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Texas bulks up insurance fund

Lawmakers in Texas have approved plans to replenish a state insurance scheme after Hurricanes Ike and Dolly depleted the fund last year.

The new plan under the Texas Windstorm Insurance Association (TWIA) provides for a $US2.5 billion ($3.1 billion) buffer in the event of a major storm.

Under the new terms, the first $US1 billion ($1.2 billion) in claims will be covered by bonds while the next $US1 billion would be covered by bonds paid on a 70-30 basis by scheme policyholders and a $US300 million ($373 million) levy on state insurers.

A final $US500 million ($623 million) would be covered by another assessment on state insurers with the option to reinsure or finance against those losses.

Hurricane Ike caused between $US10-15 billion ($12-19 billion) in insured losses last year while Hurricane Dolly cost a further $US500 million ($631 million).

TWIA acts as an insurer of last resort to Texas policyholders and is the only property insurer in 14 coastal counties.