April 8, 2013

Bills, petition target increase in homeowners’ insurance rates

Rep. Paul Tine, a Democrat who represents Dare, Hyde, Beaufort, and Washington counties, along with Reps. Susi Hamilton (D – New Hanover), Frank Iler (R – Brunswick), and Jerry Dockham (R – Davidson) submitted House Bill 519, Property Insurance Rate Making Reform, last week.

The purpose of the bill is to bring some clarity to the rate making process so that additional reforms can be made in the future, Tine said in a media release.

“We are not on the same page when it comes to how our rates are made on homeowners’ insurance in this state,” he said.  “The inland counties think they are paying for losses on the coast, the coastal counties feel they are paying more than their fair share, and we need to all have a better understanding of what is really going on.”

The bill would require the companies to submit historical data on previous losses as a basis of comparison.  Any company wishing to use modeled data would have to present two models. 

“Computer models take into account a lot of data from weather patterns, to building codes, to the types of trees you have in the area to develop a likelihood of future loss,” stated Tine. “It’s very easy to come up with different conclusions based on the different models used. We need more than one model so that we can compare the conclusions.”

There is also a provision that would allow for the North Carolina Commissioner of Insurance to require additional statistical analysis based on the historical information presented and the conclusions of the models.

Additionally, the bill would require that every policyholder in the state would have both the wind and hail rate and the property rate shown on his or her bill.  This information could then be easily and clearly compared between regions by policyholders and advocacy groups.

More work is still expected on this bill in committee and when it reaches the floor.  Tine said that several interested parties were consulted in the crafting of the bill to try and limit any unintended consequences.  The Commissioner of Insurance and his department, the Coastal Caucus, NC 20, and the insurance companies themselves all provided input. 

“This bill is designed to give us a chance to pass it into law,” said Representative Tine.  “It would help the whole state to bring more sunshine to the rate making process and have more tools in the hands of the commissioner to fight for fair and equitable rates.” 
This bill is bipartisan in the House and there is a companion bill by Sens. Norman Sanderson and Bill Cook in the Senate. 

The bill has been referred to the Committee on Insurance in the House, which is chaired by Dockham, one of the primary sponsors of the bill.

In a related effort to fight the homeowners’ insurance rate increase along the coast, Outer Banks grassroots volunteers have collected thousands of signatures on a petition condemning an increase in homeowners’ insurance rates announced last month by state Commissioner of Insurance Wayne Goodwin.

The petition calls for government officials to overturn the decision and to investigate it.

Nags Head home owner Ed Beckley wrote the petition and used broadcast e-mail to send it out to his friends. Members of the Outer Banks Tea Party backed it by doing the same thing. Beckley said the time has come to deliver the results to the governor and legislators to make it clear this was not a fair decision.

On March 5, recently re-elected Commissioner Goodwin signed a settlement agreement with the insurance companies, allowing an overall statewide average rate increase of 7 percent, varying by territory, beginning July 1. Beach areas are specifically targeted, and the Outer Banks could see as much as a 20 percent increase, Beckley said.

“This is not good governing,” he said, explaining that “the insurance commissioner received the request for an increase in October 2012, and he scheduled a hearing for June 3, 2013. After his re-election, Goodwin decided to settle the matter on his own, without airing the facts for and against such an important decision.”

Beckley said there is a perception that coastal areas are the primary cause of wind-borne damage costs, especially during hurricanes, and, therefore, people who live on the coast should pay more for wind insurance. He said research and evidence is available to counter that idea and to show that water-borne damage caused by storms both at the coast and inland is the real cause. And those costs are related to federal flood insurance coverage, not homeowners' wind policies.

“The insurance commissioner did not allow such research to be heard,” and his solitary decision is un-American. “Where was our representation?” he asked. “We want to see the figures!”

The petition calls for the governor, legislators, and the insurance commissioner to adhere to due process, to negate the increase by convening a hearing immediately, and for the governor and legislators to investigate the insurance commissioner's motives.

The petition is also currently circulating in the southern coastal areas of North Carolina.

“We want to understand why North Carolina's East Coast is condemned to pay more than its share per actual historical payouts to property owners due to wind and hail damage, compared to other areas of the state,” Beckley said.

Beckley also noted that parallel bills were filed April 2 in the state House and Senate relating to how the insurance commission should deal with rate requests in the future. Local Rep. Paul Tine is a primary sponsor of House bill H519, and local Sen. Bill Cook is a primary sponsor of S690.

Beckley said those who are interested can go to http://www.ncleg.net/gascripts/BillLookUp/BillLookUp.pl?Session=2013&BillID=S690 to see the text of these bills.

He said locals should contact Cook and Tine to provide their input about the petition and these bills. Tine's email address is [email protected], and Cook's is [email protected].

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