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By MIKE SHUTAK
NEW BERN — The state’s insurance commissioner told an audience here Friday his department’s recent settlement on homeowners policy rates, which raises premiums for coastal counties, spared property owners from much higher requested increases. But one coastal legislator said the commissioner “caved” in his negotiations with insurers.
Insurance Commissioner Wayne Goodwin spoke Friday in New Bern at a meeting of NC-20, a nonprofit organization representing the interests of the state’s 20 coastal counties. Mr. Goodwin said his settlement agreement with the entity representing homeowners’ insurance companies signed in March prevented an average 17 percent increase statewide, which would have increased rates in coastal counties by 30 percent. The settlement reduced the increase to 7 percent on average statewide.
“We, your insurance representatives, thought the 30 percent request was excessive,” Mr. Goodwin told the group.
As a result of the settlement, homeowners’ insurance rates on Bogue Banks will increase 19.8 percent beginning July 1. The rest of Carteret County will see an 8.6-percent hike.
The insurance companies, represented by the N.C. Rate Bureau, had requested an overall statewide average rate increase of 17.7 percent on Oct. 1, 2012.
Mr. Goodwin said his department is trying to balance keeping insurance rates fair to customers while encouraging insurance companies to continue to do business in North Carolina. He said insurance companies are leaving many states in the Southeast, due to the frequency of claims related to hurricanes.
Sen. Harry Brown, R-Onslow County, also attended the meeting. Sen. Brown said legislation he introduced that was passed last year enabled the insurance commissioner to negotiate with the N.C. Rate Bureau may not have had the intended results.
“Now I’m not sure that was a good bill because I think the commissioner caved in,” Sen. Brown said, “They settled on a 7 percent rate increase, but they didn’t settle how it’s allocated (among counties).”
Sen. Brown said he gets more calls on the coastal insurance rate issue than anything else. He said other parts of the state have been “well taken care of” in terms of insurance rates.
Sen. Brown said he’s considering whether the Rate Bureau should be eliminated and the job of state insurance commissioner made an appointed office rather than an elected one.
A public hearing on the rate increase had been set for June 3, but Mr. Goodwin said it would have taken a long time to prepare for it and in the meantime, the insurance companies could have begun charging their proposed rate.
NC-20 officials have said the hearing was avoided in order to keep the insurance companies’ claims data from becoming public.
Meanwhile, the meeting Friday also focused on other insurance concerns.
Mr. Goodwin said there’s legislation making its way through the General Assembly that would take away the Insurance Department’s power to negotiate with companies on auto insurance rates.
“We need to oppose this legislation – it’s a slippery slope,” Mr. Goodwin said. He said the measure could set a precedent for homeowner’s insurance.
Also, flood insurance is a growing concern addressed at the meeting.
NC-20 President Willo Kelly said recent federal legislation, the Biggert-Waters Act included changes to coverage, rates, premium structures and required floodplain map updates that could have major impacts for coastal counties.
Flood insurance rates are based on maps that indicate base flood elevation and the height floodwaters are expected to rise to during a flood. Coverage is provided through the National Flood Insurance Program, which is managed by the Federal Emergency Management Agency.
While annual premiums bring in about $3.48 billion to the program, Ms. Kelly said that a third of that amount goes to “write-your-own” insurance companies that serve as go-betweens connecting the program and homeowners. In 2005, after hurricanes Katrina, Rita and Wilma, the program had to borrow $21 billion from the U.S. Treasury to handle all the insurance claims filed.
With the Bigger-Waters Act, as of 2013, the flood insurance program is now required to build up a reserve fund of $12 billion.
Also, subsidies for pre-Flood Insurance Rate Map, non-primary homes will be removed. That change will increase rates up to 25 percent for commercial, severe repetitive loss properties (properties with four or more claims filed) and property with claims greater than fair market value.
Subsidies won’t be extended for new or lapsed flood insurance policies. Grandfathering also won’t be allowed anymore.
Ms. Kelly said a new flood map is scheduled to come out in 2014 that will include a newly designated “Coastal A zone” located just landward of the beachfront “V-zone” that will have new construction requirements.
“You need to tell your citizens and contact your insurance agents,” Ms. Kelly said to the government representatives attending the meeting. “Find out your flood zone and how these changes will affect your rates.”
Ms. Kelly said NC-20 is concerned about the affordability of flood insurance coverage, which is required by lenders for properties in flood zones.
“We’re concerned mortgage holders, as soon as the mortgage is paid off, will drop their insurance,” she said.
The updated flood plain maps will also provide new information on the state coast and flood risks.
John Dorman, director of the N.C. Office of Risk Information and director of analysis for the North Carolina Floodplain Mapping Program, said the preliminary maps to be released in November won’t go into effect for insurance purposes until November 2015.
Mr. Dorman’s program has created several different maps of the state coast, each one providing different information. One map shows stillwater levels – the water level in an area during a 100-year hurricane. Mr. Doorman said he and his staff were surprised to see that, based on their data, the state’s coast is seeing a 3- to 4-foot lowering of stillwater from the base flood elevation.
The program has also created a statewide building footprint map to show which buildings may be affected by rising sea level.
Some scientists, including those with the N.C. Coastal Resources Commission’s Science Panel, have forecast a 39-inch rise in sea level by 2100.
NC-20 opposes using that forecast in setting development rules and regulations due to the expected harm such policies could have on the coastal economy.
Accordng to the program’s map, in Carteret County, 7,335 buildings would be impacted in the event of 39 inches of sea level rise, valued at more than $1 billion.
The map also includes projections for 8 inches of sea level rise by 2100, another potential rate other scientists have forecast. At this rate, 236 buildings in Carteret Count would be impacted, with a value of $29.8 million.