The General Assembly approved the bill Thursday amid concerns that more insurance companies will stop doing business here without state homeowners providing a financial backstop for catastrophic hurricanes, John Murawski reports. It will become law when it is signed by Gov. Beverly Perdue, as is expected.

The bill requires homeowners to pay a surcharge, not to exceed 10 percent of their annual premiums, to cover storm damage that exceeds the financial capacity of the Beach Plan, an insurance plan created by the state for people who can't get coverage elsewhere. For the average homeowner, the surcharge will be capped at $65 a year, based on the typical amount of insurance policies in the state.

Triggering the surcharge would require what some call a once-in-a-century storm. It's estimated that a hurricane would have to cause $2.4 billion in damage to trigger the surcharge on homeowners, and a much larger storm for the surcharge to hit the annual cap.

The biggest payout to date by the 40-year-old Beach Plan has been $130 million for damage caused by Hurricane Fran in 1996. That was significantly less than the $2.4 billion the Beach Plan currently can access to cover storm damage.

The Senate sent its version of a bill that would shore up the state's coastal insurance plan back to the House for a final vote.

The bill would allow the state-created insurance plan known as the Beach Plan to assess a surcharge on homeowners and businesses across the state if a storm generates more claims than the plan can pay. 

The Senate backed off a proposal that would have raised the cap for coverage under the plan from $750,000 to $1 million. Senate Leader Marc Basnight, a Manteo Democrat, begrudgingly agreed to the reduction, which was proposed by Sen. Phil Berger, an Eden Republican and the chamber's minority leader.

"He and his colleagues are demanding that it occur," Basnight said. "I hope you are proud of it." 

Berger said he moved for the cap because it would be hard for many senators to go back to their non-coastal districts and explain why insurance might be more expensive because million dollar houses were destroyed.

"The idea that this plan covers property up to $1 million, I think, creates a real political problem for many of us who are willing to support a compromise bill," Berger said.

The $750,000 cap would give the bill an easier time back in the House, said Rep. Hugh Holliman, a Lexington Democrat and the chamber's majority leader. 

'DEADLINE' IS A STRONG TERM: The House and Senate missed their July 15 deadline to adopt a budget. So, proving that it's good to be the ones who make the laws, they gave themselves more time. Meanwhile, the state court system, unsure over whether it can make payroll next month, sure would like to see a budget.

BILLS, BILLS, BILLS: There's no budget yet, but that doesn't mean the House and Senate aren't working. Key votes came this week on bills to shore up the Beach Plan, to allow challenges of racism to death sentences and to stop requiring sexual assault victims to pay for rape kit exams.

SOFT ON CRIME?: Judges were in giving moods this week. First U.S. District Judge W. Earl Britt released Sam Currin, a former judge, federal prosecutor and state Republican Party chairman, who had served a fraction of his sentence for money laundering and obstruction. Then Superior Court Judge Donald Stephens decided that former House Speaker Jim Black can serve his state time concurrently with his federal prison sentence.

IN OTHER NEWS: Attorney General Roy Cooper says he will work to get money that was diverted away from crime victims. Unemployment in North Carolina has hit African Americans especially hard. Attorney and Senate hopeful Kenneth Lewis has hired Joe Trippi, who ran John Edwards last presidential campaign to help with fundraising.

The House and Senate dug in and heard scores of bills Wednesday.

Notable votes included bills on beer, reptiles and coastal insurance.

* HB 1595: Allows grocery stores to offer beer tastings similar to wine tastings that are already allowed. Beer can be served in portions no greater than 2 oz. The bill heads back to the House for a final vote.

* SB 307: Regulates possession and keeping of certain dangerous reptiles such as venomous snakes. Bill now goes to the governor.

* HB 1305: Would place the burden of paying for the damage caused by a catastrophic hurricane on homeowners across the state. Bill now heads to the Senate for consideration.

A bill that calls for a surcharge on homeowner insurance policies across the state if a catastrophic storm wreaks havoc along the North Carolina coast was tentatively approved by a wide margin by the state House.

The bill, which must be voted on again before it moves to the Senate, calls for homeowners to bail out a state-created insurance plan known as the Beach Plan if a storm generates more claims than the Beach Plan can pay, David Ranii reports.

In that event, homeowners would be assessed a surcharge of  up to 10 percent of their annual premiums.

Currently, insurers who offer homeowners policies can be assessed to cover damages the Beach Plan can't pay on a prorated basis, based on how much business they have in the state. Nothing in state law permits insurers to recover any of that money from their policyholders.

The bill proposes capping insurers’ exposure at $1 billion, which supporters — including the insurance industry — say is necessary to avoid insurers fleeing the state.

Bill sponsor Hugh Holliman, a Lexington Democrat, noted that, given the Beach Plan’s current surplus and level of reinsurance homeowners wouldn’t be liable for a surcharge until damages topped $2.4 billion.

So far, the most the Beach Plan has paid in claims for a single storm is $150 million.

A legislative study committee did not come up with a plan for beach insurance.

Instead, after months of effort, the committee decided to let the General Assembly decide whether and how much homeowners should pay to help bail out the Beach Plan if a major hurricane strikes.

The state-created plan offers insurance to coastal homeowners.

The committee also punted on the issue of whether insurers should have a cap on the amount they can be assesed for damages that go beyond the plan's financial resources.

It is recommending legislation that would limit Beach Plan homeowners' insurance coverage to a maximum of $750,000, half the current level.

The goal is to limit the Beach Plan's potential liability if a devastating storm occurs, although the committee couldn't put a dollar figure on how much the plan's liability would be reduced. (N&O)

The N.C. Department of Insurance doesn't seem to agree with itself on how big of a problem the Beach Plan insurance program is facing.

The government-created insurance program for coastal counties doesn't have anywhere near the money it would need to pay damages if a big storm hits. So if a hurricane strikes, the Beach Plan would collect funds from private insurance companies that do business in the state. Those private companies are now proposing to raise the rates on all customers in the state in order to have the money to pay for Beach Plan customers' potential damage. That idea has legislators -- and just about everyone else -- in inland counties steamed.

One lingering question has been: Where was the Insurance Department as this problem was ballooning over the past five years? Perhaps the answer lies in the department's own conflicting answers about the Beach Plan. Let's go to the highlights reel:

"I've described it as a ticking time bomb and it is." -- Assistant Commissioner of Insurance and Commissioner-elect Wayne Goodwin, Dome, Nov. 5, 2008.

"It's not a ticking time bomb." -- Kristin Milam, director of public information, Department of Insurance, Dec. 14, 2008, in the N&O.

"The (insurance) industry has been working to get out their message that there is a crisis. There are reasons to be concerned, though not to the extent touted by the insurance industry." -- Commissioner Jim Long in a Nov. 14, 2008, letter to Senate President Pro Tem Marc Basnight

"It is a crisis." -- Long, on Dec. 4, 2008, in an interview with the N&O.