Fact Sheet

III Hot Topic and Issue Update on Residual Markets

Property Insurance

The North Carolina General Assembly passed legislation on the Beach Plan this session.  While HB 1305 (The Beach Plan) does not completely solve all problems involving coastal insurance policies, it marks the beginning of a many more incremental steps toward strengthening and diversifying not only the coastal insurance market in North Carolina, but the entire market in the state.

HB 1305 includes provisions that should help slowly return the Beach Plan to market of last resort and put the Plan in a better position to cover its own losses without making assessments to policy holders across the state, or member companies. 

The industry is pleased with the leadership that the Commissioner and our legislators demonstrated in understanding that the Beach Plan needed attention and for taking the critical steps to help rectify the situation.

North Carolina: State with the highest percentage in the private passenger residual market in 2005, was North Carolina, at 23 percent, followed by Massachusetts, at 6 percent.  However, in Massachusetts, about one quarter of all commercial auto insurance premiums ends up in the residual market.  In North Carolina, a considerable number of drivers are insured in the residual market because the state's current auto insurance regulatory system does not allow insurers the flexibility to charge a rate that reflects true risk.  Those drivers believed to be too risky for the rate allowed are ceded or transferred to the shared market.