Good morning. I’m Senator Bill Cook. Today with me are Senator Harry Brown, Senator Norm Sanderson, Representative Chris Millis, Representative Mike Hager, Representative David Lewis, Insurance Commissioner Wayne Goodwin, Mr. Tony Smith, President of the North Carolina Association of Realtors and Miss Emily King from the North Carolina Homeowner’s Alliance. We are introducing legislation in both the House and Senate today, SB 208 and HB 182 that is designed to promote fairness and equity in property insurance rates here in North Carolina. The bill requires insurers to provide detailed information concerning their costs and revenues. It gives the commissioner more latitude in setting rate levels. The bill gives insurers a more efficient mechanism for responding to catastrophic losses in the state. It emphasizes the commissioner’s rules governing consent to rate situations and requires the rates to be based on sound actuarial principles and finally the bill requires a study of consent to rate policies as well as the entire property insurance rate making process in North Carolina. Having said that, I’d like to turn it over to some other folks. We’ll start with Chris Millis and then maybe hear from Senator Brown. Thank you. [SPEAKER CHANGES] Thank you, Senator Cook. I’m Representative Chris Millis and it’s an honor to be with you all today. First and foremost I want to thank my Senate and House colleagues as well as the Department of Insurance as well as the Insurance Commissioner for all the time, energy and effort that was put into this proposed legislation. We are here today after having a joint effort to deliver a thoughtful, vetted and meaningful reform to positively affect the ability for our citizens to obtain affordable property insurance across this entire state. Legislative action regarding the statewide property insurance reform is well overdue here in North Carolina. We believe that this legislation will provide greater affordability in property insurance market for our citizens and a better market environment for the providing industry. We believe the objective of increasing affordability is accomplished in this legislation due to the very statutory tools that the legislation grants to all those involved with property insurance rate making. We look forward to advancing this legislation into law for all the benefit of those affected and involved and this is a great piece of legislation that I believe all North Carolinians can be proud of. Thank you for your time today and I want to turn this over to Senator Harry Brown for a few comments. [SPEAKER CHANGES] Thank you, Chris. I’ll be brief. I think many of you know I’ve been working on legislation for several years dealing with this. I think this bill is very, very important, especially to our seniors across the state. Many in my district and several of the districts around me, what is happening in property insurance over the past couple years has truly affected the probably more than anyone else. We’ve got situations now where we’ve got seniors with no insurance because they no longer can afford the insurance for when in particular, so hopefully this reform will be something that will help the whole state. We feel like it will. You know, for us on the coast in particular, we’ve seen rates triple in the past 6-7 years. So I know it will help many of my citizens. For us on the coast it’s the number one issue. The number one issue that we hear from our constituents day in and day out, so this reform is important to us and I appreciate the legislators across the state getting involved in this and helping support this bill. I think it’s a good common sense bill and can bring some certainty maybe to some rates that will help us in the long run. So thanks a lot. [SPEAKER CHANGES] Good morning. My name is Wayne Goodwin. I’m our State Insurance Commissioner. As our Insurance Commissioner, I applaud all the legislators who have involved with this process and involved with taking up this very important issue. As I travel the state of North Carolina and ask people about the insurance issues that matter most to them, homeowner’s insurance is always a topic of discussion. Now, no doubt, it is a complex issue but it is important to people and it ought to be and I believe that when it comes to homeowner’s insurance, North Carolinians deserve fairness and they deserve transparency and that’s why
To support this bill. It empowers consumers, making more information available to consumer allows them to make better, more informed decisions about insurance for themselves, and for their families. And the more we study and understand our insurance market here in the Tarheel state, the better equipped we are to improve it for the industry, and the public alike. My staff at the North Carolina Department of insurance will continue to provide their support and their expertise throughout this process, and I’m extremely happy to work in cooperation with our legislators to come up with common sense and beneficial adjustments to our system. I’ll now turn the mic over to Emily King, with the North Carolina Homeowners’ Alliance. [SPEAKER CHANGES] Hi, my name is Emily King. I’d like to thank you for having