Coastal insurance rates draw concerns

Higher homeowner and wind and hail insurance rates for coastal North Carolina counties are proving to be a unifying cause for action by area residents, businesses and governments.

At a Coastal Insurance Symposium at the New Bern Riverfront Convention Center on Tuesday, they talked of collectively lobbying to broaden the scope of legislation now in the General Assembly that would halt the rate increases until 2011.

They also talked about working for greater transparency and more accountability from the insurance industry, more public participation in rate structuring and a state insurance commission structured more like the N.C. Utilities Commission.

"Insurance rates here are catastrophically high compared to the rest of the state, at least five times higher than Charlotte," Tom Thompson, Beaufort County economic development director, told about 140 people from at least coastal counties and towns.

He spoke at the symposium sponsored as the first official meeting of NC20 Inc., a nonprofit group started about six months ago to help 20 coastal counties speak with one voice. It was incorporated on Monday.

"I'm going to go back and talk to my commissioners," Onslow County Attorney Ron Von Lembke said. "It sounds like NC 20 is exactly the group we've been looking for ... not necessarily confrontational ... but can get the job done."

Homeowner insurance rates are down in the Piedmont and mountains by as much as 43 percent and up in coastal North Carolina counties as much as 29.8 percent. Onslow and some parts of Carteret are in the highest increase category. Pamlico County's rate would be 22 percent, and the Craven and Jones rate increase is 6.5 percent.

The changes come with a new zoned rate schedule that became effective Feb. 1 on new policies and is calculated for renewals until fully implemented on April 30 unless the legislation proposed in N.C. House Bill 26 and Senate Bill 6 to stop it is passed.

The rate change came in a statewide homeowners' insurance rate increase of 4.05 percent, said Willo Kelly, a Kitty Hawk government affairs coordinator for real estate people and home builders. It includes a surcharge for some counties and a discount for others.

More disturbing than the rate increase is a deductible change, she said, from a dollar amount to a 2-percent formula that would require a homeowner to pay $3,000 out of pocket for each wind event for a $150,000 home and contents.

"The timeline is interesting," Kelly said. "The Beach Plan Board met on Nov. 13 and approved the rate changes. Jim Long approved the change on Nov. 21. There was less than 15 days from approval to action."

Long, who died recently, was the state insurance commissioner until he retired in January.

Kelly was part of a speaker panel that included former Morehead City insurance company owner John Gainey and Bobby Outten, the Dare County attorney who filed a lawsuit opposing the rate changes. Outen has asked counties and cities to sign on, with or without contributing to the cost.

Gainey said the zone plan and new rates were patterned after a Florida plan and don't work because the states are very different.

Florida has 1,224 miles of coastline, while North Carolina has about 293 miles, he said, and population in Florida is heaviest on the coastline compared with less-dense coastal population in North Carolina.

"The coast should not bear the entire brunt of exposure to hurricanes," Gainey said. "There is statewide risk. Remnants of hurricanes coming out of the coast even bother mountain areas. Yes, we should pay higher rates but those rates should be proportional."

He also said it appeared as though the rate changes are being structured to drive people to companies not approved in North Carolina, therefore without guarantee of their solvency.

Outten said the rate increase was approved without waiting for a final report from a study group established to determine how much has been paid out in claims in the various counties by insurance companies.

Bill Price, a group member from Morehead City, said NC20 has also been unable to find out how much the insurance companies have in reserve to cover claims.

"Maybe the recession hurricane has taken their reserves," he said.

Craven County Commissioner Steve Tyson, a builder and Realtor, said the bill now before the legislature is only for residences and contents valued at under $150,000.

"I'm not sure why they did that; the average cost of a house in coastal counties is more than that," Tyson said. "It's almost like the politicians threw up their hands and said, ‘We're going to do something' but are not doing anything."