Homeowners Insurance Policy
Previously reported – January 2020
Coastal insurance rates soar again. Is system broken?
If you own a home in coastal North Carolina but don’t live in it, you will likely see an increase in the premium you pay for wind insurance beginning July 1. The group that represents insurance companies recently struck a deal with the N.C. Department of Insurance that will result in a statewide average 5.3% increase for wind coverage for non-owner-occupied residences. The N.C. Rate Bureau, a state-mandated group that represents insurance companies, had requested a 24.3% increase in wind-coverage premiums and a 4.6% hike in fire coverage. No increase in fire premiums was allowed. Although the 5.3% average increase in wind coverage is a far cry from the original request, it falls almost completely on coastal areas, where it’s more in the 10%-and-above range. The Insurance Department stressed that the settlement does not affect homeowner policies. “Dwelling policies are offered to non-owner-occupied residences of no more than four units, including rental properties, investment properties and other properties that are not occupied full time by the property owner,” the department stated in a news release. In September, the Department of Insurance reached a similar deal with the Rate Bureau on homeowners’ policies. The bureau had proposed a 17.4% statewide overall increase. The settlement approved a 4% average increase, but, as with the dwelling agreement, most of the increase was felt at the coast.
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Previously reported – February 2021
Insurance companies request rate increase for homeowners
The North Carolina Rate Bureau (NCRB) has requested a 24.5 percent statewide average increase in homeowners’ insurance rates to take effect August 2021, according to a news release issued Nov. 10 by state insurance commissioner Mike Causey. The NCRB is not part of the N.C. Department of Insurance but represents companies that write insurance policies in the state. The department can either agree with the rates as filed or negotiate a settlement with the NCRB on a lower rate. If a settlement cannot be reached within 50 days, Causey will call for a hearing. Two years ago, in December 2018, the NCRB requested a statewide average increase of 17.4 percent. Causey negotiated a rate 13.4 percentage points lower and settled with a statewide aver-age rate increase of 4 percent. One of the drivers behind this requested increase is that North Carolina has experienced increased wind and hail losses stemming from damaging storms. A public comment period is required by law to give the public time to address the NCRB’s proposed rate increase.
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- To see a table of proposed homeowners’ rate increases go to: click here
- Territory 120 / Beach areas in Brunswick County / NCRB proposed increase 25%
Insurance commissioner sets hearing date in dwelling insurance rate hike case
North Carolina Insurance Commissioner Mike Causey has set Jan. 18, 2022, as the hearing date for the North Carolina Rate Bureau’s proposed 18.7% dwelling insurance rate increase. “We are not in agreement with the Rate Bureau’s proposed increase filed in December,” Commissioner Causey said. “I want to make sure that the process is transparent, and that consumers’ interests are protected while making sure our insurance companies remain healthy so they can pay claims.” The Rate Bureau is not part of the Department of Insurance. It represents all companies writing property insurance in the state. The notice of hearing said that some of the data included in the Rate Bureau’s Dec. 14, 2020, filing contained a lack of documentation, explanation, and justification of both the data used as well as the procedures and methodologies used. The hearing is set for 10 a.m. Jan. 18, 2022, in the second-floor hearing room in the Albemarle Building, 325 N. Salisbury St., Raleigh. The hearing will take place unless the N.C. Department of Insurance and the N.C. Rate Bureau are able to negotiate a settlement before that date. State law gives the Insurance Commissioner 45 days to issue an order once the hearing concludes. Once the order is issued, the NCRB has the right to appeal the decision before the N.C. Court of Appeals. A Court of Appeals order could then be appealed to the N.C. Supreme Court. The NCRB and DOI can settle the proposed rate increase at any time during the process. Dwelling insurance policies are not homeowners’ insurance policies. Dwelling policies are offered to non-owner-occupied residences of no more than four units, including rental properties, investment properties and other properties that are not occupied full time by the property owner. The filing covers insurance for fire and extended coverage at varying rates around the state. Under the NCRB proposal, the increases would be felt statewide with most consumers seeing a double-digit increase. The last NCRB dwelling rate increase filing was in 2019 that resulted in a settlement of 4%, which took effect July 1, 2020.
