State Farm will drop as many as 1,650 insurance policies on homes on North Carolina’s coastal barrier islands, according to state officials.
Kristin Millam, public information director for the North Carolina Department of Insurance, said State Farm executives told regulators last Friday that the move is part of a national approach to reduce coastal business.
Customers can expect to receive a notice that their policy expiring after May 1 will no longer be renewed.
Milliam said many of the policies are partially underwritten by the state-backed coastal property insurance pool, formerly known as the Beach Plan, and now more of them will likely end up there.
She said State Farm hadn’t written any new policies since 1994 on the barrier islands.
“I think it’s unlikely that other carriers will take over these policies,” she said.
North Carolina has about 120 insurers licensed to write homeowners business.
One business group criticized the insurer’s move, coming as it does after the state Legislature took steps last session to shore up the Beach Plan’s finances in hopes of encouraging the private market to continue to write wind policies and more companies to come to the state to write polices.
The Business Alliance for a Sound Economy (BASE) called for a review of property insurance market in the state.
Donna Girardot, CEO of the group, noted that property owners on the barrier islands absorbed a 17.5 percent rate increase in 2009 while those in Brunswick, New Hanover and Pender counties dealt with 29.8 percent increase.
“This recent action by State Farm is a step in the wrong direction and undermines the progress made during the last session. Now these 1,600 policy holders have been put into a situation where the only probable option is the Beach Plan/Coastal Property Insurance Pool. And in some cases, these homeowners will see significant increases by having to get additional coverage through non-admitted carriers such as Lloyd’s of London,” said Girardot.
Topics North Carolina
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