies efforts to raise rates. Since 2019, TWIA’s board of directors has approved only one rate increase of 5%. Not allowing rates to rise sends a signal that wind and hailstorms aren’t as damaging or as frequent as they really are. It distorts the market.

Last year’s actuarial analysis showed that TWIA’s residential rates were inadequate by 20% and its commercial rates fell short by 22%. This year, its residential rates are inadequate by 38% and commercial rates by 45%.

If Texas experiences a mild hurricane season this summer, state lawmakers may be able to ignore the growing rate inadequacy for another year. But within a week after Beryl struck, TWIA already had received about 16,000 windstorm claims.

TWIA pays those claims by tapping different funding sources in a specific order. Those initial pools of funding originate mostly from TWIA policyholders. Once those resources are depleted, TWIA levies assessments on its member companies, and every property insurer licensed in Texas must be a member of TWIA. After Hurricane Harvey in 2017, assessments on members totaled $372 million.

“Everyone who pays for a homeowners insurance policy in Texas and is a customer of a TWIA member company pays for TWIA,” explained Richard Johnson, spokesman for the Insurance Council of Texas, in an email. “In the end, those costs will ultimately be passed along to customers.”

TWIA’s actuarial and underwriting committee held its annual rate-setting meeting on July 15 and did a brave but unpopular thing. It voted 5-1 to recommend raising residential and commercial rates by 10%. It backed the increase despite public comments from Rep. Todd Hunter, R-Corpus Christi, who described himself as “vigorously opposed” any rate hike.

Hunter seemed to suggest the committee shouldn’t even discuss the yawning gap between adequate rates and current rates.

“When you say 30 to 40%, that sends an economic chill,” he said. “Be careful when you bring up those percentages because it has a very negative economic impact on the coast.”

Maybe. Or maybe the discussions will help potential residents, builders, business owners and others — people who will need property insurance — make better-informed decisions about where to live and invest.

It won’t be easy to rethink how and where development happens along the coast, but the longer Texas waits to adapt to increasingly extreme weather, the more lives and property will be at risk. And the insurance costs for all of us will continue to rise.

Jennifer Nagorka is a freelance writer in Dallas.

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