North Carolina homeowners are looking at insurance cost increases averaging 25 percent starting in August if the state’s regulator goes along, and his office heard Friday from some of those upset about the prospect of higher premiums.
The hearing came three weeks after the state’s homeowners insurers requested rate changes that range from a savings of almost 3 percent for homes away from the ocean in Brunswick, Carteret, New Hanover, Onslow and Pender counties to an increase of 35 percent along and near the beaches in those same counties and three others.
State Insurance Commissioner Wayne Goodwin, who would have to approve any changes, expressed outrage about the size of the request that comes after a 7 percent increase took effect in July.
Insurers say they’re trying to catch up on decades of “inadequate” pricing while anticipating potential payments into 2016 and beyond.
Policyholders got a chance to be heard at a public hearing on Friday. More than 3,000 written comments had been received at the Insurance Department by Thursday and written comments can flow in through Jan. 31.
Coastal residents like Buck Lineberger of the Brunswick County town of Ocean Isle Beach are especially critical of the possible hikes. He said if they are implemented, premiums will have more than doubled since 2005.
“This repeated pattern of significant rate increases represents an undue financial burden for our homeowners, and this burden has a negative impact on our budget, the regional tourism industry, and local real estate market,” he said in a written statement. “These increases are unfair and unreasonable.”
The largest increases of 35 percent would also fall on homeowners in some of the state’s rural, inland counties including Harnett, Hoke, Granville, Person, Duplin, Greene, Lenoir, Richmond and Columbus counties. Homeowners in the cities of Durham and Raleigh would see premiums rise by 24 percent, Greensboro and Winston-Salem residents by 18 percent, and Charlotte homeowners by 17 percent.
Goodwin earlier this month said he was surprised and “appalled” by the request and that insurers should drop their plans. If the companies persisted, Goodwin said he would hold hearings for companies to explain why they sought the higher premiums.
“I urge North Carolina homeowners to take advantage of the public comment period and let their insurance companies know what they think about the notion of another homeowners insurance rate increase,” said Goodwin, whose ruling after the hearing could be appealed to court.
North Carolina’s average premium for a homeowners policy was lower in 2011 than the national average, though state comparisons are difficult because of wide variations in hazards, economic conditions and real estate values, according to the most recent data released in December by the National Association of Insurance Commissioners.
North Carolina insurers collect claims data, project what upcoming claims are likely to be, and make a request jointly through an organization called the North Carolina Rate Bureau.
Two weeks before Goodwin’s re-election in 2012, the Rate Bureau filed a request to raise prices by almost 18 percent. The companies and Goodwin settled on 7 percent. Before that, the last homeowner’s insurance rate increase took effect in 2009, when insurers sought a 19.5 percent statewide average increase but settled for 4 percent.
That’s how it’s gone ever since the late 1990s, Rate Bureau General Manager Ray Evans said. Companies propose a rate increase and try to back it up with hundreds of pages of data explaining their rationale, Evans said. The commissioner usually negotiates a much lower amount, but over time the result has been “inadequate” premium levels, he said.