Insurance companies escape a catastrophe in hurricane.

• Position: Hurricane Floyd - Illustration - Statistical Data Included

As Hurricane Floyd bore down on North Carolina, property insurers braced for the worst. Having paid $1.3 billion in claims after Hurricane Fran three years earlier, they watched as Floyd threatened to blow down even more homes and businesses and pile up even higher claims.

But Floyd was merciful to property-and-casualty companies. Instead of coming ashore as a battering windstorm, it arrived as a flood that inundated areas far from the coastline. Most affected property owners apparently didn't carry extra flood insurance -- terrible news for property owners, a terrific break for the property-insurance industry. Early estimates from state officials put the insured property losses at $835 million, about a third less than the claims from Hurricane Fran. The state's main concern was figuring out how to help property owners recover from uninsured losses.

While property insurers weathered Floyd fairly well, auto insurers were not as lucky. Policyholders who carry comprehensive insurance are covered for flood damage, and the Federal Emergency Management Agency estimated that as many as 75,000 vehicles suffered flood damage from Floyd. In October, the impact on auto insurers wasn't yet known, but the companies were prepared for a major hit.

Floyd-related losses promise to complicate an ongoing fight over rates between auto insurers and Insurance Commissioner Jim Long that dates back to 1994, when Long rejected a proposed rate hike and demanded a reduction. Auto insurers raised rates anyway and challenged him in court. While that case was pending, the scenario was repeated with a second contested rate hike in 1996 and a second court case. An estimated $300 million in contested auto premiums collected by insurers in North Carolina are now in escrow awaiting a decision that should come this year from the N.C. Supreme Court. Meanwhile, a new rate fight is brewing. Hearings on proposed auto-rate schedules were to get under way in late 1999.

Consolidation continues to reshape the insurance business, affecting every sector from health-maintenance organizations to independent insurance brokers. On the health front, the biggest news of 1999 was the departure of Kaiser Foundation Health Plan of North Carolina, part of Californiabased Kaiser Permanente. It helped launch the managed-care industry in the state in the '80s. Squeezed by competition and high overhead, it decided to quit the state, giving up more than 100,000 members in the Charlotte and Triangle...