N.C. Coastal Bill Seeks Balance on Insurance Rates
The latest version of a coastal insurance bill requires that the North Carolina Beach Plan provide a homeowners policy with rates that are not “inadequate, excessive or unfairly discriminatory,” and which must be approved by the commissioner.
According to the National Association of Independent Insurers (NAII), the current form of H.B. 1120 as amended by the Senate Insurance Committee attempts to incorporate recommendations put forward by the insurance industry and the Department of Insurance.
“The insurance industry’s major concern with the proposed draft was the inadequacy of rates, and originally recommended the Beach Plan to have rates that were ‘actuarially sound and self-supporting,” said NAII counsel Gregory LaCost. The bill’s current wording represents a compromise between the industry and the department. “If the industry language was included in the draft, we would avoid the subsidization of beach homes by non-beach homeowners.”
With the latest proposed version, subsidization can be avoided if the commissioner approves adequate rates as suggested by the Beach Plan. The commissioner’s ability to reject rates will be determined based on the “inadequate, excessive, and unfairly discriminatory” standard.
“This proposal is not a bill of first choice,” LaCost added. “It’s a compromise between having a state-wide homeowners residual market and a beach plan with self-supporting rates. The bill could still be amended to reflect the need for more rate stability.”