Senate Commerce Approves HB1305 “Beach Plan”
The Proposed Committee Substitute (PCS) for HB1305 was voted favorably out of the standing Senate Commerce Committee this morning and now will head to the Senate Floor and could be heard as early as tomorrow.
Governmental Affairs Director Tyler Newman, was on hand for the vote this morning, as he has been throughout this Session, and remarked that this PCS will provide the financial stability that the Beach Plan desperately needs. This in turn should encourage insurance companies to stay in North Carolina, and will assure insurance availability & affordability in the 18 coastal counties.
Understanding the time-sensitive nature of the current legislative session, BASE along with our state partners at North Carolina Home Builders Association, and other industry partners worked extensively with key committee leaders to get the following changes listed below made to HB 1305.
- Most critically to Coastal Homeowners and citizens one of the key amendments supported by BASE will legislatively set homeowners coverage surcharges at current rates of 5% above approved voluntary market rates for separate wind and hail coverage and 15% for wind and hail as a part of a homeowner’s policy. The Bill maintains the current surcharge levels of 5% for wind/hail and 15% for homeowners (does not increase to 10% and 20%, respectively)
- Another important aspect that the PCS offered was want BASE and its growing coalition has been advocating for since day one – more public input! The PCS provides for language in the bill that will Authorize the Legislative Research Commission (LRC) to study changes in the composition of the Board of Directors of the Association, public participation in the rate-making process, time limits for approval or disapproval by the Commissioner of rate filings, and the establishment of a public advocacy staff in rate-making proceedings. This is key as it would add more public input, public participation and transparency to the process – hopefully eliminating much of what transpired with these past rate and surcharge proceedings.
- As passed the Senate version also legislatively sets the maximum coverage limits by statue and raises them from the $750,000 that was in the version of the bill as it made its way over from the House to $1 million dollars for the maximum coverage limit under the Beach Plan.
- Two amendments that were supported by BASE and NC20 that do not appear in the compromise language were the addition of surcharges to commercial and dwelling policies and a decrease in contents coverage limits of 70%, which now will be reduced down to 40%.
Some of the other noteworthy changes that have been incorporated into the Bill are:
- Renames the Beach Plan the “Coastal Property Insurance Pool”
- Requires that the surplus of the Association be retained to pay losses, purchase reinsurance, and pay operating expenses and provides that the surplus may not be distributed to member companies
- Requires the Beach Plan to set a minimum named storm deductible for wind and hail coverage of one (1%) of the insured value of the property
- Requires the Association to file a schedule of credits for policyholders based on mitigation and construction features. Requires the Rate Bureau to do the same for policyholders in the beach and coastal areas of the State.
- Requires the Association to submit to the Commissioner an installment plan for premium payments.
- Provides that when losses incurred by the Association result in an assessment against insurers of $1B, the Association may, subject to verification of the amount of losses and expenses by the Commissioner, institute a catastrophe recovery charge on residential and commercial policyholders statewide to recover any assessment exceeding $1B. The charge, as prescribed by the Commissioner, shall not exceed an aggregate amount of 10% of the annual policy premium on any one policy of insurance.
- Requires the Beach Plan to be audited annually by an auditor selected by the Commissioner.
- Requires public notice in at least two newspapers with statewide distribution of filings for increases in residential property insurance rates.
- Requires the N.C. Rate Bureau to revise, monitor, and review territories in the Beach and Coastal areas.
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