Insurance to cost N.C. homeowners 4% more

North Carolina homeowners' insurance premiums will rise an average of about 4 percent -- not the 19.5 percent increase that insurers requested earlier this month.

A settlement between state regulators and the insurance companies was announced Thursday.

As expected, homeowners along the coast will get a much larger increase: an average of 18.7 percent, and as much as 29.8 percent in some areas.

Rates in the Triangle will rise 2 percent to 5 percent, depending on the location. Homeowners' insurance rates are set by region, based on the number and type of claims and repair costs in the area.

Coastal communities will receive another blow in a real estate market already reeling from the recession, said Alan Holden, the mayor of Holden Beach and the owner of four RE/MAX real estate brokerages in Brunswick County.

"It's certainly bad timing," he said. "I have some thoughts, but they're not publishable."

Not all North Carolina homeowners will see an increase, however. Thirty-six percent of homeowners -- mostly in western counties and in Winston-Salem and Greensboro -- will see decreases of 1.2 percent to 6 percent.

The last rate increase in homeowners' rates took effect in May 2007 and averaged 5.4 percent statewide.

The average rate increase announced Thursday, 4.05 percent, takes effect May 1. The increase comes as many homeowners are also paying more for electricity and other bills -- Progress Energy raised its rates 10.2 percent on Dec. 1.

The homeowners' rate hike followed a typical scenario: The industry's request was scaled back after negotiations with the state.

But this time many wondered whether there might be a different outcome. So many homeowners called to complain about what they thought was a done deal that the state Department of Insurance issued a statement last week to reassure them that wasn't the case.

What was different was controversy surrounding the Beach Plan, a government-created insurance provider. The Beach Plan, which dominates the coastal homeowners' insurance market, lacks the resources to cover losses if a hurricane wreaks havoc in the region. Under state law, insurers that do business in the state -- even if they don't write policies along the coast -- would be assessed for damages the Beach Plan couldn't cover, pro-rated according to the volume of business they do.

Insurers said their rate hike request was needed in case a hurricane hit the coast and companies were assessed for the damages.

Long: This deal is fair

"We've reached a settlement that is fair to both consumers and insurance companies," Commissioner Jim Long said in a prepared statement. "No one likes to see their insurance rates go up, but the industry made a strong case for allowing some increases this year. The silver lining is that most consumers won't see nearly the increases that were initially proposed."

Ray Evans, general manager of the N.C. Rate Bureau, which filed the rate hike request on behalf of insurers, said the industry compromised even though it still believes a 19.5 percent increase is warranted.

"We're getting, on average, 18 percent along the coast," he said. "To get that, we are reducing some rates in the west. It's a good step in the right direction."

Although Triangle homeowners are being spared the hefty rate increases that will take effect on the coast, they could be hit in the wallet the next time they rent a beach house.

"Always, higher costs will be passed on to the consumer," said Sam Sellars, a real estate broker with Eddy Myers Real Estate in Beaufort.