N.C. Assembly Passes Beach Plan Changes

NU Online News Service, July 16, 1:37 p.m. EDT

The North Carolina General Assembly has approved legislation aimed at ensuring the solvency of the state's property insurer of last resort if it suffers major losses resulting from a hurricane.

Passed on a 93-23, vote yesterday, the bill (HB 1305) now goes to the State Senate for action. Lawmakers there may attempt to amend it to increase an insurer's assessment cap from $1 billion to $2 billion, according to an insurance industry source.

As passed by the Assembly the measure would change the state's Beach Plan to make property insurers responsible for assessments for the first $1 billion in losses to the plan in a year. Above that cap, insurers would be allowed to recoup the assessment subject to approval by the state's insurance commissioner.

A report commissioned by the Property Casualty Insurers Association of America (PCI) and conducted by Milliman Inc., found the Beach Plan had $70 billion in exposure with a growth rate of $1 billion each month. A large storm could inflict losses of more than $7 billion, which exceeds Beach Plan's available funds of $1.5 billion for claims, the report said.

The bill approved by the Assembly aims to remedy the plans perceived deficits.

Reacting to the bill's passage, PCI's Lynn Knauf, regional manger said in a statement, "Insurers are committed to bringing meaningful reform to the Beach Plan this year. HB 1305 is a step in the right direction. Legislative action needs to take place this year to assure the insurance market is prepared to respond to a hurricane and to bring market stability for policyholders statewide."

Liz Reynolds, Southeast state affairs manager for the National Association of Mutual Insurance Companies, said in a statement, "A stable, solvent Beach Plan with a balanced approach to sharing financial responsibility for paying claims following a hurricane is important to everyone.

"While this is not a perfect bill, we have a golden opportunity to make far-reaching, long-term changes to improve North Carolina's coastal insurance market for property/casualty insurance companies and consumers throughout the state."