north carolina beach plan€¦ · north carolina general statute 58-45-1(a) created in 1969 by the...
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NORTH CAROLINA INSURANCE
UNDERWRITING ASSOCIATION - NCIUA
(Coastal Property Insurance Pool)
NORTH CAROLINA JOINT
UNDERWRITING ASSOCIATION - NCJUA
(FAIR Plan)
2
AGENDA
NCIUA – COASTAL PROPERTY INSURANCE POOL
(Commonly known as the Beach Plan)
NCJUA – FAIR PLAN
(Fair Access to Insurance Requirements)
MARKET SHARE INFORMATION
REINSURANCE STRUCTURE
2011 FISCAL YEAR FINANCIAL STATUS
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PURPOSE AND MEMBERS OF THE NCIUA
NORTH CAROLINA GENERAL STATUTE 58-45-1(a)
Created in 1969 by the General Assembly
Provides an insurance market for residents in the beach and
coastal areas
Encouragement of economic development on the coast
Supported by nonrecoupable assessment to Member
Companies – up to $1B annually
NORTH CAROLINA GENERAL STATUTE 58-45-10
Member Companies are all those authorized to write business
within the State
Exceptions for Town and County Mutual Associations and
Assessable Mutual Companies
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LEGISLATIVE HISTORY OF THE NCIUA
Created in 1969 to provide essential coverage in the beach area for
Dwelling Fire
Expanded in 1988 to provide Wind/Hail only coverage in the
beach area
Expanded in 1998 to additionally provide Wind/Hail only in the
coastal area
Expanded in 2003 to provide all inclusive Homeowner coverage in
the beach and coastal areas, also Homeowner Wind/Hail only was
introduced
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GOVERNING BOARD OF THE NCIUA
NORTH CAROLINA GENERAL STATUTE 58-45-30(a)
Board of Directors determined by the Plan of Operation as
approved by the Commissioner of Insurance
Board of Directors consists of 14 Members
7 – Insurance Industry Members
4 – Agent Members
3 – Public Members
Commissioner of Insurance appoints all Agent and Public
Members
Insurance Industry Members are elected annually by the
Member Companies
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RATE DETERMINATION OF THE NCIUA
NORTH CAROLINA GENERAL STATUTE 58-45-45(a)
Most recent Manual Rates or Loss Costs legally in effect
North Carolina Rate Bureau – Personal Insurance
Insurance Services Offices (ISO) – Commercial Insurance
The NCIUA does not set rates
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APPLICABLE SURCHARGES OF THE NCIUA
NORTH CAROLINA
GENERAL STATUTE
58-45-45(a1)
Surcharges developed
to assist in
maintaining status as
Market of Last
Resort, General
Statue 58-45-1(c)
The NCIUA does not
set policy surcharges
Commercial Fire ISO Manual Rate
Commercial
Wind
ISO Manual Rate
Dwelling Fire NCRB Manual Rate
Dwelling Wind NCRB Manual Rate X
1.05 (5%)
Homeowner NCRB Manual Rate X
1.15 (15%)
Homeowner
Wind
NCRB Manual Rate X
1.05 (5%)
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DETERMINATION OF POLICY FORMS FOR THE
NCIUA
NORTH CAROLINA GENERAL STATUTE 58-45-45(a)
Policy forms applicable are those most recently approved by
the Commissioner of Insurance
Insurance Services Office (ISO) for Personal and
Commercial business
North Carolina Rate Bureau for North Carolina specific
forms but published by Insurance Services Office (ISO)
Separate Wind Hail policy forms must be approved by the
Commissioner of Insurance and are modeled after Insurance
Services Office (ISO)
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MINIMUM POLICY DEDUCTIBLES FOR THE NCIUA
NORTH CAROLINA GENERAL STATUTE 58-45-45(a2)
Minimum of one percent (1%) of the insured value for Named
Storm*
Residential deductible options and rates are published by
the North Carolina Rate Bureau
Commercial deductible options and rates follow the
Insurance Services Office (ISO) rating plans
The NCIUA does not set deductible options or rating
*Named Storm includes hurricanes, tropical storms and tropical depressions
if so named
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MAXIMUM POLICY LIMITS FOR THE NCIUA
NORTH CAROLINA GENERAL STATUTE 58-45-41
Residential property building value $750,000
Residential property contents 40% of building limit
Commercial property building $3M per fire division subject to
$6M aggregate for multi-fire division structures
Excess coverage must be purchased to full value of the
property insured for any risk that exceeds these limitations
The NCIUA does not set coverage limitations
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REGULATORY OVERSIGHT OF THE NCIUA
NORTH CAROLINA GENERAL STATUE 58-45-30
Plan of Operation outlining written rules, practices and
procedures as approved by the Commissioner of Insurance
Rules, practices and procedures not outlined in the Plan of
Operation are filed and approved by the Commissioner of
Insurance prior to implementation
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PURPOSE AND MEMBERS OF THE NCJUA
NORTH CAROLINA GENERAL STATUTE 58-46-1(a)
Created in 1969 by the General Assembly
Provides a basic insurance market for residents outside the
“beach area” defined in GS 58-45-5(2)
Encourage the improvement of properties
Arrest the decline of properties
Member Companies share in the expenses, income and losses
