Insurers seek 25 percent increase in NC homeowners insurance rates

dranii@newsobserver.comJanuary 3, 2014 


Steve LaSala with CitySpace Realty paints a new house built in Dorothea Gardens Wednesday, February 27, 2013. Tucked next to Boylan Heights, Dorothea Gardens will consist of both new and restored homes in Raleigh's historic district.


  • How to comment

    The state Insurance Department is seeking public comments, as required by law, on the insurance industry’s latest request for higher homeowners insurance rates.

    Members of the public can comment in person on Jan. 24 from 9:30 a.m. to 4 p.m., in the Jim Long Hearing Room of the Dobbs Building at 430 N. Salisbury St. in downtown Raleigh.

    Written public comments are being accepted through Jan. 31. They can be mailed to: NCDOI, Attn: Bob Mack, Property & Casualty Division, 1201 Mail Service Center, Raleigh, NC 27699-1201; or emailed to

Insurers are asking for another major increase in homeowners insurance rates across North Carolina – an average increase of 25.3 percent.

The increases the industry is seeking vary by territory and are much higher for Triangle homeowners than they have been in the recent past. The industry is seeking a 24.4 percent increase for homeowners in the cities of Raleigh and Durham; and a 32.1 percent increase in the rest of Wake and Durham counties as well as in Chatham and Orange counties.

Insurance Commissioner Wayne Goodwin blasted the industry’s request, which overall ranges from a decrease of 2.7 percent in some areas to an increase of as much as 35 percent in some regions along the coast, and urged the industry to withdraw it immediately. Goodwin ultimately would have to approve any rate increase.

Ray Evans, director of the N.C. Rate Bureau, which filed the request late Friday afternoon on behalf of the insurance industry, said the request was driven by higher claims by homeowners in recent years. He also said the industry is playing catch-up on rates because it has consistently in the past obtained much smaller increases than it sought.

The last time the industry sought an increase in homeowners rates, in 2012, it sought an average increase of 17.7 percent. But in the end, the industry and Goodwin compromised on a statewide rate increase that averaged 7 percent.

“We’re trying to get caught up,” Evans said. “We’re trying to get to an adequate premium.”

In 2011, two of the largest insurers in the state, N.C. Farm Bureau and Allstate, stopped writing homeowners policies in some instances unless customers also bought auto insurance from them. A Farm Bureau executive told a state legislative committee at the time that its homeowners insurance business was unprofitable.

The last increase went into effect July 1, although some homeowners may not have even felt the effects of that increase yet because the higher rates aren’t imposed until a policyholder’s coverage expires.

Goodwin responds

To be sure, policy premiums can rise in a year when no rate increase has been approved if an insurer reduces or eliminates discounts. In addition, policies that cover the “replacement cost” of a house may rise annually to keep pace with construction costs.

If the industry and the Insurance Department staff can’t agree on a rate change, a hearing would be held that is presided over by the insurance commissioner, who would then issue a ruling that could be appealed to the courts.

Goodwin made clear that he’s not in a mood to settle, issuing a statement saying he was “appalled that the insurance companies would request another increase” so soon and urging the industry to withdraw its request.

“If they do not, the insurance companies should expect a full hearing on this matter,” he added. “I will not entertain any settlement negotiations.”

Goodwin also said he was offended that the request was filed “late on a Friday afternoon, when they think the public won’t be paying attention.”

The new rates that the industry is seeking would take effect Aug. 1.

Out on the coast

Coastal homeowners have been especially upset about the rates that they pay, which have been rising much higher than those in other areas of the state. Residents of coastal counties decried the last increase the industry sought as excessive, unwarranted and unfair.

The rates sought in the new filing go as high as 35 percent in some beach areas but also go as low as a decrease of 2.7 percent in the inland areas of some coastal counties, said Insurance Department spokeswoman Kerry Hall.

Evans, the N.C. Rate Bureau director, said the industry also is seeking a revision of the rate territories to apportion rates more fairly.

Evans said that for every dollar in premiums that the state insurers received in 2010 and 2011, “they essentially paid a dollar in claims.”

Those years “were particularly bad years for, if you’ll remember, for tornadoes ... and severe weather in general, excluding hurricanes,” he said.

Ranii: 919-829-4877

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