Windstorm Insurance: In Two States, Higher Rates Ahead~

As Coastal Connection reported last month, windstorm insurance rates in coastal counties are a political hot potato in many states. In North Carolina and Texas, coastal homeowners have been struggling to fend off rate increases targeted at houses exposed to hurricane risk. But so far, the game is not going their way in either state. In North Carolina, a Wake County Superior Court judge threw out a petition by coastal municipalities to stop an Insurance Department deal with the North Carolina Rate Bureau (which represents insurers). Under the arrangement, rates in some coastal counties will jump by 22% to 28%, while rates in 32 western inland counties will fall 1.2% to 6%. In the coastal areas, many homes are insured by the "Beach Plan," North Carolina's state-backed high-risk pool. Insurers say the rate hikes are necessary because the Beach Plan's assets are far short of the amount needed to cover the possible losses if a major hurricane strikes the state. Judge Ronald Stephens said the towns and counties who oppose the rate hike lack the legal standing to contest the Insurance Department policy in court. His order clears the way for the rate hikes to take effect. The Raleigh-Durham News & Observer covers that story (" Insurance challenge rejected," by David Ranii). The Insurance Journal offers more background (" North Carolina Judge Clears Way for Home Insurance Rate Changes," by Emery P. Dalesio). For some coastal residents, the upcharge will come as a shock. The Jacksonville, N.C., Daily News cites one example: a homeowner who has until just May 31 to pay a $3,961 premium to keep his policy in force (" Coastal residents prepare for impact of property insurance hike," by Janette Pippin). That's $1,200 more than last year, says the News. And the story notes complaints by some coastal residents that past hurricanes, including Hurricane Hugo and Hurricane Fran, did more damage in western counties than along the coast. Coastal politicians are now moving the battle to the state legislature, where legislators are pushing a measure to stay the rate increases for up to a year. The Wilmington Star-News has more on that story (" Legislators try to repeal insurance rate increases," by Joe Johnson). In Texas, the struggle over rate hikes reached the legislature last month. Here, coastal interests have managed to put the brakes on the toughest rate hikes. However, some kind of rate increase appears to be inevitable because, as in North Carolina, the state insurance pool (the Texas Windstorm Insurance Association) can't cover the risk to its policyholders if another big storm occurs, without a cash infusion from somewhere. A measure to raise coastal premiums, Senate Bill 14, has moved on to the Texas House. The bill calls for rate hikes of 5% annually in 13 coastal Texas counties — meaning, in theory at least, a 50% hike in ten years (even using simple math). The Bay City Tribune covers that story (" Windstorm legislation bill moves on to House," by Heather Menzies). A hastily organized protest on the state Capitol steps by coastal residents drew a crowd of about 200 demonstrators, according to this report from Kiii-TV News ("Austin Scene of Coastal Rally"). The Beaumont Enterprise covers the story, but counts the crowd at just 100 (" Coastal residents rally at Capitol in support of affordable windstorm bill," by Dan Wallach). Meanwhile, whatever compromise the legislature may produce has to come soon: Texas' part-time legislature, which meets for just 140 days every other year, wraps up its work for this session on the first of June.