Judge Orders State To Rework North Carolina Beach Plan Hikes

A Wake County judge has ordered North Carolina Insurance Commissioner Wayne Goodwin to reconsider deductible and surcharge increases for coastal homeowners in the state insurance pool called the Beach Plan.

Wake County Superior Judge William Pittman ruled that Goodwin’s predecessor, former Insurance Commissioner Jim Long, did not follow procedures before approving the increases in November. Pittman ordered the Insurance Department, now headed by Goodwin, to redo the process.

The judge’s ruling blocks surcharges the Beach Plan can charge for wind protection beyond insurance companies’ rates from rising from 15 percent to a maximum 25 percent. The surcharges took effect with new policies written since Feb. 1.

Also frozen is a planned rise in the deductible level to 2 percent of a home’s insured value per occurrence.

The ruling doesn’t effect higher coastal premiums scheduled to begin in May as part of a deal Long struck allowing a statewide rate increase that averaged out to about 4 percent. That settlement cut premiums for homeowners in central and western counties, but hiked rates on coastal homes by up to 30 percent in five southeast coastal counties.

Coastal governments and trade groups have also challenged the rate increases in court.

Meanwhile, legislators are debating a bill that would freeze the surcharge, deductible and premium increases until next year. Goodwin said the legislation risks making policies less available and more costly for everyone.

Lawmakers are also considering reducing the Beach Plan’s maximum coverage to relieve its potential liability, as well as capping how much insurance companies would have to pay should the Beach Plan not have enough money to meet all of its claims.

A 100-year storm could rack up more than $3 billion in insured losses if it struck North Carolina, according to industry data. Beach Plan administrators have said it could pay $2.4 billion but only if it assessed insurers hundreds of millions of dollars.

The Beach Plan began in 1969 and was considered to be the insurer of last resort when traditional insurers wouldn’t agree to take on potential liabilities on North Carolina’s barrier islands. The Beach Plan has since expanded to 18 coastal counties and began providing homeowners’ coverage and not just protection for wind damage. The program now includes 170,000 coastal properties valued at $72 billion, up from $3.6 billion in 1995.

Topics Legislation North Carolina