Christine Murphy fears a major increase in homeowner’s insurance rates would have a devastating impact on her life.
“I’m 74 living on $718 a month,” Murphy, of Jacksonville in Onslow County, wrote recently in opposition to a rate increase proposed by insurers. “I can barely make it. If the hike passes, I will be forced to give up my home, with nowhere to go and no family. I see no way out but death.”
Emotional pleas such as Murphy’s, as well as angry outbursts that blast the industry, have poured into the state Insurance Department since insurers asked for a rate increase on homeowner’s insurance that would range as high as 30 percent in Onslow and other coastal counties. The average increase insurers seek is 17.7 percent, although it would be as low as 1.2 percent in some regions; in the Triangle, the rate increases would range from 11.1 percent to 11.8 percent.
Some commentators said that although they would understand a small increase, they consider the magnitude of the increase the industry seeks to be outrageous. Others said any increase is unacceptable, especially in light of the struggling economy.
As of Monday, nearly 1,600 homeowners had written the Insurance Department, mostly via e-mail, to complain about the rate increase request unveiled Oct. 3. These comments, which are being accepted through Friday, offer a preview of what’s in store at the live-and-in-person public comment session being held Wednesday at the Insurance Department offices in downtown Raleigh.
“It’s hard to predict how many people are going to show up here on Wednesday, but we are preparing for a big crowd,” Insurance Department spokeswoman Kerry Hall said.
Commissioner Wayne Goodwin instituted public comment sessions on rate increase requests when he took office in 2009. Since then, the legislature has mandated such sessions.
Bryan Heckle, a manager in the Insurance Department’s property and casualty division, will oversee Wednesday’s session. Goodwin is absenting himself to remain impartial in case he ends up presiding over a hearing in which the industry and state regulators present evidence. Such a hearing would take place if the industry and department staff fail to agree on an appropriate homeowner’s rate. Goodwin would set the rate after the hearing, although his decision could be appealed to the courts.
The N.C. Rate Bureau, which represents insurers, hasn’t requested a rate increase for homeowner’s insurance since 2008. At that time, the industry sought an average increase of 19.5 percent but agreed to accept 4.05 percent after negotiating with regulators, following the historical pattern of state regulators whittling away at rate increase requests. Still, those rates, which went into effect in May 2009, rose as much as 29.8 percent along the coast and outraged residents there.
The absence of a boost in rates since 2009 doesn’t mean homeowners have been spared premium increases since then, however. Insurers can – and do – raise premiums when no rate increase has been approved by reducing or eliminating discounts. Also, policies that cover the “replacement cost” of a house may rise annually to keep pace with construction costs.
To justify its rate increase request, the industry cites:
• An uptick in claims per 100 homes.
• Higher costs per claim.
• Higher expenses, especially for the reinsurance that insurers buy to protect themselves from catastrophic losses.
• And, along the coast, potential losses from a severe hurricane.
Last year, two of the state’s largest insurers, the N.C. Farm Bureau and Allstate, stopped writing homeowner’s policies in some instances, with the Farm Bureau complaining that the homeowner’s business in North Carolina has turned unprofitable.
A sampling of the first batch of more than 200 e-mailed comments, plus more than 60 typed or handwritten responses, turned up virtually no analysis of the industry’s 1,272-page filing. Instead, the comments are mostly impassioned and frequently blunt.
“The request epitomizes the heartlessness of some greedy clowns,” wrote John Coleman of Hope Mills.
Many of the comments came from coastal residents, who would be hit hardest by the proposed rate increase.
“In the last few years residents of eastern North Carolina have been pummeled with ‘JUST IN CASE THE BIG ONE HITS’ insurance rate increases,” wrote Ray W. Smith of Hubert, in Onslow County. “Well, the ‘big one’ hasn’t hit, but the insurance companies still got to keep the money.”
One of the more detailed comments came from Jay Barnes, director of development at the N.C. Aquarium Society and author of “North Carolina’s Hurricane History,” a book published by UNC Press.
“The notion that hurricanes are just a coastal problem is one that I hear regularly during my classes and lectures,” Barnes wrote. “Nothing could be further from the truth. … (Hurricane) Hugo, for example, caused $1 billion in losses in N.C. in 1989, with almost all of those losses coming from wind in the western counties.”
A number of comments express a raise-the-other-guys’-rates mentality, with inland residents protesting that they shouldn’t be subsidizing coastal homeowners. A few residents of coastal counties complained that they shouldn’t be lumped in with beachfront properties.
“We do not see a beach from our property. … We do not step out onto soft sugar sand around here,” wrote Lynn and Lawrence Darby of Carolina Shores. “Even Google Maps will prove this area to be anything but COASTAL Brunswick County.”
Ray Evans, director of the N.C. Rate Bureau, which represents insurers, said that although insurance depends on policyholders as a whole subsidizing those who suffer losses, the industry has tried to limit such subsidies by setting rates by region.