Posted by Benji Riggins on June 30, 2009 under Insurance News | 
North Carolina legislators started grappling last week with how to beef up the state-created but underfunded insurance program for coastal property, and immediately confronted the possibility that all of the state’s insured property owners could pay more after a catastrophic hurricane season.
Legislation at fixing the Beach Plan was introduced in the House Insurance Committee, which will take it up again this week. The bill’s balancing act includes a proposal to cap insurers’ risks from a catastrophe and shift remaining rebuilding costs to all North Carolina policyholders.
There is now no limit on the price tag insurers could face, and several have warned they would scale back their business or quit North Carolina altogether without a cap on their liability. That could limit competition for consumers, Insurance Commissioner Wayne Goodwin said.
“I have no choice but to believe some of what the insurance companies say is true,” Goodwin said. “This is not a perfect bill, but it has protections for consumers.”
The Beach Plan was created in 1969 as the insurer of last resort. But it has ballooned as insurance companies raised rates in storm-prone coastal areas after Hurricane Andrew in 1993 and politicians extended coverage to more people. The Beach Plan now insures 170,000 properties valued at nearly $74 billion. But it has the resources to cover just a fraction of that.
The bill would allow every property insurance policy’s annual premium to rise by up to 10 percent if the Beach Plan’s claims surpassed about $2.4 billion in available assets, reinsurance and additional charges assessed on property insurance companies doing business in the state.
Each insurer could be forced to pay for claims on Beach Plan policies under regulations thats allow them to do business in North Carolina. The assessments would be besides paying off their own policy holders who suffered damage from storms.
The statewide surcharge could mean up to an extra $65 a year for the average annual homeowners premium of about $650, the state Insurance Department said. North Carolina’s homeowners insurance premiums have been among the country’s lowest, with the state ranking 35th in 2006, according to the Insurance Information Institute.
Insurance industry lobbyist John McMillan said the statewide surcharge would only kick in if the Beach Plan’s losses topped $2.4 billion.
“When you get calls about the possibility of surcharges in the western part of the state, it is very, very remote,” McMillan said.
In comparison Hurricane Hazel, the monster 1954 storm that set the standard for damage in North Carolina, would have cost more than $6 billion in current dollars, Insurance Department lobbyist Rose Vaughn Williams said.
The measure also would:
- Change the program’s name from Beach Plan to Coastal Property Insurance Pool, which is described as the insurance market of last resort for coastal properties.
- Make sure wind and hail coverage through the pool would always be 10 percent more expensive than the rate the state allows companies to charge. The pool’s surcharge for homeowner’s insurance that includes wind and hail coverage would be 20 percent.
- No longer distribute back to insurance companies surpluses accumulated during times the Beach Plan did not have to pay claims.
- Cut the maximum coverage on residential properties the pool would insure from $1.5 million to $750,000. The portion of a property’s value that exceeds $750,000 would have to be insured through a costlier excess and surplus coverage. The pool would not insure the first $750,000 until the excess coverage was lined up.
- Direct the pool’s wind and hail policies to include a deductible of at least 1 percent, which means the owner of a $300,000 home would have to pay at least the first $3,000 in damage out of pocket in the event of hurricane damage.
- Allow pool policies to be paid on an installment plan.
- List the types of damage-reducing construction features or improvements that policyholders can adopt in return for credits on their policy.
- Let the insurance commissioner forgive an insurer’s assessments to the pool if the commissioner thought it would put the company into danger of insolvency.
Posted by Benji Riggins on June 26, 2009 under Safety |
Young motorboat drivers in North Carolina would be required to meet minimum boating safety education requirements in legislation approved by the House.
The bill approved this week would obligate people under age 26 to complete an approved boating safety course or pass a test to operate a boat with a motor of at least ten horsepower.
There are many exceptions, including those who operate in state waters for less than 90 days, commercial fishermen and someone who is renting a boat.
Violators would face no monetary penalty except for court costs.
Supporters say the requirement hopefully will prevent accidents on the state’s waterways.
The bill now returns to the Senate, which must decide whether to accept the House changes.
Posted by Benji Riggins on June 20, 2009 under Insurance News, Uncategorized |
A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a+” of MetLife Auto & Home and its nine members, led by Metropolitan Property and Casualty Insurance Company. The outlook for all of the ratings is stable. Best said the “ratings reflect MetLife Auto & Home’s adequate capitalization, consistent operating performance, strong enterprise risk management practices and successful multiple-channel distribution network.” However, offsetting factors include “the group’s moderately elevated underwriting leverage, as well as its exposure to weather-related events. The rating outlook is based on the group’s adequate capital strength, consistently favorable operating trends and the support of its parent company, MetLife, Inc. ” In addition Best noted that “positive rating attributes include MetLife Auto & Home’s geographic diversification and the marketing advantage it derives from the established brand name recognition of MetLife.” The ratings also acknowledge management’s “focused operating strategy, extensive product knowledge and multiple distribution channels. The group has consistently generated capital through operating earnings reflective of disciplined underwriting and a steady stream of investment income. Behind these results is an enterprise risk management structure of oversight committees and work groups that maintain various procedures and contingency plans within MetLife Auto & Home.” Best pointed out that, although MetLife Auto & Home has incurred large catastrophic losses as a result of several hurricanes in recent years, “the group continues to reduce its catastrophe exposure through underwriting initiatives, coverage limitations, increased deductibles and reinsurance protection, which should favorably affect future operating earnings.”
