Real Estate - Residential

Homeowners Insurance Rate Increase Capped At 5.5 Percent

By Christina Haley O'Neal, posted Apr 19, 2018
A legal dispute between the state department of insurance and the N.C. Rate Bureau (NCRB) has settled with a negotiated rate increase of 4.8 percent statewide.

That is down almost 14 percent lower than the rate of 18.7 percent originally proposed in November, according to a news release from the N.C. Department of Insurance. The rate increase will take effect Oct. 1.

The 4.8 percent rate increase will vary according to territory with a cap of 5.5 percent, instead of the 25 percent jump along the coast that was initially proposed by NCRB, officials said in the release.

In the Wilmington area, a $200,000 insurance policy with a $1,000 deductible on a frame house in fire protection class 5 would see an average increase of $101, compared to current premiums, according to a spokesman with N.C. Department of Insurance. That is an average of $359 less than the proposed rate increase by NCRB.
In Wilmington, the current annual average premium is $1,846, but individual policies may vary, according to the N.C. Department of Insurance's numbers. With the settled rate, the annual average premium in Wilmington is $1,947; the Rate Bureau proposed rate would have resulted in an average premium for the year of $2,306. 

Tyler Newman, president and CEO of Business Alliance for a Sound Economy, said that while the increase is better than what was proposed, the state could make some changes to its rate-making processes.

“We are appreciative of the Commissioner denying the exorbitant requests from the Rate Bureau,” Newman said in an email. “At the same time, we still face significant statewide inequity in rates with the coastal areas paying two to three times more for the same types of coverage in the interior part of the state—while at the same time being required to have separate wind and flood policies.”

He added, “We continue to encourage the General Assembly to make fundamental changes to the rate making process in North Carolina ... otherwise, we will be right back in the same spot in a few years."

The last time homeowners across North Carolina saw an insurance rate increase was in 2012, when the NCRB case was settled for an average statewide increase of 7 percent.

“I have negotiated a rate that will have minimal impact on the coast yet keep the state’s insurance companies financially sound,” said Insurance Commissioner Mike Causey, in the Wednesday release. 

The agreement also covers insurance for tenants and condominiums, which is capped at 12 percent, according to the release. The rate settlement will "save consumers approximately $293 million in the first year alone, compared to the NCRB’s proposed increase," officials said.

Officials with N.C. Realtors said there is still more work to be done.

Amy Hedgecock, 2018 N.C. Realtors president, said in a release Wednesday, “It is important to take steps at both an administrative and legislative level to ensure consumers are not additionally harmed by actions like consent to rate letters distributed by companies who wanted more significant rate increases. We look forward to working with Commissioner Causey and legislative leaders over the coming months.”

Insurance companies are not required to use the new rates, said Jim Moore, CEO of James E. Moore Insurance Agency Inc., adding that "it’s really a suggested rate and the insurance company can make a filing for more or less.”

“As long as we have companies in business here, and they do compete … people should still be able to find insurance that costs less than that,” Moore said of the new rates.

“For the public, the thing is if you do get a big increase, check around … not all of them (insurance companies) will be charging the same price,” Moore added.
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