Beach Plan fix brews controversy

The Beach Plan, originally created as an insurer of last resort, covers nearly $74 billion worth of property. Its resources, though, top out at about $2.4 billion.

Fear of exposure to Beach Plan losses has led about a dozen insurance companies – including Nationwide, Farmers and an Allstate division – to cut some policies or to announce plans to pull out of the state, Insurance Commissioner Wayne Goodwin has said.

"I think if we don't get these companies some certainty this year, they will pull back even more. When the big one hits, there might not be enough insurance available to cover all these claims," said Jennifer Cohen, executive director of the Insurance Federation of North Carolina

H.B. 1305 would cap assessments on insurance companies at $1 billion. Those assessments are in addition to claims paid to policy holders.

For bigger losses, the state insurance commissioner could add a surcharge of 10 percent on the insurance premium of all North Carolina homeowners, for as long as it takes to pay off coastal property holders' claims. The surcharge would be about $5.40 a month for an average $650 annual homeowners policy.

Coastal homeowners said the plan would benefit the whole state.

"The same storm that blows and hails in Raleigh and Zebulon and Rocky Mount moves east and blows and hails on our houses. Why should we have to pay four times as much?" coastal resident Stuart Couch said.

"We're all one state. It's not the west against the east, the way they're doing it," he added.

Goodwin said the proposed plan isn't the best one, but waiting for a perfect fix could be disastrous.

"If we don't act this year, in terms of the legislative process we have, it could be two years before we have a chance to reform it again," he said. "That's two hurricane seasons."

H.B. 1305 passed the House in mid-July and has been referred to a Senate committee.