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Local insurance rates could go up 30-percent
Opposition is growing to a home insurance rate hike that could hit 30-percent in many coastal counties, after a request by the N.C. Rate Bureau.
The bureau represents the property insurance companies writing business in the state, requested a statewide average increase of 17.7 percent that would go into effect on June 1, 2013.
But according to the NC-20 group that represents coastal N.C. counties, rates in Dare, Hyde, and Currituck counties would increase the most.
A public comment session will be held Wednesday in Raleigh, while written comments are being accepted through Friday.
The increase is being proposed for homeowners policies that normally cover fire, theft, and liability.
NC-20 President Willo Kelly said coastal counties have long paid more than their fair share in insurance premiums, in relation to insurance companies’ losses on the coast.
“We feel these rates are excessive, they are unfair, they are discriminatory and the data is not included in this rate filing in order to figure out their actual losses,” Kelly said in a news release. “It’s not transparent at all.”
According to Kelly, the requested increase from the rate bureau is not supported by loss data.
“We pay (premiums) based on a modeled catastrophic risk, which is a computer model that’s based on what is put in it, which we can’t find out because its proprietary information,” Kelly said.
“Here in eastern North Carolina, we pay based on projected losses,” Kelly said. “If Hurricane Hazel comes ashore today and goes up the coast, here’s what your potential losses would be. In any given year, it’s $4 billion.”
She said insurance companies are basically investment firms, using premium dollars to invest to earn more money.
When the market is good for investment, rates are discounted, but when the investment market is not good, such as during recent years, insurers seek higher rates.
Citing figures from the Insurance Information Institute, Kelly said U.S. property insurance companies are holding about $567 billion in policyholder surpluses at the end of 2011. Last year’s catastrophic losses totaled only $35 billion.
“That’s all the tornadoes, Hurricane Irene…insurance companies are not suffering,” Kelly said.
Current homeowners’ insurance rates in North Carolina took effect May 1, 2009 – the third increase in six years.
But during the past 20 years, the rate disparity between the coast and inland counties has widened, according to NC-20.
Eighteen eastern counties accounted for only $259 million in losses, but the 82 other counties experienced about $2.21 billion in total losses from 2001-05, according to Kelly.
In the most hurricane-prone counties of Currituck, Dare and Hyde, only 6 cents of every premium dollar paid went to pay wind losses.
“In Buncombe County in western North Carolina, it was 21 cents of every dollar paid,” Ms. Kelly said.
The last homeowners’ insurance rate filing was in 2008 when the insurance companies requested a 19.5-percent statewide average increase.
A settlement agreement allowed for a 4.05-percent statewide average increase to go into effect in May 2009.
State legislation passed earlier this year requires Insurance Commissioner Wayne Goodwin to hold a public comment period on the rate filing.
The filing will be reviewed by Department of Insurance experts to determine what, if any, rate adjustments are warranted.
If the two parties cannot agree on rate changes, Commissioner Wayne Goodwin will call for a public hearing in which both parties would present their cases for any rate adjustments.
The filing is available for public review on the Department’s website at http://pserff.ncdoi.net/pc.html and enter the Serff Tracking Number NCRI-128708881.
A public comment session has been scheduled for Wednesday, Oct. 17, from 9:30 a.m. to 4 p.m. in the Jim Long Hearing Room of the Dobbs Building, 430 N. Salisbury St., Raleigh.
Written public comments are being taken through Friday, Oct. 19 and can be mailed to NCDOI, Attn: Bob Mack, Property & Casualty Division, 1201 Mail Service Center, Raleigh, NC 27699-1201; or emailed to 2012homeowners@ncdoi.gov.
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Jordie Fike says:
make my payments for 20 years, get a flood and lose $25K in belongings plus two cars, everything but $1,600 gets denied in the claim and now they want to up my rates??? KMA
Hoi Toid says:
Take from the rich counties and give to the poor inland counties. Is Robin Hood running this scheme? Or even better yet, lets tax the rich in our country more so we can spend on what we want to.
