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NC Court Rejects Appeal of Coastal Insurance Increase

Source: Business Week

Posted on 21 Apr 2010

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A state appeals court ruled Tuesday it cannot reverse homeowners' insurance premiums that allowed a nearly 30 percent increase along the coast because state law doesn't allow a challenge to the former insurance commissioner's last-minute deal.

A three-judge Court of Appeals panel ruled in a lawsuit by coastal communities trying to overturn a December 2008 deal between former Insurance Commissioner Jim Long and the North Carolina Rate Bureau, which represents insurers. Their settlement on homeowners' rates, which came weeks before Long ended his 24-year run as the state's top insurance regulator, also allowed homeowners in 32 western counties to cut their premiums.

The municipalities argued Long made the deal before coastal residents could react to the increases insurers wanted. Then Long allowed homeowners' premiums to jump by unreasonably high levels, said attorneys representing Dare, Washington, Currituck, and Hyde counties and five coastal towns.

Attorneys for the state agency and the Rate Bureau told the judges at a hearing three months ago that state law makes the insurance commissioner responsible for representing consumers, and rate settlements can't be appealed to the court by anyone else.

The judges ruled that since Long never held a hearing at which the rate increases were challenged and never judged the requested premium increases to be excessive, inadequate, or unreasonable, the court couldn't overturn the deal.

"This court cannot assume jurisdiction over any order of the commissioner that does not include those requisite findings," Judge Ann Marie Calabria wrote in the ruling also joined by Judges Linda Stephens and Martha Geer.

An attorney representing the coastal communities referred a call seeking comment to Dare County Manager Bobby Outten, who did not respond to messages.

Insurance Commissioner Wayne Goodwin, who took over the month after Long's settlement, said the case isn't over and he could not comment on Tuesday's ruling. A second, related appeal of the Rate Bureau case was argued last week before a different three-judge appeals court panel, Goodwin said.

Long's decision meant that homeowners policies that were written or renewed beginning May 1 for coastal properties from Sunset Beach to Morehead City could jump 29.8 percent. Policy premiums for homes on the Outer Banks counties of Currituck, Dare, Hyde and Pamlico were allowed to rise by 22 percent, a big jump but a bargain compared to the doubling of rates that insurance companies originally sought.

The rate changes included policies written by both private insurance companies and the Beach Plan, the state's property insurance provider for coastal properties.