N.C. House takes final look at Beach Plan fix
Posted August 6, 2009 4:17 a.m. EDT
Updated August 6, 2009 10:45 a.m. EDT
Raleigh, N.C. — North Carolina legislators take a final look at legislation that insurance companies have been wanting for months and consumers find difficult to welcome.
The House will consider final approval Thursday for a bill that aims to support the state Beach Plan, an underfunded coastal insurance that insurance regulators warned was becoming a problem for property owners statewide.
The Beach Plan provides wind and homeowners insurance policies in 18 coastal counties. Originally created as a insurer of last resort, it now covers nearly $74 billion worth of property, but its resources top out at about $2.4 billion.
As it stands, the Beach Plan requires that once its resources are exhausted, property insurers statewide must cover the rest of the claims.
However, some companies have threatened to leave North Carolina if their now-unlimited risk wasn't capped, State Insurance Commissioner Wayne Goodwin has said.
Insured property owners statewide would be on the hook under the bill moving through the General Assembly.
Assessments on insurance companies liabilities would be capped at $1 billion. To cover larger losses, the insurance commissioner would add a surcharge of 10 percent on all North Carolina homeowners' premiums until the coastal property holders' claims are paid off. The surcharge would be about $5.40 a month for an average $650 annual homeowners policy.
The bill was approved by the Senate Wednesday after being passed by the House in mid-July. The House must now look at the amended bill.
Goodwin originally backed plans by former Insurance Commissioner Jim Long to raise the Beach Plan's surcharges for homeowner's coverage by 25 percent and for wind damage by 15 percent. Those increases drew stiff opposition from coastal property owners and legislators.
Goodwin has said the bill in the General Assembly 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."