N.C. Beach Plan Reform Approved

NU Online News Service

The North Carolina House of Representatives has given final approval to a measure reforming the state's Beach Plan, its residual market property insurer.

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

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

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

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

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

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

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

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