North Carolina Escapes Storms; Will It Escape Florida’s Insurance Woes?

Earlier in 2010, Colorado State’s Tropical Meteorology Project forecasted eight hurricanes to emerge from 15 named tropical storms in the Atlantic basin. Of those, four were forecasted to become major hurricanes. On August 29, Tropical Storm Earl was upgraded to a hurricane and reached Category 4 status. Hurricane Earl headed toward the eastern coast of the United States. As Hurricane Earl rampaged through the Caribbean, federal and state officials feared a hurricane reminiscent of 1991’s Hurricane Bob and began preparing to evacuate areas of the coast.

Although Hurricane Earl dissipated and there was no major damage to the eastern coast of the United States, North Carolina Governor Beverly Perdue shared the sentiment of many of North Carolina’s residents when she stated, “North Carolina dodged a bullet” when Earl missed the coast.

Not long after Earl vacated the area, there were warnings and preparations were made for the arrival of Tropical Storm Nicole. The storm brought massive amounts of rain and flooding. States of emergency were declared in parts of Florida, North Carolina and as far north as Delaware. Thankfully, Tropical Storm Nicole swept through the region without much damage reported. Again, North Carolina dodged a bullet. In fact, major storm activity from 1980 to date indicates that North Carolina has seen several bullets whiz by.

Homeowners multi-peril writers in North Carolina are breathing a little easier now that Earl and Nicole have passed. In 2009, the top 10 homeowners writers reported over $1.25 billion of homeowners direct premium written in North Carolina. This amount represents approximately 68.5 percent of all homeowners direct premium written in the state. The top 10 in 2009 is also the same group from 2008.

North Carolina Top 10 2009

Since the homeowners multi-peril market in North Carolina has been relatively stable over the last few years, the top 10 homeowners writers for 2010 can be projected using the filed quarterly statements as of June 30, 2010. Nine of the top 10 should remain in the list, but it is projected that Liberty Mutual Fire Insurance will drop from the top 10 homeowners writers in North Carolina. If June 30 information is an indication of year-end 2010, replacing them on the list of top 10 would be Peerless Insurance Co.

North Carolina Top 10 Projected 2010

When compared to other areas hit by these storms, it is clear that North Carolina dodged a couple of bullets. Unfortunately, North Carolina cannot rely on luck or good fortune for storms to change their course in the future. North Carolina may have a property insurance crisis comparable to what Florida is facing. Hopefully, North Carolina will utilize the lessons learned and be better prepared if that day ever occurs.

Petrelli is the president and founder of Demotech, Inc., a Columbus, Ohio based financial analysis firm. Demotech provides Financial Stability Ratings^® (FSRs) and consulting services to property and casualty insurance companies, title underwriters and specialty insurers of any size. Demotech is also an official research partner of Insurance Journal.