Susan P. says:
My mortgage payment has gone up over $200/mth. due to the increase in my homeowner’s insurance. I can’t imagine having to pay more!
Then on top of this Dominion wants to raise their rates.
chaser says:
Life on a sandbar….sell the dream, ignore the reality.
Monty montcalm says:
Boy am I glad I got out !!!!!
curious says:
Just curious,
Paul Tine is an insurance company owner and running for state office, he hasn’t said much about these ridiculous rate hikes, what is his stance on this? Surely he would try to help us and lower them!
Russ Lay says:
I would suggest you review his web site and his comments at the Voice debate
curious says:
This was on his website:
Insurance
The cost of property insurance is a major issue in our region. As an insurance agent, I have fought for years with insurance companies, the Beach Plan, the Commissioner of Insurance, and members of the Legislature to keep rates fair and affordable. I have found the insurance issues to be complicated and that there are no easy answers.
The biggest problem we have is that insurance companies have had high property losses in North Carolina and the eastern part of North Carolina, with its low number of voters, is an easy target in the legislature. If you base rates on past losses and not speculation, you will find the real need for rate increases is in the central and western part of the state. For the past several years, even after Irene, northeastern North Carolina has shown positive loss ratios. The storms usually move quickly over our area and then stall northwest of us, our pine trees have a root system that makes them less likely to blow over than the oaks that are in the central part of the state, and our building codes are more stringent than the rest of the state. While we certainly have had some serious flooding recently, the people in Raleigh don’t appear to understand that flood insurance is a Federal program that in no way affects property rates.
There is a definite need for rate reform but we need to be very careful and deliberate how we go about it so that we don’t make things worse. Our system works very well with automobile insurance, for example. We have some of the lowest rates in the southeast United States and the companies continue to make a profit which keeps private competition in the market. The same system applied to homeowners, however, has caused the market of last resort to become the primary market in the east, very few companies writing east of US Highway 95, and a rate in the northeast that makes it increasingly difficult to live and work in this area.
As I stated in the beginning, the resolution to this problem won’t be easy, but when I am elected, I will work with the legislature, the insurance companies, and the communities to make sure we have rates that allow our economy to grow.
curious says:
Does he plan on going to Raleigh tomorrow?
Key sentance: There is a definite need for rate reform but we need to be very careful and deliberate how we go about it so that we don’t make things worse. Our system works very well with automobile insurance, for example. We have some of the lowest rates in the southeast United States and the companies continue to make a profit which keeps private competition in the market.
Companies continue to make a profit, including HIS company.Be careful? of course, careful not to shoot his own golden goose!
junkman says:
Its the oldest game in the insurance company book. What they really need is maybe something like 5%, but ask for 30% then grudgingly settle for 15% and make us think we got a great deal.
KDH Rezident Evil says:
Insurance is legalized gambling. Will your house be destroyed in a storm this year? (rolls dice)
No? Hey you win AND pay the house $3,000 in premiums.
Lets play again next year.
Insurance profits should be taxed at the same rate as a gambler’s earnings, which I believe puts it in the top tier.
JimH says:
Which type of insurance is being discussed? I have three separate policies: Homeowners (theft, liability, and fire), Wind and Hail (AKA Beach Plan) and Flood. I doubt that it is flood since that is a federal program that the states have no control over.
If we are talking about the Homeowners policy then an increase can’t be justified as the likelihood of fire, theft, and liability have increased minimally. If we are talking Wind and Hail an increase is unreasonable since this represents $2100/year for me and 30% would push up another $630/year.
We really need more details on this article because a large number of people don’t know the types of insurance or their individual costs and only look at the total cost of their mortgage payment, which is like buying a car with the only concern being the cost of the payments and not the actual price paid.
