R Street alarmed by North Carolina property insurance bill
The measure, aimed at restructuring insurance claims of weather-related catastrophic loss, would give the state’s insurance commissioner the authority to order rate rollbacks and allow him to pick and choose which catastrophe models insurers may use in examining their risks. It would also shift the risks of catastrophes currently borne by private insurers and reinsurers around the world directly onto the shoulders of all North Carolina residents.
“North Carolina already has one of the most restrictive insurance markets in the country,” said R.J. Lehmann, senior fellow with the R Street Institute and author of R Street’s annual insurance report card. “The proper response to North Carolina’s insurance problem is to scrap the Rate Bureau altogether and move to an open, competitive insurance market where rates truly reflect risk.”
In R Street’s 2014 insurance report card, North Carolina was one of only two states to score an “F,” largely due to the fact that insurers collectively set rates and terms for home and auto insurance through the Rate Bureau. Because it produces one-size-fits-all products, the end result is that innovative new products available to consumers in other states are much less available to North Carolina consumers.
The bill also calls for the ability of the Coastal Property Insurance Pool in North Carolina to issue tax-exempt bonds following a storm, which would be financed over time by post-storm assessments.
“Essentially, the Beach Plan would charge ‘hurricane taxes’ that raise the coast of coverage for everyone for years to come,” said Lehmann.