me today. I’m a member of the North Carolina Homeowners’ Alliance, and I came to speak out in support of this bill. As the North Carolina homeowner, my family is directly impacted by any increase in insurance rates. Giving the commissioner of insurance the ability to lower rates has the potential to lower homeowners’ insurance rates for all North Carolina families. This fair and equitable bill will help North Carolina families in an economy that is still recovering. Consent to rate notices are a scare tactic used by insurance companies that cause individual consumers to get consent to rate increases that continue on over time. This bill will extend notice periods for consent to rate notices, and also cause the companies to give notice of any continued increases in rates. I’d like to thank all of the bill’s sponsors for their support and help to North Carolina families like mine, and I’d like to encourage wide bipartisan support of this bill. I’d like to now turn it over to Tony Smith, he is the president of the North Carolina Association of Realtors. [SPEAKER CHANGES] Thank you, Emily. As president of the North Carolina Association of Realtors, I want to extend thanks and support to the bill’s sponsors of behalf of the association. The long overdue changes in this bill have been priorities of ours for years, and much needed to insure that homeowners insurance is affordable. Our association is committed to the grass-roots mobilization to support the bill, and I encourage others to sign up as cosponsors in both chambers, and to encourage quick passage of this bill. Over 30 years in real estate and residential sales, there was a time when the insurance – property insurance was not an issue to the transaction, and now the cost of it can be a deal killer, so I really look forward to the passage of this. Thank you. [SPEAKER CHANGES] Unless there’s somebody else who wants to speak, that’s about it for us today. I want to thank you all for coming and paying attention. If anybody has questions, we’ll field a few. We don’t have a lot of time. Yes, sir? [SPEAKER CHANGES] How does this affect what the rate ?? is required to do when submitting rate cases, does this go to what past bills have done, regarding using historical data, and not just risk modeling when it comes to making rate cases? Does it go into that at all? [SPEAKER CHANGES] Not very much. We try to look at historical – encourage them to look at historical data, but still allows for models to be used. I always forget. That’s probably my wife and I’m in deep trouble. Alright, yes ma’am? [SPEAKER CHANGES] Senator Curtis, so you mentioned when you were introducing this, that it gives the insurance companies a little bit more flexibility and how to respond to these? Can you explain that? [SPEAKER CHANGES] Well, insurance companies are what they call a tower of where they get their money from, for catastrophic events. They look at retained income, first level, they grab that money to pay off banks, and they look at reinsurance money. I don’t want to get too technical. Insurance companies turn around and buy insurance to support their insurance, so that’s the second thing we look at, are we going to give them another level of bonding, they can sell bonds in order to meet catastrophic events, which makes the requirement for reinsurance, which is expensive. To the extent that we are able to --
Reinsurance, we reduce the costs, which hopefully will provide for smaller premiums for the consumer. [SPEAKER CHANGES] Would those bonds be government backed? [SPEAKER CHANGES] If you want to, I’ll answer this. Those bonds are not government backed. Basically what this bill does is actually give, by way of a bonding authority, the actual rate here, the ability to issue tax-exempt bonds, so the full faith and credit of the state is not behind these bonds. It actually established bonding authority. [SPEAKER CHANGES] Alrighty—oh, one more? [SPEAKER CHANGES] Senator, this is usually -- the insurance industry wants to say something about a bill like, and they’re not here today. Has this been discussed with the insurance industry? What has been their response, and why aren’t they supporting this? [SPEAKER CHANGES] I haven’t heard from them. I’m sure they’re aware of it. [SPEAKER CHANGES] One quick follow-up, Representative Millis. Do other states do this bonding authority? [SPEAKER CHANGES] Yes, other states do. I actually have this authority, this actual legislative tool, that their insurance providers can utilize. I believe it’s been done in the past in the state of Texas, and possibly in Louisiana, and some others. We definitely tailored this to the benefit of our North Carolina citizens, as well as our North Carolina underwriters as well, and we try to more or less glean from the good and throw out the bad in terms of how to actually establish this. We feel very confident in the way that we’ve put this forward, not only with reaching out to the actual bonding commission, but also with a dialogue from the part of insurance and the insurance commissioner on actually how to do this the right way in North Carolina. [SPEAKER CHANGES] Seeing no more questions, I think we’ll quit. Thank you very much.