North Carolina homeowners could see their first rate increase in four years as the state’s rating bureau demanded an average 17.7 percent increase in loss cost rates across the state. The North Carolina Rate Bureau filed for the rate increase on behalf of all property insurers. It would increase loss cost rates by 17.7 percent if approved. That figure includes a homeowners’ rate hike of 17.4 percent, a rental rate increase of 30 percent and a 29.5 percent increase in condominium coverage.
The rise of reinsurance is one of the several factors contributing to the rate increase, according to Rate Bureau General Manager Ray Evans. “The cost of reinsurance has increased by 65 percent since the last filing in 2008 and it is a challenge to fine adequate reinsurance,” said Evans. Evans also reasoned that insurers’ claims costs have risen due to the massive number of claims filed and severity of claims.
Recently, some consumer groups have spoken out against the proposed rate increases. The Business Alliance for a Sound Economy (BASE), a consumer group representing the state’s coastal area, is against the proposed rate, claiming it unfairly penalizes coastal policyholders. BASE Governmental Affairs Director Tyler Newman argued that the disparity between rates in the inland counties and coastal counties is unwarranted.
For example, under the current filing, a home valued at $75,000 in the inland areas will see its premiums increase by as little as 1.2 percent, from $364 to $369. In the coastal areas, that increase is projected to be as high as 30 percent, adding more than $300 in additional cost for the same policy.
“It is the disparity of costs that is so disconcerting,” said Newman. “Everyone should pay the same for the same perils.”
The new rate filing is the first since lawmakers earlier this year took steps to improving the ratemaking process by giving policyholders more input. Under the law, the property insurance rate filing is open to the public, which will have 30 days to submit comments. Previously, the public was only allowed to make public comments in the event the insurance commissioner decided to hold a public hearing.
The North Carolina Department of Insurance released a statement saying that in addition to accepting written comments, Insurance Commissioner Wayne Goodwin is planning to hold a public comment session on October 17. “This gives citizens a voice they haven’t had before,” said Newman,
In the event that Goodwin and the rate bureau cannot agree on a final rate, a public hearing will be held that will offer North Carolina residents another chance to voice their concerns. Under the new law, Goodwin will have the final say on rates as long as they don’t fall below existing rates and above what the industry is requesting.
