The North Carolina Insurance Federation has created a website that discusses the proposed change and also gives you the resources to contact your State Senator about the vote.  Please visit the site and take action immediately.

http://www.dontraisemyinsurance.com/

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The North Carolina Beach Plan was established as a market of last resort for insuring coastal property.  Over the years, the North Carolina Beach Plan has become the market of first resort.  The North Carolina Department of Insurance sets the maximum premium(s) that can be charged for any risk.  The problem is that under the leadership of the former insurance commissioner, North Carolina would not allow private insurance carriers to charge adequate rates for coastal risks.  The result, most insurance carriers that do business in North Carolina refused to write coverage in the coastal counties.  The result was made the market of last resort into the market of only resort.

Fast forward to 2009 and The North Carolina Beach Plan is faced with major problems.  The Beach Plan is under funded and unable to purchase adequate reinsurance.  In order to make sure that the Beach Plan remains solvent and capable of paying claims, in the event of the 100 year storm, the Beach Plan will have to impose assessments on all insurance carriers that write property insurance in the state of North Carolina.  The assessments will be made proportionately according to market share by each carrier.  The net affect, the Top 10 Property Insurance Carriers in the state of North Carolina are looking at the potential of being assessed 10′s of millions of dollars.

Most North Carolina residents do not concern themselves with what takes place at the beach.  That will soon change.  In order to prepare for the possible assessments, insurance carriers are having to increase insurance rates to the non-coastal risks that they insure.  Is this fair?  The answer is no, but unfortunately since the carriers are unable to increase insurance premiums for the coastal exposures, they must find additional ways increasing reserves.  That leaves only two avenues, increasing premiums to the remainder of the state (which they are doing) and reducing their possible assessment by decreasing their market share (which many are doing by tightening underwriting requirements).

If you live at the beach, it is understandable that you do not want to voluntarily ask for an increase in premiums.  However, is your risk not substantially more than someone who lives in Greensboro?  Shouldn’t you pay more to insure your home than someone in the Triad?

The North Carolina Insurance Industry is facing a huge challenge.  Unless some serious resolutions are made, the innocent will again carry the burden.

About The Author:  Jack Wingate is a Professional Insurance Advisor and Founder of ALLCHOICE Insurance in Greensboro, NC.  For more information about Jack Wingate or ALLCHOICE Insurance please visit http://www.allchoiceinsurance.com

Hartford Financial, Lincoln National (for North Carolinians that is the old Jefferson Pilot), Allstate, Ameriprise Financial, Principal Financial, and Prudential Financial are all about to receive TARP Funding.  It is estimated that, combined, the companies will receive a little under $22 BILLION!  While this will strengthen the capital positions of these institutions in the short term, I think the jury is still out about the long term consequences.

While I don’t want to throw about random musings about the future of these companies, I do know that I would not place any insurance business with any of these companies until they can prove that they can stand-alone without being bailed out.  With Insurance, companies ask a question of every policy they write, “Is this risk worth insuring?”, my question now becomes are these institutions worth bailing out?  The management of these companies apparently have not performed their jobs well, so why should we think that they are going to act any differently now.  They just have more money (your money) that they can “gamble” with.

Jack Wingate

We all know that the economy is not in great shape, regardless of recent stock market performance.  You have are also probably aware of the difficulties many banks and lending institutions are having.  While I hate to make “blanket statements”, it is safe to say that a company has anything to do in Financial Services (Banks, Mortage Companies, Brokerages, and yes Insurance Companies) then those companies have had to take a hard look at the state of their businesses.

What does this mean to you?  Most people will sweep this under the rug along with the other “white noise” that comes each day with regard to the economy.  While I don’t believe we are facing a financial armageddon, I do think you should pay close attention to any news that offers negative views with respect to Insurance Carriers!  Think about it, the three main Insurance Carriers mentioned in this article are household names!  There is a good chance that you or someone you know has some form of insurance coverage with one of these companies.  While I am not saying that these carriers are at a point where your personal coverage is in jeoporady, but would you take that chance?  What is more likely to happen is that these companies are going to need to find capital from somewhere.  Now, let’s think about this…what are the possible sources of capital?

• Increase Investment Gains (good luck with that)
• Decrease Insurance Losses (that is there job, but people have wrecks, houses burn down, life insurance claims pay out)
• Issue Debt / Borrow Money (we have all seen how good the use of debt works out for people / corporations / and Governments)
• Increase Revenue (that means your insurance premiums are going up)

Of that list of capital sources, which one is the easiest to pull off?  That’s right, raising your premiums.  In my years as an Insurance Professional, I have found that insurance consumers are loyal (the good customers).  Many people just say, I have been at XYZ Insurance Company for 15 years, why should I switch?  That is what most insurance carriers (and agents) like to hear.  They pour the dirty water down and you drink it like it was Kool-Aid!

Jack Wingate