Cook introduces proposed legislation to compel insurance reforms

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State Sen. Bill Cook (R-District 1) is shown Tuesday speaking at a press conference to announce his ‘Property Insurance Fairness’ legislation. From left are Insurance Commissioner Wayne Goodwin; state Sen. Harry Brown (R-District 6); Representative Chris Millis (R-District 16); Cook; Representative Mike Hager (R-District 112); and state Sen. Senator Norman W. Sanderson (R-District 2).


RALEIGH – This week State Sen. Bill Cook, a Republican who represents Beaufort, Camden, Currituck, Dare, Gates, Hyde, Pasquotank & Perquimans Counties, filed a comprehensive property insurance reform bill — Senate Bill 208.

The bill aims to ensure transparency and fairness in the North Carolina property insurance rate-making process. Sen. Harry Brown and Sen. Fletcher L. Hartsell joined Cook as primary sponsors of the bill.

The bill requires insurers to provide detailed information concerning their cost and revenues. It gives the Commissioners more latitude in setting rate levels, Cook said. This bill gives insurers a more efficient mechanism for responding to catastrophic losses in the state.


Several Republicans in the state House filed a companion bill the same day.

This legislation proposes to create a public authority to issue tax-exempt bonds in order to finance potential catastrophic losses. The bonds would be issued if, and only if, a catastrophic event threatens to exhaust the resources of the property insurance pool. No bonds would be issued until after a catastrophic event has actually occurred.

The legislation does not impose any new costs on North Carolina citizens. Several other southeastern states (Florida, Texas, and Louisiana) with large coastal exposures have the ability to finance deficits in their wind pools with tax-exempt bonds, Cook said. For example, in the aftermath of Hurricane Katrina, Louisiana’s wind pool issued post-event bonds to enhance its claims-paying ability.

The bill requires that more than one catastrophe model must be used in a Rate Filing. The models have to be specific to North Carolina risks and reflective of the North Carolina Building Code.

The bill also makes changes to the existing state statute, which now allows a controversial concept known as consent to rate as it applies to residential property insurance policies. The rate for which consent is sought must be based on sound actuarial principles, meaning that it is based on and justified by the insurers own projection of its expected future claims. Once the insurer has obtained the policy owners consent to a higher rate, future renewals of the policy must provide 30-day notice to the policy holder and obtain their written consent again.

This bill has the support of Insurance Commissioner Wayne Goodwin, North Carolina Association of Realtors and the North Carolina Homeowners Alliance, Cook said.

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