by Anna Manning
From Carolina Journal’s Lindsay Marchello:
It would take a catastrophic series of events for state insurance money to go dry, but that doesn’t remove the burdens, experts warn.
Several storms similar to Hurricane Hazel in 1954 could see all state residents chipping in to pay for losses after North Carolina’s Coastal Property Insurance Pool is depleted.
The N.C. Insurance Underwriting Association provides the Coastal Property Insurance Pool, also known as the Beach Plan. It’s a pool of private property insurers intended to provide storm coverage to property in beach or coastal areas and a market of last resort for people who can’t get insurance in the private market.
The plan has more than 190,000 policies with $71.7 billion in total exposure. Before Hurricane Florence made landfall, R.J. Lehmann, senior fellow and director of finance, insurance, and trade policy for the R Street Institute, said the storm could seriously stress the Beach Plan.
“The Beach Plan may not have the resources to pay,” Lehmann said. “If it doesn’t, what it has to do is issue bonds, and those bonds are paid off with assessments. Assessments are on every policy in the state whether you’re on the beach plan or not.”
Former Insurance Commissioner Wayne Goodwin once described the Beach Plan as a ticking time bomb, but a 2009 law provided stability. House Bill 1305 granted the N.C. Department of Insurance the ability to raise home insurance rates for all residents to cover financial losses from the Beach Plan. The bill also limited assessment at $1 billion in the event of a major disaster causing a deficit.
But while the bill defused the bomb, taxpayers would still have to shoulder the cost if damage overwhelms plan reserves.
Read more here.