Court upholds NC Insurance Commissioner’s lower rates for homeowners

A three-judge panel has affirmed state Insurance Commissioner Wayne Goodwin’s rejection of an industry request to raise homeowners insurance rates by an average of 25.6 percent, leaving in place the commissioner’s decision to instead reduce rates by an average of three-tenths of a percent.

The unanimous opinion affirming Goodwin’s rate plan was issued Tuesday by the N.C. Court of Appeals.

“The evidence in the record supports the commissioner’s critical findings and ultimate conclusions,” the 56-page ruling states.

Goodwin was jubilant over the ruling, calling it “a victory for all consumers in North Carolina.”

“I rejected the insurance industry’s proposed rate increase because I think it was unjust and I am very pleased with the court’s ruling,” Goodwin said. “This action will save North Carolina homeowners hundreds of millions of dollars in insurance premiums.”

The state’s consumers won’t see a change in their insurance premiums as a result of the court ruling because the lower rates established by Goodwin went into effect June 1, 2015. However, if the insurance industry had prevailed, the higher rates – which it proposed in January 2014 – would have taken effect.

Insurance rates vary by region. Under the rates imposed by Goodwin following a hearing during which the industry presented its case, rates fell 4.1 percent in Durham and Wake Counties and declined 14.2 percent in Chatham and Orange counties. Rates in Johnston County rose 2.6 percent.

The premiums homeowners pay aren’t affected just by the established rates, however. Premiums also can be impacted if an insurer reduces or eliminates the discounts it offers, and policies that cover the “replacement cost” of a house may charge a higher premium to keep pace with construction costs.

Ray Evans, general manager of the N.C. Rate Bureau, which represents insurers that sell homeowners policies in North Carolina, called the court’s ruling disappointing.

He said the industry “presented a lot of good evidence” and thought it had “a chance of prevailing on at least some of the issues.”

But the court, he said, ruled against the four main reasons that the industry put forth to justify the proposed increase.

“It’s commissioner 4, Rate Bureau zero,” he said.

Evans said no decision has been made on whether to appeal the ruling.

Goodwin said that, given that the three-judge panel’s ruling was unanimous, he would be surprised if the insurance industry appealed the decision.

The industry contends higher rates are needed because of higher claims by homeowners in recent years and because the state’s rate-making process consistently results in insurers getting significantly lower rates than they sought.

Rate cases typically have been settled out of court by the commissioner and the Rate Bureau. Goodwin said that Tuesday’s ruling was the first court decision on homeowners insurance rates in 23 years.

Highwoods earnings

Highwoods Properties unveiled second-quarter results that exceeded Wall Street’s expectations and announced plans to issue a special cash dividend to shareholders of at least 75 cents per share.

The Raleigh-based real estate investment trust reported after the markets closed Tuesday that its funds from operations, a profitability measure for REITS, totaled $82.2 million, or 82 cents per share, up from $75.2 million a year ago. Analysts polled by Bloomberg News had projected 80 cents per share.

Highwoods, the Triangle’s largest landlord, said that a portion of the $660 million it realized from its previously announced sale of Country Club Plaza, a retail and office complex in Kansas City, would fund a special cash dividend for shareholders that it plans to issue before the end of the year.

The dividend will be at least 75 cents per share and could be as high as $1 per share, the company reported.

Highwoods issued its second-quarter results after the markets closed Tuesday. Earlier in the day, its shares closed at $55.29, down 45 cents. Its shares have risen 27 percent this year.

This story was originally published August 2, 2016 at 5:43 PM with the headline "Court upholds NC Insurance Commissioner’s lower rates for homeowners."