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N. C. needs insurance reform
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February 03, 2012 The insurance industry in North Carolina is broken. More specifically the property insurance system is a perfect example of how government regulation does NOT work.
Most of us buy property insurance to cover major losses in the event of a natural disaster or fire. We contact a local agent we know or someone has referred us to. We tell them we need homeowners insurance and they eventually give us a quote after a box load of forms is filled out. We then begin paying…and praying, hoping we will never have to use what we're sometimes paying more for than our mortgage payment. Then it happens.
A hurricane comes through, a thunder storm, tornado or fire. We call the agent and he/she helps us file a claim. Then the horror story begins. After we struggle mightily to get back on our feet, an adjuster comes out with his clip board, camera and tape measure. He's nice enough, gets his info and tells us we will be hearing from them. We expect a check. What we get is a thick envelope denying our claim, or most likely, parts of our claim. The fine print becomes a nightmare.
We call the Insurance Department. What a joke. It takes longer to navigate the bureaucracy than it does for them to tell you there is nothing they can do. You re-read the fine print. It still does not make sense, but you've got to get the roof fixed. You've already pulled the carpet and insulation out but there is a terrible odor. Your head hurts when you get up in the mornings.
You go to your local lawyer. He's no help, except to take enough of your time to charge you a couple of hundred dollars. The roof still leaks. Your headaches are getting worse.
You eventually go to another attorney a neighbor used (for the same problem) and he wants five grand to file the suit. No, he will not take it on a contingency basis. And then the shocker. He tells you that you cannot count on recovering your legal fees, even if you win, and the odds of winning are slim and none. That fine print again.
You run the numbers. It'll cost you more to win than if you go to the bank and take out a second mortgage.
Such is the insurance industry in our state.
Just ask Phil and Aven Roach. Their story was recently published in our partner publication, the County Compass. You can read it on the Compass News 360 website.
This is a mess that must be fixed. Insurance costs entirely too much and pays too little when you have a loss and the insurance companies know you're not going to sue them after you find out how much it will cost. It is a racket. We have some ideas. Here are some of them:• The N. C. Department of Insurance should be abolished. The insurance industry should be deregulated. The Attorney General's office should be charged with licensing insurance companies (verifying solvency) and filing suit against any that abuse the public, including collusion.
• Policies should be greatly simplified. This should be done by standardizing "basic" coverage. Policies should be written in plain language, ideally on one sheet of paper in large print.
• The concept of property insurance policies should be: They will put your property back as it was if it is damage by natural forces or fire.
• A company that sells any policy in the state should be required to sell to anyone else in the state who wants to buy that policy and for the same price.
• The state should provide a clearinghouse that tracks who sells what kind of insurance and what they charge for it as well as how many complaints have been received about that company and how many claims they denied. This information should be factored into a rating system for service. We would suggest A, B, C, D or F and each company should be required to advertise their service rating.
• Insurance companies should be prohibited from hiring lawyers. (We're not serious, but you get the point).
• At least, if you sue an insurance company and win they should have to pay you for twice your loss and your legal bills. And if it took them longer than a month to settle your claim they should have to pay triple damages. If anyone wants to run for Insurance Commissioner on this platform they are welcome to use it.
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Fair 72°
