Efforts to beat back increases in coastal homeowners' insurance have stalled, and it is increasingly likely a new rate structure will go into affect next week.
"We feel like Custer here," said Tommy G. Thompson, president of NC-20, a partnership of 18 coastal counties. "The population center in North Carolina is in the Piedmont - the power there is enormous. The insurance industry, I think, has capitalized on our political vulnerability."
Barring legal or legislative action in the next week, homeowners at Dare, Hyde and Currituck county beaches will be subject to rates of about $4,200 annually, a 6.5 percent increase, to insure a $300,000 property.
Proposed legislation introduced by state Rep. Timothy Spear, a Creswell Democrat, is seeking to stop increases in surcharges, deductibles and rates in the Beach Plan, the informal name of a statewide homeowners insurance pool.
Although the bill, H426, was scheduled for a vote Tuesday in the House Insurance Committee, Spear pulled it prior to the vote to buy time to find more support.
Of the 19-member committee, three members are from coastal counties.
Spear said that the increases disproportionately hurt poor counties. It will also affect some that are not even on the coast, he said, such as Robeson and Pembroke counties, which will be hit with a 12 percent increase.
In Hyde County, one of the state's poorest, homeowner coverage for a $150,000 policy on the mainland will jump 22 percent to $1,519 a year, from about $1,245.
Other areas in the state, Spear said, will see decreases, like Charlotte.
"We are currently in the worst economic crisis in North Carolina ever," he said. "Now is not the time to increase homeowners' premiums."
Two other Beach Plan bills also are under consideration in the House, and legal challenges on the increases are pending in state courts.
Spear said that insurance companies stand to collect about $80 million in additional premiums with the increases.
"My question is: Who can better afford to do without that $80 million?" he said.
Willo Kelly, government affairs director for the Outer Banks Home Builders Association and the Outer Banks Association of Realtors, said that the coast is already paying three to five times more for standard residential homeowners insurance. That's before wind policy costs are added.
Kelly also said that 75 percent of residential Beach Plan policies are for wind only. But she said that in 19 years, the coastal counties experienced only $765 million of the state's $3 billion in wind losses.
"The risk should be shared," she said.
Thompson said the perception that the coast is lined with $1 million second homes is distorted. More accurately, he said, the average homeowner's policy covers about $200,000.
"There are isolated pockets of prosperity," he said, "but mostly, it's a sea of poverty."
A number of the most powerful hurricanes that have hit the state - Hazel (1954), Hugo (1989), Fran (1996), Floyd (1999) - inflicted extensive damage inland, he said, where there is a higher population and more development.
"The implication that hurricanes are a coastal phenomenon and a coastal problem is completely incorrect," Thompson said.
Catherine Kozak, (252) 441-1711, cate.kozak@pilotonline.com
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REDLINING IS ILLEGAL
This article is by far one of this paper's finest hours. Kudo's to the Virginia Pilot for reporting the news on this one, and not bowing to the pressure of the insurance industry...the third most powerful industry in the country. What the insurance companies are doing to the coastal communities is called "Redlining". Redlining is Illegal. It used to be done against minorities until Insurance and housing industries were finally called out for discrimination and regulated on it. Now the poor North Carolinian beach masses that serve the few rich, mostly out of state "castle in the sand" owners are a colorless minority. It is redlining just the same and the insurance companies should be publically humiliated for their greed and exploitation of their infinite power. Thanks VA Pilot for standing next to us during our last stand.
Let's be fair
Premiums to insurance companies should be based on risks that have affected us in the past. Hurricanes are a problem in NC, inland AND along the coast, so premiums should reflect that shared risk fairly and they don't under this proposal. The companies also shouldn't take large chunks of the premiums as profits, then complain there's not enough money for coverage. We're not asking for anything but fair pricing here. Just like you'd want.
Not Exactly Kawika
The cinder blocks won't survive either because they are ground level and the storm surge will take them out. But that is a flood ins issue.
The issue here is wind/hail ins. As the article notes wind damage on the coast in NC over 19 yrs has been less than a 1/3 of the total wind claims in the state. Can you say strong thunder storms, wind shear, tornado, hurricane moving inland??? And we are already paying 3-5 times as much for wind/hail as the rest of the state.
Also can you say Isabel, Floyd or 1933 with regard to VB area and cost sharing????
Difference is
So, based on the numbers in the article, the difference will be about $20 a month more on a mortgage payment assuming the insurance is paid through escrow. We're not exactly talking big bucks here. If there really is so little actual risk, they can just increase the deductible to offset the change and take on the non-existent risk themselves.
Higher Costs and Poor Economy!
These kinds of increases with a poor economy and fewer jobs will only produce more foreclosures and displaced people in these area's. Of course the argument will be, "This is a business, and we got to make a profit!" Alot of these people living along the coast must be feeling very insecure right now! The hurricane they are now facing is the financial one! And I can tell you it will be more devestating to many of those people than the real ones! Living along the coast is becoming more and more of a luxury than ever! There will eventually be an exodus of people moving farther and farther inland to avoid higher and higher costs!
When They Live Right on the Beach, Pay for the Folly
When you build your house on shifting sands and by roiling waves, do not be alarmed that your insurance rates will be hurricane-sky high. The villages on the OBX have been overbuilt to the point where the communities are no longer the ideal as to what was once offered, wide sky, grand beaches, desolate expanses. The only homes that will survive the next 'big one' will be the cinder-block houses built of concrete and stone. The multi-story stick and vinyl apartments (not homes), time-shares and speculation structures will only end up as part of a larger debris field. You want to live by the shore, do not look to the surrounding citizens of NC or VB to pay for your folly of living near a heaving beast of uncertain attitude. If your firm desires to maintain dozens of homes as rental properties, do not saddle others with the burden of supporting your cause should they be damaged or leveled. On the OBX, it should be the rule that if a home is lost due to proximity to the sea and storm-rebuilding shall not occur-leave it be for the sea.