March 7, 2013

Homeowners’ insurance rate hike agreement will slam coastal counties


The North Carolina Department of Insurance announced earlier this week that Commissioner Wayne Goodwin has signed a settlement agreement with homeowners’ insurance companies, allowing an overall statewide average rate increase of 7 percent, varying by territory and form, beginning July 1.

The insurance companies, represented by the North Carolina Rate Bureau, had requested an overall statewide average rate increase of 17.7 percent on Oct. 1, 2012. The difference between the requested and settled rates amounts to $237 million in savings to policyholders.

However, the rate request will have a much larger impact on coastal counties.

On the beach areas of Dare, Hyde, and Currituck counties, the Rate Bureau asked for a 30 percent increase and got 17 percent under the settlement.

On a $150,000 policy in these counties, homeowners’ insurance costs would rise from $2,122 to $2,759.

On the other hand, Winston-Salem and Greensboro will have an increase of 1.1 percent and Charlotte, 8.4 percent.

“I am very disappointed in the rates settlement announced by Commissioner Goodwin today,” said state Rep. Paul Tine, a Democrat who represents several coastal counties, including Dare and Hyde. “While our beach communities received a 17 percent to 19.8 percent increase, more populated areas received as little as 1.1 percent.

“Historical data does not support the assertion that inland residents are paying for the losses of coastal communities,” Tine added in his statement. “However, that assertion appears to be guiding the decisions made in our legislature and at the Department of Insurance. Our economy in the East is suffering while our cost of living continues to rise. It is long past time that we develop a fair rate system that is based in historical data, not conjecture.”

Willo Kelly, who oversees government affairs for the Outer Banks Home Builders Association and the Outer Banks Association of Realtors, issued a media release as president of NC 20, a consortium of 20 coastal counties.

“While the settlement agreement may represent a softer blow to coastal homeowners’ insurance policyholders than prior rate settlement agreements and what was originally proposed by the N.C. Rate Bureau,” Kelly said, “NC 20 maintains that the rate increases are unwarranted and unjustified, especially given N.C. DOI's statements included in the Notice of Hearing. NC 20 was hopeful that the hearing would be held, thus allowing further public transparency of the rate making process and a better understanding of how our homeowners’ insurance rates are determined.”

After the request for an increase by the Rate Bureau, The North Carolina Department of Insurance  asked for public comment and set a hearing on the issue, which was to begin on June 3.

Some 9,000 comments were received, but the Department of Insurance then decided that a hearing would not be necessary.

“As Department of Insurance experts spent months studying the insurance companies’ request, it became apparent that some increase was justified, largely due to the steadily rising cost of reinsurance related to hurricane risks and ongoing concerns regarding availability,” according to a media release issued by the department on Monday. “In order to minimize the increase, the Department of Insurance elected to settle on rates, eliminating the need for the hearing scheduled for June 3.”

“Homeowners' insurance is a very complex issue. We face a great challenge in making sure that it is not only affordable, but available, to consumers across the state,” said Insurance Commissioner Wayne Goodwin. “I feel this settlement helps strike that balance, and I am pleased that the increase will be significantly smaller than what insurers originally requested.”

The last homeowners’ insurance rate filing occurred in 2008 when the insurance companies requested a 19.5 percent statewide average increase. A settlement agreement allowed for a 4.05 percent statewide average increase to go into effect in May 2009.


Click here to see a breakdown of the homeowners’ insurance rate revisions by region on the N.C. Department of Insurance settlement with the Rate Bureau.

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