The board of North Carolina's insurer of last resort has agreed to provide data an insurance trade group has requested concerning the plan's financial stability.

In a 6-5 vote on Monday, the board of the Beach Plan (officially named the North Carolina Insurance Underwriting Association) and FAIR Plan (N.C. Joint Underwriting Association) granted the Property Casualty Insurers Association of America (PCI) permission to receive financial information to make a full analysis of its risk exposure.

The FAIR plan is an insurance pool that sells property insurance to homeowners unable to buy it in the voluntary market.

PCI noted that concerns over the fund's financial position were underscored last week by Farmers Insurance decision to leave the state. The carrier said it was leaving because of its concerns with potential assessments insurers would face if the plan were to exhaust its claims paying resources.

Robert Herlong, vice president and Regional Manager for the Southeast region for the Des Plaines-Ill.-based PCI, said, "We are pleased with the decision of the Beach and Fair Plan to provide the information we requested.

"And we're sorry that it passed by a 6-5 vote, but we wish to assure the members of the board, and others who are looking at this issue, that we are working to cooperate and work with stakeholders to bring about essential reforms."

PCI filed a Freedom of Information Act back in June to get the information and says it was denied the data.

Dewey Meshaw, general manager of the Beach and FAIR Plans said the 6-5 vote granted PCI the data subject to confidentiality agreements concerning insurers. He said he did not have a problem giving the information to PCI, but it required board action before going forward.

"We don't have any problem with PCI at all," said Mr. Meshaw. "We weren't trying to shut them out on anything."

At issue is the amount of exposure the Beach Plan has and whether it has enough capital to cover potential losses.

Both PCI and Mr. Meshaw agree that there is a total of close to $70 billion in coastal exposure in the plan, but disagree over the adequacy of current coverage.

Mr. Meshaw said some of the "facts and figures have been distorted" and that with the current amount of money and reinsurance the plan has purchased and plans to purchase, there will be plenty of capacity to cover a one-in-100 year storm loss projected at $3.5 billion.

He said if there was a storm that devastated the entire coast line from South to North, that would be a loss impacting a greater degree of the exposure, but that is not the way hurricanes have hit the coast historically. He also noted the last time insurers were assessed for hurricane losses was in 1996 from back-to-back Hurricanes Bertha and Fran.

"We are not looking at a $70 billion one time loss," he said.

PCI said it is commissioning an actuarial analysis to better understand the state's insurance market. Mr. Herlong said he believes the study will show the state has suppressed property rates for too long and that this continued practice could seriously undercut the state's market in the future if not remedied.

He said South Carolina has found solutions to its insurance market issues, and that he hopes North Carolina might adopt some of its neighbor's solutions.

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PCI To Receive N.C. FAIR Plan Information

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