GS 58-46-5
NORTH CAROLINA GENERAL STATUTE 58-46-10
Member Companies are all those authorized to write basic
property coverage within the State
Exceptions for Town and County Mutual Associations and
Assessable Mutual Companies
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GOVERNING BOARD OF THE NCJUA
NORTH CAROLINA GENERAL STATUTE 58-46-20
Board of Directors determined by the Plan of Operation as
approved by the Commissioner of Insurance
Board of Directors consists of 14 Members
7 – Insurance Industry Members
4 – Agent Members
3 – Public Members
Commissioner of Insurance appoints all Agent and Public
Members
Insurance Industry Members are elected annually by the
Member Companies
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RATE DETERMINATION OF THE NCJUA
NORTH CAROLINA GENERAL STATUTE 58-46-55
Most recent Manual Rates or Loss Costs legally in effect
North Carolina Rate Bureau – Personal Insurance
Insurance Services Office (ISO) – Commercial Insurance
The NCJUA does not set rates
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APPLICABLE SURCHARGES OF THE NCJUA
NORTH CAROLINA GENERAL STATUTE 58-46-20
Substandard property conditions as outlined in the Plan of
Operation
Approved as the Substandard Rating Plan by the
Commissioner of Insurance
Surcharge(s) removed once the substandard condition(s) has
been corrected
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DETERMINATION OF POLICY FORMS FOR THE
NCJUA
NORTH CAROLINA GENERAL STATUTE 58-46-55
Policy forms applicable are those most recently approved by
the Commissioner of Insurance
Insurance Services Office (ISO) for Personal and
Commercial business
North Carolina Rate Bureau for North Carolina specific
forms but published by Insurance Services Office (ISO)
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MINIMUM POLICY DEDUCTIBLES FOR THE NCJUA
NORTH CAROLINA GENERAL STATUTE 58-46-20
Minimum of one percent (1%) of the insured value for Named
Storm as outlined in the Plan of Operation approved by the
Commissioner of Insurance
Personal Lines applies in the coastal area
Commercial Lines applies statewide
Residential deductible options and rates are published
by the North Carolina Rate Bureau
Commercial deductible options and rates follow the
Insurance Services Office (ISO) rating plans
The NCJUA does not set deductible rating calculations
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MAXIMUM POLICY LIMITS FOR THE NCJUA
NORTH CAROLINA GENERAL STATUTE 58-46-20
Limits are defined in the Plan of Operation and approved by
the Commissioner of Insurance
Residential property building value of $750,000
Residential property contents 40% of building limit
Commercial property building $2.5M per fire division
subject to $6M aggregate for multi-fire division structures
Excess coverage must be purchased to full value of the
property insured for any risk that exceeds these limitations
The above limits were amended to be consistent with the
NCIUA maximum limits as defined by General Statute
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REGULATORY OVERSIGHT OF THE NCJUA
NORTH CAROLINA GENERAL STATUE 58-46-20
Plan of Operation outlining written rules, practices and
procedures as approved by the Commissioner of Insurance
Rules, practices and procedures not outlined in the Plan of
Operation are filed and approved by the Commissioner of
Insurance prior to implementation
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NCJUA/NCIUA POLICY COUNT
0
50,000
100,000
150,000
200,000
1996 1998 2003 2011
NCJUA NCIUA
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NCJUA/NCIUA PREMIUMS
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
1996 1998 2003 2011
NCJUA NCIUA
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NCJUA/NCIUA EXPOSURE
$0
$10,000,000,000
$20,000,000,000
$30,000,000,000
$40,000,000,000
$50,000,000,000
$60,000,000,000
$70,000,000,000
$80,000,000,000
1996 1998 2003 2011
NCJUA NCIUA
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NCJUA/NCIUA MARKET SHARE INFORMATION
BEACH AREA 71%*
COASTAL AREA 37%*
STATEWIDE 13%*
*Based on reported premium writings for calendar year 2010
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2011 REINSURANCE STRUCTURE
$4.0B TOTAL RISK FINANCING
$750M NCIUA Retained Earnings
$1B Member Company Non-Recoupable Assessments
$2.25B Purchased Reinsurance
$1.3B Attachment Point for Purchased Reinsurance
$750M NCIUA Retained Earnings
$550M Member Company Non-Recoupable
Assessments
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2011 FISCAL YEAR FINANCIAL STATUS
2011 FISCAL YEAR NCJUA NCIUA COMBINED
PREMIUMS $25,589,193 $303,724,266 $329,313,459
PAID LOSSES INCLUDING
EXPENSE
*Data as of 9/30/11
$(23,181,082) $(64,123,043) $(87,304,125)
OPERATING EXPENSE
AGENT COMMISSION
$(3,780,665) $(39,146,303) $(42,926,968)
OPERATING EXPENSE
NCJUA/NCIUA
OPERATIONS
$(2,400,687) $(5,056,555) $(7,457,241)
OPERATING EXPENSE
PREMIUM TAX
$(697,226) $(8,459,328) $(9,156,555)
REINSURANCE EXPENSE $(12,387,488) $(208,817,651) $(221,205,139)
PREMIUM REMAINING $(16,857,955) $(21,878,614) $(38,736,569)
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NCIUA NCJUA
END OF PRESENTATION