That would send residential customers and commercial and government policyholders to the Texas Windstorm Insurance Association, a kind of insurance-of-last resort agency created by the state in 1971 to provide coverage in the state's 14 coastal counties.

This Thursday, the windstorm association will ask the Texas Department of Insurance for rate increases of 19 percent for residential customers and 22 percent on commercial-government policies, said windstorm association general manager Jim Oliver.

If claims for damages among windstorm association policyholders exceeded the agency's resources, then the private insurance companies that are automatic members of the pool must make up the difference.

"We had applied for an increase in August (2005), but the (state insurance) commissioner decided in November to wait to see what our Rita losses were. Last August, we had asked for 10 percent in both (residential and commercial-government)," Oliver said.

The association, which is a private agency created by the Legislature to serve a state need, received permission for an increase of 10 percent on the commercial-government side in 2004, but none on the residential side.

The Legislature has limited the windstorm association's ability to raise cash - and consequently its ability to pay claims - and the association had asked the state during the 2005 legislative session for the ability to raise another $800 million through bonds.

The association has the ability to pay up to $1.3 billion in claims. Oliver, and his board, which is made up of two consumers, two insurance agents, and five insurance company members, are asking for permission to issue bonds.

"They would be backed by policyholders and the property-and-casualty companies. Homeowners and auto policy holders would pay a small surcharge," he said.

Oliver said increasing the windstorm association's cash on hand to $2.1 billion would move the state's revenue out of harm's way to some degree.

The windstorm association's number of policyholders could increase if a company such as Allstate Insurance Co. decides to eliminate windstorm coverage from its current policyholders. The Illinois-based company already had announced it no longer would include windstorm coverage in new policies because of losses associated with the active 2005 hurricane season. Forecasters are predicting an equally heavy season this year.

"Allstate is considering a number of different things in evaluating its coastal risk," said Allstate spokesman Joe McCormick. "Should we move some of our windstorm coverage to TWIA? Nothing has been decided yet."

Oliver said Southeast Texas isn't the association's greatest area of risk. The Galveston Bay area is, including Galveston County and the portion of Harris County that touches the bay.

He said the association is carrying 48,000 policies in that region - representing half of all policies there, making the association that region's largest insurer.

He said the association has commitments from 400 to 500 independent adjusters to respond to a catastrophe. During Rita, it used 150 adjusters plus 15 supervisors to handle the demand.

$160 million in total claims from Jefferson, Chambers and Galveston counties. The association received about 12,000 claims and has settled about 98.5 percent so far.

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