Sam Walker says:
JimH…this requested increase is for homeowners insurance as stated multiple times in the article. We’ll add some additional details. Thanks for your comments.
obxer says:
Just another hit on the middle class. Between high gas prices, high food prices, increased electrical prices, health premiums,bank fees, how much more can we take. The salaries are not increasing. Something has to give. Americans cannot prosper while carrying all these burdens. Just like Biden said “The middle class has been crushed the last four year”. Yes we have and it needs to stop.
Chris says:
“Homeowners” includes wind and hail. The Beach Plan rates and your primary homeowners rates will go up if this is approved.
Frank Sciacchitano says:
The following is the letter I forwarded to Mr. Bob Mack of the Property and Casualty Division expressing my concern in this unfair rate request:
Bob Mack: I am a former VP at Aetna Life & Casualty, having spent my entire professional career in both Planning & Finance and Marketing. Although I do not intend to read the entire 1267 page filing, I know enough already from living on the Outer Banks for the past 5 1/2 years that the proposed rate increase for Dare County is unfair, not warranted, and is based solely on what “may happen” relative the wind loss to property. The rate filing calls for a 30 percent increase. Why? Do the insurance companies wish to build-up their surplus to compensate for the loss of revenue from investments and or historical low interest rates? The proposed increase is NOT justified from an underwriting standpoint., i.e. we have not experienced excessive property loss ratios here on the Outer Banks to justify a 30 rate increase. Please read the following article which will probable make more sense than the 1267 pages submitted by the Rate Bureau:
http://outerbanksvoice.com/2012/10/16/local-insurance-rates-could-go-up-30-percent/
Residents on the Outer Banks have been over-paying homeowner insurance for decades. Don’t allow it to continue. If anything, the State of North Carolina should consider subsidizing homeowner rates due to the fact that it is our homes which provide the “cash cow” of tax revenue, occupancy taxes, and restaurant food taxes from the millions of visitors each year the State of NC enjoys at our (homeowner/taxpayer) expense. The above mentioned article tells the truth of the matter. Thank you – Frank, Southern Shores, NC
john says:
If it’s “just” for the homeowners’ portion of the coverage and not for “wind”, while still absurd, it will be much more tolerable.
C-unit says:
Increase the rate 30% just incase something happens. And when something does happen, they will up the rate again to cover losses from said incident. What a bunch of crooks
Mary says:
I think Chris is correct. I went to the website and of course it is all Greek to us that do not normally read this submissions. BUT the repeat of Wind and Hail in the verbage, charts etc. led me to believe that it was part of the increase.
If it was not, then why are there statements in other press that the reason given is hurricanes? Hurricanes don’t equal theft, fire, liability.
DividendReimbursement says:
Jacking the homeowners rate 30% is outlandish and pure greed, they will settle for 5%. I could see an increase in flood, especially after Irene and this last summer with our torrential rains and crummy drainage (thank you town managements!). We coastal residents should not be forced to pay your stock dividend payouts next quarter!
Obx home owner says:
Time to buy and live in a rv and or a house boat folks…
Salvo Jimmy says:
I’ve owned a house in Salvo for over 40 yrs. In all that time I’ve had one claim to “homeowner” insurance that went above my deductible. This was years ago before the % deductible for named storms and before the beach plan. It was a wind claim for roof damage before I replaced the shingles with one that has had no shingle movement in the past 12 yrs from wind.
Only other claim I’ve ever had was last year for flood from Irene. There no damage to the building itself, only utility stuff under the house.
So tell me again “NC Rate Bureau” why you need more for my “Homeowner” insurance.
BTW the only other claim on “homeowner” I’ve ever had was a claim for the monster hail storm years ago in Northern VA where the siding and roof on my place there were destroyed. No doubt that storm was a big factor in “Hail” being included in the “Beach Plan”.
Wonder when the “NC Rate Bureau”" will ask for a “beach plan” and “Lloyds flood” for vehicles here????
paul kelly says:
why is there no break given for new homes built under current building code, given the cost is greater for impact resistant doors and windows glued down shingles precut labeled plywood foor doors and windows 2×6 exterior walls elevated fondations 16 ft embeded pilings ect. the list goes on