NU Online News Service

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The North Carolina House of Representatives has given finalapproval to a measure reforming the state's Beach Plan, itsresidual market property insurer.

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By a vote of 92-19, the House yesterday agreed to changes in theplan (HB 1305) made by the state Senate and moved the legislationon to the desk of Democratic Gov. Bev Perdue.

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Lynn Knauf, regional manager for the Property Casualty InsurersAssociation of America (PCI), in a statement, called the bill "avictory for consumers statewide as it will provide needed stabilityto the North Carolina property insurance market."

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"This is a strong reform bill," said a statement from Raymond G.Farmer, assistant vice president, Southeast region for the AmericanInsurance Association.

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He said the legislation "meets two key goals: first, putting theBeach Plan on a stronger financial footing, and second givingprivate market insurers greater certainty as to their ultimatefinancial obligations should a major storm hit that depletes theBeach Plan's claims paying resources.

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"We appreciate the votes of every House and Senate member whounderstood the potential negative impact on the insurance marketstatewide if the Beach Plan reform bill was not approved."

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Among the bill's reforms, insurers' assessment for post-stormlosses will be capped at $1 billion and the state's propertyinsurance policyholders would pay a surcharge of no more than 10percent for losses to the plan above insurer's $1 billion cap.

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The bill also limits exposure to $750,000 in home value forBeach Plan participants.

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A study of the plan sponsored by PCI found the Beach Plan had$70 billion in exposure with a growth rate of $1 billion eachmonth. A large storm could potentially inflict losses of more than$7 billion, which exceeds Beach Plan's available funds of $1.5billion for claims, the report said.

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