North Carolina Insurance Commissioner Wayne Goodwin has announced a settlement agreement that calls for the North Carolina Insurance Underwriting Association, known as the Beach Plan, to reverse the more than $16 million it made to member companies in 2009.
The Beach Plan serves as the insurer of last resort for policyholders located along the state’s coastline who cannot find coverage in the private market. The majority of the policyholders purchase coverage for damage due to windstorms and hail. Under the Beach Plan’s operational plan, it had been allowed to return any surplus premiums to its member companies. That changed, however, when in 2009 when the state legislature passed a law requiring the Plan’s accumulated surplus must be retained from year to year and used to pass losses, reinsurance costs and other expenses. The change in law came after hundreds of thousand homeowners along the state’s coastline saw premium increases averaging up to 30 percent.
An examination ordered by Goodwin and conducted by the department’s Financial Evaluation Division found that the Beach Plan had distributed some $16.4 million to its member companies in December 2009. The examiners contended that the reimbursement was not in compliance with the state law, which took effect on August 26, 2009. After talks between the department and Beach Plan officials, the plan agreed to reverse the distribution while not admitting they violated any laws.
“I am pleased that we came to an agreement that this money will be returned to the Beach Plan where it can help protect coastal property owners,” said Goodwin.
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