Transcript New Industry Problem - NC-20

NC Homeowners
Insurance
Willo Kelly – Government Affairs Director
Outer Banks Association of Realtors
Outer Banks Home Builders Association
NC-20
• Background
• Mission
To support the common environmental and
sustainable economic development
interests within the 20 coastal counties
Property Insurance Overview
• NC Rate Bureau - Territories
• NC Department of Insurance
Insurance Commissioner
• Beach Plan/Fair Plan
Beach Plan Board/Fair Plan Board
• Voluntary Market, Surplus Carriers, Market of
Last Resort
• Policies: Dwelling/Homeowners/Wind Only
New Homeowners Insurance Rates
Became Effective May 1, 2009
The third such change
within five years!
WHY?
• Loss Experience
– Storm Losses
• Hurricanes
• Increased Construction Costs
• Risk
• Modeling – Loss Projections
1993 – 2009 Comparison
Rates per $75,000 of Coverage:
1993 2009
Charlotte
$ 351
Gaston, Mecklenburg, Union
350
Ashe, Buncombe, Burke
319
Alamance, Guilford, Davidson
350
Carteret, Currituck, Dare, Hyde 578
Brunswick, New Hanover
578
344
324
312
364
1,379
1,522
As of May 1, 2009 Policyholders in
32 Counties and the
City of Charlotte
are paying less for Homeowners
Insurance than they did in 1993!
2008 Rate Filing Data
2001-2005
Four hurricanes made landfall on the
Coast: Isabel, Alex, Charley and Ophelia
Five other hurricanes affected the state:
Francis, Gaston, Ivan, Jeanne, Cindy
Comparison of Losses
Total Statewide Losses - $2.47 Billion
18 Eastern NC Counties - $259 Million
82 Other NC Counties - $2.21 Billion
18 Eastern NC – 10%
82 Counties – 90%
Wind Losses
2001-2005
18 Eastern NC Counties - $121,297,407
82 NC Counties - $411,154,637
18 Eastern NC Counties – 23%
82 NC Counties – 77%
The 29 western NC County Territory of Ashe,
Buncombe, Avery, Catawba, Macon, etc. incurred
$35 million more in wind losses than the 18 Eastern
NC Counties.
Average Premium Dollar Paid for
Losses 2001-2005
Currituck, Dare Hyde- $0.06
Brunswick, Carteret, New Hanover, Onslow and
Pender – Barrier Island Area
$0.07
Ashe, Avery, Buncombe, Catawba, Madison
$0.21
18 Eastern NC Counties - $0.12
82 NC Counties - $0.17
Beach Plan
House Bill 1305 Ratified August 6, 2009 –
Changes to Beach Plan (NCIUA)
Renames Beach Plan the
“Coastal Property Insurance Pool”.
Beach Plan Changes
• Maximum Coverage Limits lowered from $1.5 million
to $750,000
• Deductible of 1% per named storm; other
deductibles to be allowed
• Personal property lowered to 40%
• Mitigation credit schedule to be established
• Public notice of Rate Bureau filing
Beach Plan Changes
NO NEW SURCHARGES – any future surcharge
increase will have to be approved by the NC
General Assembly.
A SAVINGS OF OVER
$15 MILLION TO EASTERN NC
POLICYHOLDERS
Beach Plan Changes
Companies statewide have non-recoupable
assessment cap at $1 Billion.
Recoupable assessments – 10% per policy until
losses “recouped”.
No distribution of surplus.
Other Provisions in
HB 1305
The Association shall be audited on an annual
basis by an auditor selected by the
Commissioner.
Each member company shall report by February
1 of each year to the Commissioner the
amount of coverage written in the preceding
year in the beach and coastal area.
What Happened?
• State Farm abandons 1,600 beach area
policyholders.
• Nationwide tells policyholders “no more wind
coverage”.
• Legislative Research Commission MAY study ……???
Shall submit a final report to the 2011 General
Assembly?
January 2011
• Dwelling Policy Rate Filing – unwarranted,
unsubstantiated
– Public Comment Session Held
• Beach Plan ordered to “retrieve” $16 million
in illegal distributions
• Commissioner Goodwin asks for PAC money
contributions for 2012 campaign prior to start
of session
Dwelling Rate Filing
• “Represents 20.9% average increase
statewide”
• Two components of dwelling policies:
– Fire
– Extended Coverage: includes windstorm and hail
Dwelling Rate Filing
• Average statewide wind increase of 42%
• Proposed coastal wind increase of $1,000 on a
$300,000 structure
• Proposed coastal rates are up to 10 times
higher than the rest of the state
• Increases impact housing costs
• Dwelling wind was surcharged May 1, 2010
– Building base rate change of 16.4%/2.5%
Proposed Wind Rates
Per $15,000 Coverage
Current Proposed
•
•
•
•
•
•
Charlotte
14
Gaston, Mecklenburg, Union
16
Ashe, Buncombe, Burke
20
Alamance, Guilford, Davidson
21
Carteret, Currituck, Dare, Hyde 171
Beaufort, Jones, Washington
100
22
24
30
26
222
139
Dwelling Rate Filing
• Losses adjusted to a $250 “standard”
deductible; does not factor in 1% named
storm deductible
• Does not consider NC Building Code
• Beach Plan Dwelling Wind increased in 2010
• Actual Cash Values vs. Replacement Cost
Exposure
• Shows increased repair costs
Be Informed
Check the “Dwelling” value on your policy. In many cases,
this amount is overvalued and could have increased
without notice or explanation. Recent policy review
shows a 7.8% inflationary factor applied to dwelling
values at policy renewal.
Your dwelling value should be the cost to rebuild only the
structure – not the cost of the driveway, septic system,
bulkheading, engineering/surveying costs, decks, etc.
Your premium is based on the dwelling value on your policy
and is typically not the market value!
Contact Your Agent
Long-Term Solutions
Ask legislators to:
Address statewide property insurance reform!
Enforce Section 8 of HB 1305 and have the
Legislative Research Commission study the
rate making process and the feasibility of an
Insurance Commission.
Increase industry transparency by establishing
mandatory catastrophe reserves for property
and casualty companies; establish a statewide
catastrophe fund.
Catastrophes include not only hurricanes, but
tornadoes, wildfires, ice storms, etc.
Willo Kelly
[email protected]
(252) 202-7927