Economic Outlook - January 2009

For three years, Wayne Goodwin was state Insurance Commissioner Jim Long’s understudy. In November, voters picked Goodwin to succeed Long, who made his reputation battling auto insurers over rate hikes and will step down this month after 24 years in office. A Richmond County native, Goodwin, 41, practiced law 13 years, served in the General Assembly for eight and became assistant insurance commissioner in 2005.

Can we expect you to continue Jim Long’s approach to insurance regulation?

Well, I’m certainly my own person. I have a different management style. I think it is vital that the insurance commissioner always champion two primary goals: affordable, accessible insurance and a competitive insurance market with solvent companies.

Those goals often conflict.

You have to strike a balance. Consumers are harmed if there’s not a competitive insurance market with solvent companies, and it certainly doesn’t help the insurance market if the rates are such that people can’t afford them.

Has the department struck a balance?

I think so. But we have seen the marketplace and the economy change tremendously just in the last three years, so it requires the next insurance commissioner to revisit the ways that rates are set.

The Competitive Enterprise Institute (Economic Outlook, June) says our automobile-insurance system is “the very worst in the country.”

If you ask consumers and businesses in the state how we have done, I would confidently say that they disagree with the institute’s findings. We have the lowest automobile rates in the South and the eighth-lowest in the country. There’s always room for change, and we must consider targeted reforms and targeted modernization. For example, we need to depopulate the reinsurance facility.

You’re talking about the involuntary insurance pool for high-risk drivers.

Yes. There are people who perhaps pay more than they should, and there are others who do not pay a rate that is appropriate. Some reforms are necessary, but we must make any changes in a very strategic, incremental way because we don’t want to upset the current structure in a way that causes instability.

You agree with the institute in some ways.

I agree that the percentage of drivers in the facility must be reduced. It’s now about 25% of insured drivers. I can’t tell you what it should be. We need to get more data. I need more input from the industry, the public and our lawmakers.

One of your top priorities will be revamping the so-called Beach Plan, which protects coastal property owners against wind damage. Why?

When the next major storm hits North Carolina, there are not sufficient reserves to handle the expected claims and costs of rebuilding homes and businesses. If there are not ample reserves, you will see a ripple effect all the way to the mountains. The Beach Plan will assess the insurance companies for the gap. One scenario has insurance companies leaving the state, meaning less choice and potentially higher rates.

We’ve had big storms before. Why is this a problem now?

That’s right. That’s one of the problems we have to fix. Because the value of coastal property has increased so much and the rates offered by the Beach Plan are so low, there’s too much incentive to go to the Beach Plan. There are some aspects of the Beach Plan that haven’t been updated since its inception 40 years ago. The deductible now is $500.

Some owners will see higher rates?

It would appear so.

What are your other top issues?

Targeted reforms in the rate-making process, so it doesn’t take as long for the rates to be established. Another priority will be fighting insurance fraud. In down economic times, insurance fraud escalates, both by potential claimants and wayward agents. I’ll also be engaging the department more in the discussion about health insurance. We’re restricted by federal and state law, but the commissioner still must be engaged in promoting health-insurance policy that helps consumers and businesses.

Would that include health insurance for all North Carolinians?

I will push for affordable, accessible health care for all North Carolinians. Recently, the department worked with the insurance industry and others to establish the high-risk insurance pool. That goes into effect Jan. 1, and it’s for those who otherwise could not afford or be offered any type of health-insurance coverage.

But it doesn’t mean everyone will be covered.

There is a percentage of people that is still not reached, but this is a strong first step.

What other changes should North Carolina residents expect?

A commissioner of insurance and a department that will be focused on modernizing as much as possible so we can be more efficient and responsive. Commissioner Long has been fantastic, but I look forward to being even more, even more …

... fantastic?

I didn’t say that. I’ll be even more engaged and involved around the state on matters of concern to the department. I look forward to building on what he has established, but I’ll have different points of emphasis.