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Causey sets hearing date in dwelling insurance rate hike case
North Carolina Insurance Commissioner Mike Causey has set Jan. 18, 2022, as the hearing date for the North Carolina Rate Bureau’s (NCRB) proposed 18.7% dwelling insurance rate increase. We are not in agreement with the Rate Bureau’s proposed increase filed in December, Commissioner Causey said. “I want to make sure that the process is transparent, and that consumers’ interests are protected while making sure our insurance companies remain healthy so they can pay claims. The Rate Bureau is not part of the Department of Insurance. It represents all companies writing property insurance in the state. The notice of hearing said that some of the data included in the Rate Bureau’s Dec. 14, 2020, filing contained a lack of documentation, explanation, and justification of both the data used, as well as the procedures and methodologies used. The hearing is set for 10 a.m. Jan. 18, 2022, in the second-floor hearing room in the Albemarle Building, 325 N. Salisbury St., Raleigh. The hearing will take place unless the N.C. Department of Insurance and the N.C. Rate Bureau are able to negotiate a settlement before that date. State law gives the Insurance Commissioner 45 days to is-sue an order once the hearing concludes. Once the order is issued, the NCRB has the right to appeal the decision before the N.C. Court of Appeals. A Court of Appeals order could then be appealed to the N.C. Supreme Court. The NCRB and DOI can settle the proposed rate in-crease at any time during the process. Dwelling insurance policies are not homeowners’ insurance policies. Dwelling policies are offered to non-owner-occupied residences of no more than four units, including rental properties, investment properties and other properties that are not occupied full-time by the property owner. The filing covers insurance for ire and extended coverage at varying rates around the state. Under the NCRB proposal, the increases would be felt statewide with most consumers seeing a double-digit increase. The last NCRB dwelling rate increase filing was in 2019 that resulted in a settlement of 4%, which took effect July 1, 2020.
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Beacon
Previously reported – November 2021
NC DOI Again Postpones Hearing on 25% Homeowners Rate Hike
A hearing set for today on a proposed 24.5% average increase in homeowners’ insurance rates has been postponed until Jan. 3, the North Carolina Department of Insurance announced. The rate increase was recommended by the North Carolina Rate Bureau one year ago and has met with stiff opposition from realtors and homeowner groups since then. The Rate Bureau is not part of the insurance department but represents insurers in the state. Insurers have said that increased wind and hail losses from storms are the main drivers behind the requested increase. Insurance Commissioner Mike Causey said in a news release that the January hearing will proceed if the department and the rate bureau cannot negotiate a settlement for a lower rate increase. This is the second time the hearing has been postponed. A Sept. 20 meeting was rescheduled for today, Nov. 1. The recommended increase follows one in 2018, in which the bureau asked for a statewide average hike of 17.4%, but later settled for a 4% increase. In April of this year, the bureau had proposed an 18.7% average increase in dwelling insurance, for rental and investment properties, but settled for a 7.6% rise after negotiating with the department. If the two sides do not reach a compromise, the hearing on the latest proposed increase will be Jan. 3 at 10 a.m. in the Albemarle Building, 325 N. Salisbury St., in Raleigh.
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Previously reported – December 2021
Proposed 24.5% homeowners insurance increase in NC negotiated down
The N.C. Department of Insurance has ended its legal dispute with the North Carolina Rate Bureau on a proposed 24.5% homeowners insurance rate increase. Insurance Commissioner Mike Causey and the Rate Bureau settled on an average 7.9% statewide increase, 16.6% lower than the Rate Bureau requested. “I am happy to announce that North Carolina Homeowners will save over $751 million in premium payments compared to what the NCRB had requested,” Commissioner Causey said. “I am also glad the Department of Insurance has avoided a lengthy administrative legal battle which could have cost consumers time and money.” The Rate Bureau represents companies that sell property insurance in North Carolina and is not a part of the N.C. Department of Insurance. In early November the group proposed an overall statewide average of 24.5%. After studying the data, Commissioner Causey negotiated a settlement for a much smaller increase. The increase will take effect on new and renewed policies beginning on or after June 1, 2022. As part of the agreement, Causey said the Rate Bureau will not seek another homeowners rate increase until 2024 at the earliest, meaning this rate change will be in effect until at least 2024.
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Previously reported – January 2022
NC Homeowner’s Insurance Rate Settlement Only A Partial Victory
Homeowners in Carteret and the other 19 coastal counties received good news in late November with the announcement that North Carolina Insurance Commissioner Mike Causey denied a proposed insurance premium increase that would have raised homeowner’s insurance up to 25% and instead negotiated a rate increase that tops out at 9.9%. While this is good news for local homeowners as well as those across the state, it raises concerns that need to be addressed.
