North Carolina Farm Bureau to Raise Homeowners’ Rates, Drop Policies

By | February 27, 2012

North Carolina’s third largest homeowners insurer is looking to reduce its exposure in the state by increasing rates and rolling back its policyholder numbers, citing steep increases in reinsurance costs.

The North Carolina Farm Bureau Insurance Co. announced it will implement a statewide average 6 percent increase in premiums on the 380,000 homeowners it insures around the state.

Although homeowners’ rates are capped by the state, the insurer said the increases will come in the form of eliminated policyholder discounts and credits. The insurer is seeking to implement similar changes on its mobile home and farm properties policies.

In January, the insurer imposed new underwriting guidelines that require homeowners to purchase an auto policy in order to maintain their coverage. It also decided to non-renew homeowners who had filed a claim on their property in the last five years.

Farm Bureau Executive Vice President Steve Carroll said the moves reflect a steep rise in its reinsurance premiums following last year storms, which resulted in over $50 million in claims. As a result of those losses and changes in the reinsurance market, he said the insurer’s reinsurance costs jumped from $75 billion in 2011 to $150 million this year.

The Raleigh, N.C.-based Farm Bureau is the state’s third largest homeowner insurer, representing 13.9 percent of the market.

One segment of the market Farm Bureau is looking to substantially withdraw from is its dwelling policies. Dwelling policies are generally limited to insuring physical damage on rental and investment properties that not occupied by an owner.

In 2011, the North Carolina Rate Bureau filed for a 30.6 percent rate increase for these policies, which was denied by Insurance Commissioner Wayne Goodwin. Goodwin ordered a 7.3 percent rate deduction. Goodwin’s decision is currently under appeal.

As a result, the insurer will exclude wind coverage on 15,000 dwelling and property policyholders in coastal areas, effective June 1. It also plans to eliminate 43,000 properties in the western region of the state unless the owner has an auto policy. The company will also stop offering any new dwelling policies in non-coastal regions, effect April 1.