by Locker Room contributor
Coastal communities are having their day in appeals court, trying to overturn higher homeowners insurance premiums for coastal residents. The higher rates were agreed in 2008 by then-Commissioner of Insurance Jim Long and the North Carolina Rate Bureau. It sounds like the judges are sympathetic to the counties (not that they are thinking of their own ability to vacation at the beach).
“Suppose the commissioner gets it wrong?” Judge Linda Stephens wondered.
“I don’t know of anywhere else where an order can be issued and there’s no right to appeal that,” Judge Martha Geer said.
Judge Stephens is right to wonder what happens if the commissioner gets the premium wrong. She should recognize that the risk is two-sided. Counties think the commissioner is wrong and has raised prices too much on their property owners. But the commissioner could just as easily have underestimated the cost of insuring coastal properties, which is why the Beach Plan needed to be rescued with higher premiums this year. The problem is coastal communities are more vulnerable to hurricanes and rates there should be higher than in the mountains – Frances and Ivan notwithstanding – so hurricane coverage at the beach should be more expensive.
Fair insurance premiums should not be decided by lone commissioners or three-judge courts, they should be decided by insurers (with help from their actuarials) and consumers.