Due to the importance of homeowner’s insurance, and the fact that it is a necessity for home mortgages, there needs to be greater transparency on the part of insurance companies providing claim details so that the public better understands the justification. And, in the cases of a rate settlement such as announced last month by Commissioner Causey, there needs be more disclosure about the process and the arguments used that resulted in the new premium charges. In mid-November of 2020, the N.C. Rate Bureau (NCRB), a legislatively created department tasked with assuring accuracy of insurance rate administration and to represent those agencies licensed to operate in the state, presented a premium increase to the state’s Department of Insurance (DOI) for homeowner’s insurance that averaged 24.5% statewide. In making the rate request, the rating bureau stated that because of an increased number of insurance claims over the preceding years a much high rate was justified to assure the solvency of the requesting companies. But out of the apparent concern for the financial impact of even higher rates, the NCRB and its members proposed only a 24.5% increase. Keep in mind this was an average increase. The state is divided into 29 territories and each territory carries a specific risk rating, with the coastal region and a few mountain regions carrying the highest risk rating. Because the 20 coastal territories are considered to have the highest risk of claims due to hurricane exposure, insurance premiums for that region of the state were facing premiums increases as high as 25% while other territories were scheduled for single digit increases. Public notice of this 2020 rate proposal was disseminated by Commissioner Causey in a two-page press release to newspapers and broadcast media. Because the notice was sent out a week before Thanksgiving, the traditional beginning of the Christmas season, most newspapers and the few broadcast media that cared enough to read the new release provided only cursory coverage. The public notification of this proposal was extremely short on both time allotted for public comment, one month, and equally short on information about the reason for the increase. The only explanation provided in Commissioner Causey’s release was “one of the drivers behind this requested increase is that North Carolina has experienced increased wind and hail losses stemming from damaging storms.” There is no mention of what storms were the cause nor any indication as to the losses suffered, nor did it mention that there was an extreme disparity of rate changes, with the coastal region experiencing the highest rate increases in all categories. Anyone interested in the details of the rate increase needed to go to the Rate Bureau’s website which is not part of the state’s DOI website and then attempt to comprehend the two-part, two-thousand-page filing. The NCDOI website had few details about the filing and only provided information for making comment or participating in a “virtual meeting.” Late last month, almost a year to the day after the initial rate increase request, Commissioner Causey announced that he and the rate bureau had settled on an increase that caps premium increases to 9.9% for the areas designated as high risk and 5.5% for other territories, which results in a statewide average of 7.9%. In making the announcement about the recent settlement, Mr. Causey stated, “I am happy to announce that North Carolina Homeowners will save over $751 million in premium payments compared to what the NCRB had requested. I am also glad the Department of Insurance has avoided a lengthy administrative legal battle which could have cost consumers time and money.” There is no question that homeowners, condominium owners and apartment renters in the 20 coastal counties are far better off now that Mr. Causey has negotiated the proposed 25% premium insurance increase down to only 9.9%. But still, the public has been kept in the dark about the process and reasoning behind both the original requested premium hike and now the settlement. Considering the complexities of the insurance rate proposal and the expansive requirement of insurance for property ownership, it stands to reason that the NCDOI should do more to inform and educate the public. Simply announcing that a rate increase has been proposed with little, very little, explanation and then to provide only one month to understand and research the facts provided is unfair to the public. It is worth noting that this proposal, like four other previous proposals, came during the holiday season when the general population was focused on the Christmas season. The 2020 requested premium increase is particularly onerous as the nation and state recover from the economic impacts of the Covid-19 pandemic and rapid out-of-control inflation. Commissioner Causey and the legislature should establish the same procedures utilized by the N.C. Utilities Commission. Utility companies licensed to provide electricity and gas services in the state, like the insurance industry, must seek approval for all rate increases or adjustments in service. In those cases, the utility company requesting a rate or service change must present documentation for the changes to the state’s Utilities Commission. The commission then conducts public witness hearings in several towns affected by the rate or service proposals. Following those meetings, the commission then conducts an expert witness hearing and from both the public forums and more comprehensive hearings, the commission’s staff makes a report for the Utilities Commission’s final decision. Mr. Causey’s announced rate reduction is only a partial solution. Recent news reports noting that home insurance is rising faster than inflation should cause even greater concern for homeowners, spurring Commissioner Causey and the legislature to improve public disclosure and more transparency in the process.
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Previously reported –July 2022
Home insurance costs nearly double due to inflation
Inflation has affected nearly every aspect of life, from food, to gas, to labor. Now, homeowners could see those costs reflected in their insurance premiums. “It’s the first time in my lifetime, that I’ve seen inflation at such a high level and at such a fast rate,” said North Carolina Coastal Insurance owner, Hernan Lois. According to Lois, the average homeowner will pay 30 to 40 percent more for homeowners insurance this year because of inflation raising property values, labor prices, and building supply costs. According to builder, Neil Sims, the average OSB board (one of the most common materials home builders use) used to cost around eight dollars apiece. Just recently, that cost reached the mid 30-dollar range. “The prices… the labor prices and material prices have significantly increased. So, because you could build a house for 200,000 dollars five or 10 years ago, does not mean anything anymore,” Sims explained. And with the height of hurricane season quickly approaching, insurance expert Hernan Lois says it’s more important than ever to update your coverage. “The reality is,” Lois continued, “you want to make sure you have full replacement value because if something were to occur, you want to be made whole.” Lois says total losses happen more often than you’d think. Being underinsured can be a disaster in itself. “Well ultimately out of pocket expenses. It means that they would have to pay for all of the additional reconstruction costs or possibly to their contents coverage. Their loss of use coverage, which is their living expenses while their home is being rebuilt,” said Lois. Though he opted for more coverage, Wilmington resident Dennis Mauger says his insurance went up 600 dollars a year. It was a tough financial pill for the retiree to swallow. “We had a house fire a couple years back and thank goodness we had good coverage on insurance replacement costs. I understand the value of insurance, it’s just hard to, if it’s the year that you’re not using it to absorb those costs,” Mauger said. When a storm system is named and predicted to come to our region, insurance companies can bind policies, keeping homeowners from changing their coverage plans.
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