When it comes to property insurance rates, nobody likes Ike. Or Dolly.

Or even Rita, for that matter.

The big question is whether property owners who live inland from the Gulf will have to pay higher insurance premiums because of the losses sustained by coastal residents. The answer is maybe yes, maybe no.

Texas Insurance Commissioner Mike Geslin heard testimony Friday in Austin from the Texas Windstorm Insurance Association on losses from this year’s hurricanes Dolly and Ike. For some southeast Texas regions, insurance companies are still reeling from the after-effects of 2005’s Hurricane Rita.

Texas Windstorm Association provides wind and hail coverage other insurers do not cover.

The association is actually a pool of all property and casualty insurance companies doing business in the state. Companies contribute to this pool, which acts as a reserve fund in times of catastrophic damages such as Ike.

Although it not a state agency or a for-profit company, the association acts as a “last resort” for property owners and does not actively compete against private insurers.

The bottom line: The association’s reserves have been blown away by Ike, and its financial pool needs to be replenished. Insurers who write policies for Texas coastal residents are asking for more money to cover their losses during the recent hurricanes. That would mean homeowners and businesses might see premium increases when policies come up for renewals within the next 12 months.

However, several consumer protection groups on Friday disagreed, insisting the association’s requested increases are too high.

The Texas Department of Insurance will hear comments and testimony until Nov. 3. A decision will be announced Nov. 15. For now, no one is predicting what the State Insurance Commission will decide.

“Some of the impact will definitely be weighted toward policy holders on the Gulf Coast,” Texas Department of Insurance spokesman Ben Gonzalez said. “This storm was massive, and the losses were tremendous. No one can say right now how much premiums will rise, but mostly coastal residents will pay more.”

Although the Texas Windstorm Insurance Association acts independently from the Department of Insurance, it must have good reasons why it needs higher rates. “It must be actuarially sound,” Gonzalez said.

The association’s funding is a convoluted system of pools, reinsurance, assessments and tax breaks, all mandated or controlled by state law.

“It operates with a catastrophe reserve fund built with several layers of funding,” said Jerry Hagins, Department of Insurance spokesman.

“Beyond a certain point, when all funds are expended, then TWIA can still pay claims. The storm [Ike] was beyond what their funding could pay for. There will be a general hit on revenue, but we’re not sure what that will be,” Hagins said.

Temple insurance executive Mack Purifoy agreed.

“It’s way too early to tell, but I wouldn’t be surprised if the commercial rates went up,” said Purifoy, owner of Purifoy & Co. “I’m afraid the TWIA is in a world of hurt because of Hurricane Ike. I think it’s been underfunded for a long period of time, and now it’s all catching up with them.”

If the rates go up, other insurance companies will be assessed for this coverage and that will eventually be passed on to consumers, particularly commercial customers, he said.

“I don’t think it will be a drastic rise, just mostly in the commercial rates, but it won’t happen in 2008. Maybe in 2009,” Purifoy surmised.

The Texas Windstorm Insurance Association’s board has approved paying out $430 million in Ike-related losses, but only $230 million will be reimbursed by the state, mostly through tax breaks to insurers, Hagins added.

At least Friday’s hearing had one hopeful sign. “Historically, Texas has never had a major storm after September,” Hagins added.

pbenoit@temple-telegram.com