Hurricanes May N. C. Hurt All owners

 

Thursday, Apr 23,2009, 4:18:04 PM   Click:

April 22 - A bill recently introduced in the state legislature raised the possibility that the State, the owners may end up bailing out a statement created by insurance if a major hurricane wreaks havoc in coastal areas of the country.

But the bill presented by Hugh Holliman, a Lexington Democrat and House majority leader, does not the size of the beach plan repair bill should be before the owners face an assessment. The beach offers homeowners insurance plan-damage and wind policies in coastal areas of the country.

"What is missing in the bill is any kind of numbers," said Lynn Knauf, director of Regional Property Casualty Insurers Association of America. "This is - this is the expression? - The 900 lbs gorilla in the room. "

Holliman co-chaired a legislative committee Beach Plan which studied the issue last winter without reaching a definitive plan to address the financial consequences of a catastrophic storm.

The committee was created because the beach does not have sufficient resources to cover damage caused by worst storm. The beach plan an estimated surplus of $ 700 million, over $ 1 billion in reinsurance, but it covers valued at $ 73.5 billion.

Under current law, all insurers that offer homeowners policies of the state - including those who do not write policies along the coast - would be assessed for any damage to the Beach Plan is unable to cover, and there is nothing in the law of the insurers, to recover all this money to its policyholders. These evaluations will be distributed based on the turnover of each insurance company in the state.


Insurers dislike having to open-ended risk. They argue that failing to put a cap on their exposure could lead to an exodus of insurance companies of the State.

"We force all insurers to the state to safeguard the Beach Plan," said Holliman. "They see a real responsibility - and it is."

Holliman bill provides insurers cap exposure, allowing them to recover the rest of their policyholders across the state - but the figures are not included, which is not unusual for a new project law. Instead, it lists the cap size as "XX." Once the ceiling is reached, insurers could assess their insured up to a maximum of "XX" percent of their annual bonus. "This is essentially the bill under consideration by the Committee, so there are no surprises," said Knauf.

To fill in the blanks, Holliman said, "We work between industry and the DOI and all interested parties, such as the beach, to see what would be reasonable."

The industry wants its liability capped at $ 100 million, "said Holliman. He thinks it should be "a little more, but it does not say how much.

Holliman said that the beach plan to affect the issues of State, the owners, given the possibility to let the insurers of the state if nothing is done.

"I think the state has a responsibility in this area to find the best plan we can," he said. "We created the Beach Plan, and now we need to do a little fix on him."

The other provisions of the Bill:

The Beach Plan shall, by 1 May 2010, be financially able - thanks to a combination of earned premiums, excess and reinsurance "- coverage of damage caused by a 100-year hurricane. After that, it must continually improve its finances, so that by 2022, it may cover damages from an in-150-years storm.

Whether this is possible, "said Rose Vaughan Williams, legislative counsel for the insurance of the state, depends on several factors, including the premiums that policyholders pay Beach Plan. Superior Beach Plan premiums that were supposed to come into force on 1 February are pending due to a lawsuit brought by more than a dozen counties and towns to challenge the rates.

The accumulated surplus in the plan of the range must be retained and may be distributed to insurance companies. These distributions were made in the past but not in recent years. Holliman consider the money used to buy more reinsurance.

Insurance coverage would be limited to $ 750,000 on homes, half the current level. Homeowners who need more insurance would be required to purchase excess coverage from another insurer.

This limit of coverage is an abomination to Willo Kelly, director of government affairs for the Outer Banks Homebuilders Association and the Outer Banks Association of Realtors. She does think there should be no limit and argued that $ 750,000 is abnormally low, because it also includes personal property and the structure.


Officials of the NC Public Interest Research Group, which tracks insurance issues on behalf of consumers, could not be reached for comment on the bill. The Beach Plan matters referred to Dewey Meshaw CEO, who could not be reached for comment.

Knauf said that since the details have yet to be fulfilled, it can not say whether his organization ultimately the insurance industry will support it.

"I can not say that I support, but I am sure that the concept of support," she said. "There are very good reviews and reforms in this area. We are very optimistic now that it is there, we'll see some of the reforms. "

Similarly, Kristin Milam, a spokesman for the State Department of Insurance, said that the Ministry of the final position will depend on what the numbers are used to fill in the blanks.

"If the whites are too low, we do not love us," she said. "We want to ensure that we protect all consumers, and not to let those of the coast, if there is a hurricane, high and dry. ... We want to make sure it is balanced for all. "

david.ranii @ newsobserver.com or 919-829-4877