RALEIGH – Eli Lehrer is the director of the Heartland Institute’s Center on Finance, Insurance, and Real Estate. He is also the author of recent John Locke Foundation studies of the state’s automobile and homeowners insurance markets.

Lehrer has just published his latest Property and Casualty Insurance Report Card, an annual analysis of the state regulatory environment for insurance. In the report, the free-market Lehrer has some good things to say about North Carolina’s Democratic insurance commissioner, Wayne Goodwin.

I hope Wayne isn’t too upset about that.

The Report Card evaluates each state’s insurance regulations on such criteria as clarity, fairness, and barriers to entry. North Carolina received a B- in the 2010 study – not exactly something to crow about, but an improvement over the state’s ranking in past years.

While changes in the report’s methodology explain some of the improvement in the scores of North Carolina and a handful of other states, Lehrer also credits policy changes by the Department of Insurance and the General Assembly. “Thanks to newly elected Insurance Commissioner Wayne Goodwin,” he writes, “North Carolina’s state legislature enacted major reforms to the state’s troubled wind-damage insurance pool.”

Lehrer’s own 2008 work for JLF helped make the case for reform, too. In his report on the Beach Plan, Lehrer wrote:

North Carolina’s little-known Beach Plan imposes an enormous fiscal liability on the state. Intended largely to provide windstorm insurance for coastal residents unable to find coverage elsewhere, the Plan has grown to become one of the nation’s largest entities of its type.

By its own accounting, the plan does not have the capacity to survive a once-in-six-years storm without imposing significant taxes (called assessments) on North Carolina residents and businesses. One study from an independent actuarial firm shows that North Carolina could face liabilities of up to $6.2 billion from the plan — a figure that’s almost certainly low. In recent years, the Beach Plan has grown at a rate of roughly $1 billion a month, growth that shows no sign of stopping.

The Beach Plan’s growth stems from deliberate public policy decisions rather than North Carolina’s physical environment. By nearly all accounts, neighboring Virginia faces a greater economic risk from hurricanes than does North Carolina, but that state’s equivalent plan imposes essentially no burden on the state or its taxpayers.

Policymakers enacted some major reforms to the Beach Plan last year. Many coastal residents are angry at the resulting rate increases, to be sure, but North Carolinians residing elsewhere were angry about the prospect of subsidizing coverage of coastal properties.

There are still major problems in North Carolina’s insurance markets. But it’s good to see some progress towards reform – and some external recognition of it.

Hood is president of the John Locke Foundation.