That will soon be illegal in NC. 

Gov. Bev Perdue has signed a bill to prohibit the use of cell phones for texting while driving.  The measure is set to go into effect Dec. 1 of this year.

Proponents claim that texting while driving diminishes  your reaction time as much as being under the influence of alcohol.  I think we all agree that is certainly can be a  distraction.

Drivers caught texting would be subject to a $100 fine but no insurance points.  Just about everyone agrees enforcement will be difficult.

Gary Sides

gary@marshallinsurance.com

Created as an insurer of last resort, the Beach Plan was morphing into something it was never intended to be, and should not be — the coastal property insurer of choice. And no wonder. For various reasons, as insurers were denied the rates they claimed they needed to compensate for the increased risk of coastal exposure, many private insurers simply stopped writing coastal policies. In the place of a properly priced private market, the Beach Plan offered coverage at below-market rates.

How could it do this? Easy — with other people’s money. In the event of any catastrophe beyond the so-called “50-year storm,” the Beach Plan would simply pass onto property insurers anywhere in the state an “assessment” — the obligation to make up the difference! If insurers didn’t like this, well, they could leave the state.

Last summer, Farmers Insurance finally called the Beach Plan’s bluff, decamping entirely from the North Carolina property insurance market, leaving 40,000 policyholders from all over the state in need of replacement policies. The departure of Farmers Insurance also raised the exposure of the state’s remaining property insurers to the Beach Plan’s fantasy financing. It doesn’t take a genius to imagine what might happen if things didn’t change. Other insurers have announced rate increases and new underwriting restrictions.

Earlier this year the state Department of Insurance recognized this necessity by approving an increase in the premiums paid by those owning property at the coast, as well as approving a higher deductible (the amount of loss an insured absorbs before insurance proceeds kick in).

This made terrific sense. North Carolina had one of the lowest coastal deductibles of any southeastern state, dis-incentivizing our coastal property owners from taking cost-effective mitigation measures that could strengthen their homes and reduce the amount of wind losses caused by storms in the first place.

A study committee also recommended several reforms to the Beach Plan and these recommendations were introduced in the NC House as HB 1305.  The bill raises the Beach Plan’s financial capacity to satisfy wind-damage losses by incorporating a variety of interconnected reforms: coastal rates are raised, a modest but crucial increased deductible is imposed, coverage is limited to residential properties valued at $750,000 or less, (currently the plan offered coverage up to $1,500,000) and, in the event of a true catastrophe slamming into the coast, it can obligate all of the state’s ratepayers to surcharges that cannot exceed, in any one year, more than a 10 percent increase (approximately $65/yearly to the average $650 property tax premium).

HB 1305 , has been approved in the NC House (after which it goes on to the Senate), does not give reformers everything they should demand. But it’s also far better than the status quo.

Personally, I fear if this legislation is defeated by special interest we will see serious homeowners rate increases, even tighter underwriting restrictions and more insurance companies leaving the NC homeowners market.

A 2006 National Highway and Transportation Safety Administration study found that almost 80% of crashes and 65% of near crashes involved driver distraction i.e. the driver was distracted by their use of the cell phone.

A national insurance company conducted a study and found that 73% of drivers talk on their cellphones while behind the wheel.  Even more shocking the study found 19% text while driving.

In North Carolina cell phone use by bus drivers and drivers under the age of 18 are currently prohibited with the exception of emergency situations.

As with any other accidents parents and employers could be held liable for accident caused by children or employees of the company in a company vehicle  that are involved in accidents.  So its not just the drivers that are at risk in these situations.

A study was conducted by the UNC center and the  Institute for Highway Safety.  Researchers parked outside of 25 high schools discovered over 11% of teens were talking on cell phones while driving away from school.

Another study found 64% of teens were aware of the law forbidding cell phone use but only 39% of parents were aware of the ban.

Experts liken the use of cell phone while driving to have the same effects as being under the influence of alcohol.

The NC Rate Bureau, which represents 144 auto insurers that operate in the state, had asked for its largest rate increase in 14 years–12.9%. Insurance Commissioner Jim Long turned the tables, instead ordering a 16 percent cut.

Long ruled that the insurers submitted data to back their positions that didn’t justify the increase they sought. The Insurance Department also argued that the companies skewed their depiction of NC’s market by including claims from riskier drivers who are inexperienced or who rack up insurance points against their license and other decisions. Those drivers are assigned to the NC Reinsurance Facility.

Insurers revamped their requested rate increase in their appeal to the state Court of Appeals and are now seeking 9.4%.

Under state law, insurers can charge the higher rate beginning Jan .1, but any amount collected above the 16% cut ordered by Long must be placed into escrow accounts. If insurers win their appeal, they can keep the money. If they lose, they will have to refund the money to policyholders, plus pay interest at the prime rate plus 3 percent.

A court hearing on the appeal has not been scheduled.

The North Carolina Rate Bureau, which represents all of the homeowners insurance companies doing business in the state, had requested a 19.5 percent average rate increase.

Rate changes will vary by territory.  Some coastal territories could see increases by as much as 29% while western areas could actually decrease.  The changes will take effect May 1, 2009.

“There has been a lot of speculation surrounding this homeowners rate filing, but I feel that we’ve reached a settlement that is fair to both consumers and insurance companies in North Carolina,” Long said in a statement. “No one likes to see their insurance rates go up, but the industry made a strong case for allowing some increases this year. The silver lining is that most consumers won’t see nearly the increases that were initially proposed.”

The settlement also realigns several insurance territories along the coast so that homeowners who live farther inland pay less for insurance. Long said that makes sense because these homes have less exposure to the impact of a hurricane.

The increase will be the first since May 2007, when homeowners insurance rates went up 5.4 percent.