Lawmakers approve $1.5M to study volatile insurance industry

Insurance Commissioner Jon Godfread presents to lawmakers about a funding request during a Budget Section meeting on June 19, 2024. (Mary Steurer/North Dakota Monitor)

North Dakota lawmakers agreed Wednesday to set aside an additional $1.5 million for the North Dakota Insurance Department to research policy solutions to help residents weather an unusually volatile property insurance market.

The request came alongside the release of a report that explores the effect of recent investment, insurance and policymaking trends on North Dakota  — especially those related to “environmental, social and governance” criteria, or ESG.

“We wouldn’t be here today without the ESG study,” North Dakota Insurance Commissioner Jon Godfread told members of the Legislature’s Budget Section.

The study, requested by the Legislature in 2023 and spearheaded by the Bank of North Dakota, included several insurance-related recommendations.

Report explores ways to make North Dakota appeal to environmentally conscious investors

It noted that due to factors like increased severe weather events and global economic trends, insurance across the country is getting more expensive and more difficult to obtain.

“Many of you are probably seeing rate increases, whether it’s homeowner or auto insurance – you’re likely getting those phone calls just like we are,” Godfread said, noting some consumers have seen rates go up 30-40%.

Insurance coverage has been especially hard to find for coal companies, he added.

To help keep pressure off of North Dakota’s economy, the state could consider measures like standardizing statewide building codes and look into creating a multi-state insurance pool for the energy states, the report found.

The Insurance Department wants to hire consultants to help turn those recommendations into policy proposals lawmakers can consider next session, Godfread said.

The $1.5 million will come from the Insurance Regulatory Trust Fund, according to the Budget Section agenda.

The Budget Section also voted to approve several other requests forwarded by the Emergency Commission earlier this month, including approval for the Secretary of State’s Office to access $1 million in federal money from the Help America Vote Act.

The money goes to support election-related expenses like voting technology, Secretary of State Michael Howe told lawmakers during the hearing. The federal grant requires a 20% match, so the Legislature will have to earmark an additional $200,000 for the Secretary of State’s Office during the 2025 session, he said.

In addition, lawmakers greenlit a request for $468,770 from the Office of Management and Budget to demolish the former North Dakota Water Resources building . The 70-year-old building has been vacant for almost two years and is infested with mold, John Boyle, facilities director for the Office of Management and Budget, told the Budget Section.

States beg insurers not to drop climate-threatened homes

Lawmakers also received updates on state finances.

As of May 31, North Dakota general fund revenues this budget cycle have outpaced projections by nearly $267 million, according to a finance report by the Office of Management and Budget.

The general fund is expected to receive $5.2 billion in revenue by the end of the 2023-2025 budget period, according to the report. As of the end of May, it’s accrued roughly $2.7 billion of that.

After the Budget Section adjourned Wednesday afternoon, members gathered into four smaller divisions as part of a new initiative approved in March.

The four groups — Leadership, Government Operations, Human Resources and Education and Environment — mirror the divisions of the Appropriations Committees that meet during the legislative session.

The purpose of the new divisions is to give lawmakers in the Budget Section more training on budget-related issues ahead of the 2025 session, Chair Sen. Brad Bekkedahl, R-Williston, said.

It’s an effort to prepare legislators for the impacts of North Dakota’s new term limits law. Up to 69 lawmakers could meet their term limits in 2028, according to a Legislative Council analysis .

With more veteran legislators on their way out, newer members will have to learn the state budgeting process more quickly.

“It’s a learning curve that we’re trying to push forward faster,” Bekkedahl said.

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