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A bill to reform a state-created insurance plan known as the Beach Plan has passed its first legislative hurdle in the state House.
The bill, which moves to the House Finance Committee after winning the endorsement of Insurance Committee members on Tuesday, calls for homeowners across the state to bail out the Beach Plan if a catastrophic storm along the coast generates more claims than the Beach Plan can afford to pay. The Beach Plan insures nearly 176,000 coastal properties valued at $73.6 billion.
A contentious issue moving forward is the trigger point at which homeowners across the state would be assessed a surcharge of up to 10 percent of their annual homeowners insurance premiums.
Other controversial items in the bill are a reduction of the coverage limits of Beach Plan homeowners policies from $1.5 million to $750,000 and an increase in the premiums paid by Beach Plan customers.
The current bill would allow insurers to assess a 10 percent surcharge on homeowners statewide after the insurance companies themselves have covered a $1 billion Beach Plan deficit. Given the Beach Plan's surplus and the reinsurance policies it has purchased, a storm would have to cause about $2.4 billion in damages before a statewide premium surcharge would be necessary.
Still, Lisa Martin of the N.C. Home Builders Association complained to committee members that the $1 billion deficit threshold was a far cry from the $4 billion that the state Insurance Department initially advocated.
Insurance Commissioner Wayne Goodwin said in an interview afterward that both sides had compromised. “The industry initially wanted $100 million,” he said. “This is 10 times higher than what the industry initially sought.”