Posted by Benji Riggins on June 15, 2009 under Insurance News |
As you are aware, GM has filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code (Reorganization). GMAC has not filed for bankruptcy and does not intend to do so. GMAC continues to meet all of its obligations.
GMAC is a separate company with a newly-appointed Board of Directors and a diversified ownership structure. GM directly holds less than 10 percent of the common equity in GMAC.
GMAC continues to provide its auto customers, including GM dealers and consumers and Chrysler dealers and consumers, with automotive financing products and services. This includes retail auto originations, wholesale financing, insurance products, and servicing of customer loans. The company’s non-automotive activities continue uninterrupted.
GMAC’s auto-centric businesses are still largely connected to GM and, although there are some potential impacts to that business (auto finance volume, remarketing proceeds, etc.) as a result of GM’s restructuring, GMAC has been working for some time to mitigate the effects.
At GMAC Insurance, operations are unchanged. Our focus remains on delivering exceptional, innovative insurance products and services to our customers. Moreover, restructuring activities at GM will not impact GMAC Insurance’s ability to meet and service its obligations.
GMAC Insurance remains a strong company with a strong balance sheet and market presence, and committed employees. We are confident in our plans to grow the business and successfully execute them.
Our Products. All GMAC automobile insurance policies are issued by licensed and regulated insurance companies, which are members of the GMAC Insurance Group led by GMACI Holdings LLC.
Our Company. The GMAC Insurance Group is wholly owned by GMAC LLC, which received bank holding company status December 24, 2008.
Insurance companies of the GMAC Insurance Group maintain a financial strength rating of “A-” (Excellent) from A.M. Best Company, a primary rating organization for the insurance industry. The “A-” rating is assigned to companies that have, in the opinion of A.M. Best, an excellent ability to meet their ongoing insurance obligations.
Our Experience. With nearly 70 years of experience offering quality insurance and insurance-related products and services, GMACI will continue to offer an exceptional level of service to our customers, agents and brokers.
GMAC Insurance – Personal Lines has a long history of serving independent agents in our core states building on the excellent foundation of Integon, who GMAC acquired in 1997. We believe we continue to offer superior value to our policyholders, including excellent customer and claims service which differentiates us in the market. We are proud of that record, and we remain committed to our policyholders, agents and brokers and customer groups.
Our dedication to our policyholder, agent and broker and customer group relationships continues to compel us to improve our operations and make investments in service and products. A number of exciting internal initiatives are underway, and we will be communicating more specific information on these efforts in the near future.
We understand you may have questions, and we are committed to keeping you informed. As always, if you have any questions, please contact us at 704/821-7630.
Posted by Benji Riggins on under Insurance News |
GMAC Financial Services is a creditor of General Motors Corp. (GM) and as such is taking the appropriate steps to protect GMAC’s interests during GM’s restructuring.
GM has submitted a motion to the U.S. Bankruptcy Court that, pending approval, would allow its direct business with GMAC to continue in the ordinary course during GM’s restructuring. In addition, GMAC has been advised by GM that GM will take appropriate steps in the bankruptcy court to authorize a purchaser of the assets to comply with all of the contracts with GMAC, including all payment obligations.
GMAC continues to provide automotive financing products and services to GM and Chrysler dealers and customers, including retail auto originations, wholesale financing, insurance products, and servicing of customer loans. The company’s non-automotive activities also continue uninterrupted.
GMAC is a bank holding company with a newly appointed board of directors and a diversified ownership structure. GMAC has not filed for bankruptcy, nor does it intend to, and the company continues to meet all of its obligations.
Posted by Benji Riggins on June 12, 2009 under Insurance News |
Citing concerns over the potential for property losses due to storms, Nationwide Insurance is exiting the mobile home insurance policy market in North Carolina, phasing out existing mobile home policies from Oct. 3, 2009 through Oct. 2, 2010 and halting the writing of any new mobile home policies.
In addition, Nationwide is discontinuing writing new renters, condo and dwelling fire policies in the state effective Aug. 31, 2009. This does not impact existing renters, condo and dwelling fire business.
The mobile home maket withdrawal does not affect existing mobile homes that are covered under a traditional homeowner policy.
The company said it is working with local agents to help approximately 15,000 affected mobile home customers find alternative coverage options.
The company said the actions are part of its ongoing efforts to manage its property risk exposure in the state.
“The ongoing exposure to windstorm, tornado, ice storms and the threat of hurricane activity are very real factors we have to consider so we can continue to be here for our customers for the long-term,” said Lee Morton, regional vice president for Nationwide in North Carolina.
Customers will be notified by mail approximately 90 days before their policy expires. They should also receive a formal notice of non-renewal by mail approximately 60 days prior to their policy’s non-renewal date. Coverage remains in effect until the non-renewal date.
The state has allowed some property insurance rate increases but insurers remain concerned about the ability of the state’s market of last resort, the Beach Plan, to withstand a major storm without later levying huge assessments on insurance companies.
The state has been considering proposals to shore up the Beach Plan and cap insurers’ liability.
Last year, Encompass Insurance left the homeowners market.
