September 30,  2009



Now that the dust has settled on coastal insurance, I would like to comment on how we coastal dwellers have fared.

There were two main problems with the recent ruling by the North Carolina insurance commissioner and follow-up legislation regarding the Beach Plan and coastal insurance in general.

First there were the unjustifiably high rates, and second there was the attempt by the insurance commissioner and the insurance lobby to add even more onerous provisions to the current cost of homeowner’s insurance. 

Here’s what we accomplished in the last legislative session: 

• Maximum coverage limits were reduced from $1.5 million to $750,000 (our only defeat), but a “1 percent named storm deductible” will now apply rather than the previously approved 2 percent per wind occurrence deductible. Savings: incalculable.
• The Senate version of HB 1305, which ultimately passed, removed the additional increases in surcharges and added language that an act of the General Assembly would be required to increase surcharges in the future. With this alone, the Senate saved Beach Plan policyholders at least $15 million in 2010.
• Beach Plan surpluses will no longer be distributed to member companies. In 2006, insurance companies withdrew $43 million from the Beach Plan and in 2008 began complaining that it was seriously under funded.
• Mitigation credits will be developed: If you take additional measures to prevent storm damage to your structure, you will get a discount on your premium.
• A premium installment plan will be developed. Currently, annual premiums are required to be paid in one lump sum.
• With the exception of confidential information, the Beach Plan will now be required to fulfill requests for information. The Department of Insurance and the North Carolina Rate Bureau will be required to post public notices of possible rate increases.
• The Legislative Research Commission will be reviewing the rate-making process statewide and the operations of the Beach Plan, with a final report to the General Assembly in 2011.

NC 20, which is a nonprofit corporation dedicated to defending the 20 coastal counties from regulatory and legislative abuse, will continue to advocate for insurance rates that are fair, and regulatory practices that are reasonable.

Finally, there has been much written about the Beach Plan being “broken” and how House Bill 1305 “saved” it. Your readers need to know that the Beach Plan surplus was – and is – growing exponentially. With the 30 percent rate increases imposed by the insurance commissioner in 2008, the surplus will grow embarrassingly large in the future if history is a guide.

The name “Katrina” was invoked over and over again by the insurance lobby. Folks, we have never had a Katrina on the North Carolina coast. We have never had a category 5 hurricane. We’ve only had one category 4, and that was Hazel, which did as much damage in the Piedmont as on the coast. Need I mention Hugo? Missed us completely.

We stopped almost all of the egregious increases in the last session. Now, we’re going after our absurdly high rates.

(Tom Thompson is president of NC 20, which is a nonprofit corporation dedicated to defending the 20 coastal counties from regulatory and legislative abuse. More information is available on the group’s Web site at http://www.nc-20.com/)

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