Wind damage to coastal N.C. is key issue for insurance chief

Insurance is a subject that can stop a lighthearted conversation in its tracks.

But with legislators in Raleigh intent on fixing the emergency wind-damage insurance pool, known as the "Beach Plan," it's a subject critical now to coastal residents.

Republican John Odom and Democrat Wayne Goodwin, competing for the state insurance commissioner seat to be vacated by longtime commissioner Jim Long, agree that the Beach Plan desperately needs reform. Each thinks he's the best man to be at the helm.

Coastal properties are valued at about $78 billion, but the Beach Plan reserve has enough to cover only about $2.4 billion in damage.

"It's a certain crisis because

we are going to have a storm. It's not a matter of if, it's a matter of when," Goodwin said.

Goodwin, who is assistant commissioner under Long, said the problem resulted from the rapid increase in coastal development and a string of bad storms that caused severe damage.

"If you look at the Outer Banks 40 years ago and what it is today, there's a huge difference," he said. "The Beach Plan hasn't kept up with the need and goals of providing for people."

The Beach Plan, the name commonly used for the state's Insurance Underwriting Association, was created in the 1960s to provide affordable wind-damage insurance to coastal residents who otherwise couldn't get coverage.

But the issue potentially affects all state residents because if there is not enough money to pay for storm damage, the money will have to come from state assessments on insurance companies throughout the state, leading to increased insurance rates overall.

One solution would be to regionalize the pool with nearby states, Goodwin said. He also advocates creating a statewide catastrophe fund that could provide additional money to the state when disaster strikes.

Odom, a Scotland County business owner, said he also favors regionalizing the plan with other states, and he favors having the cost reflect the risk.

Only five insurance companies write policies for more than $1 million, Odom said, and none writes for more than $10 million. So that leaves such structures as condominiums having no choice but to use the Beach Plan.

Odom, who supports tax credits as incentives to build stronger, more storm-worthy buildings, said it's not fair for people living inland to have to bear the burden of repairing storm damage to oceanfront houses.

"The people on the coast, because of their proximity to the ocean, should always pay a little more," he said. "That will be the tricky part - seeing how much.

"We are all in North Carolina. We all have to work together," Odom said. "People in the mountains don't want to pay for people on the coast. And they have a point."

Even when residents are dealing with federal flood insurance issues, Odom said that the state's insurance commissioner should be working on their behalf.

"We must have an insurance commissioner who is willing to get involved," he said. "Often, people who buy insurance policies really don't understand the policy. Somehow, there has to be some kind of way to communicate with the public so they understand the policy."

Helping consumers is an important part of the job, Goodwin said, whether it's keeping automobile rates low, protecting from scams against senior citizens or dealing with insolvency issues resulting from the economic meltdown.

Goodwin said he would encourage more recruitment of volunteer firefighters by offering special tax deductions and by offering more free tuition at community colleges and college scholarships.

"One of my primary goals is preserving and expanding the consumer watchdog role," Goodwin said. "I will fight attempts to weaken the insurance commissioner."

Catherine Kozak, (252) 441-1711, cate.kozak@pilotonline.com