Higher insurance rates could crush NC homeowners

North Carolina homeowners and renters could be hit with higher insurance rates later this year, and in the state’s coastal counties like Cartaret, New Hanover, and Brunswick, those rates could be astronomically higher.

In January, the North Carolina Rate Bureau (NCRB) proposed an average insurance rate increase of 42.2% statewide, which was rejected by Commissioner of Insurance Mike Causey. 

The NCRB, an entity created by the General Assembly in 1977, proposes rate hikes, and the Commissioner of Insurance can either accept these hikes, reject them in favor of a hearing held at a later date or negotiate a settlement agreement at a different rate.

Causey said at the time of the rejection that the increase requested by the NCRB was too high. 

“I haven’t seen the evidence to justify such a drastic rate increase on North Carolina consumers,” he said.

In 2021, the Rate Bureau requested a 24.5% average rate increase, which was negotiated down to 7.9% prior to the hearing date set by Causey. This time around, a hearing will take place on October 7th, unless a settlement is reached between Causey and the Rate Bureau before then.

But State Sen. Natasha Marcus (D-Mecklenburg County), Causey’s Democratic opponent in the November 5th election, believes it is important that the hearing take place this year.

“We need a public hearing. Mike Causey, our current commissioner, has never held one. He’s held the required public comment period,” Marcus told Cardinal & Pine. “What I’m calling on him to have, is for the first time since he’s been commissioner, an actual public hearing, where the insurance companies have to present their evidence, to explain and prove what the new rates need to be.”

Marcus criticized the commissioner’s past action on rate hikes.

“The Rate Bureau brings him a rate hike, it’s always very high. And he says, ‘I am going to hold a hearing, and then the public can see.’ Then he never holds the hearing, and instead what he does is he goes into a private room and makes a private settlement,” Marcus said. “And he will come out of that room, the current commissioner, and basically, in not quite so many words, tells the public ‘trust me, I just made you a great deal in there.’”

Striking a balance between profit and excessive increases

After rejecting the initial rate hike proposal, Causey indicated that he would accept a rate increase of some sort.

“I’m willing to listen if they want to come back with some numbers that are more reasonable to the people because the majority of people can’t stand this,” Causey said.

A North Carolina Department of Insurance spokesperson said at the time that it was important to balance consumers’ concerns and  insurers’ ability to continue doing business in North Carolina. 

“What we do not want to happen is what is happening in some other states, and I’m thinking of Florida comes to mind, where insurance companies are leaving the state and consumers don’t have choices,” NCDOI Spokesperson Barry Smith told ABC11 in January.

In Florida, companies like Farmers and over a dozen others have left the state due to increased instability in the marketplace, including more frequent hurricanes. The average Florida homeowner now pays three times the national average for home insurance.

Marcus believes that it is important for companies to be able to make a profit and for the state to have a competitive marketplace.

“We have to make sure insurance companies want to do business here, because they are making a reasonable profit. That’s what they’re entitled to make here, and it is best for North Carolina consumers and homeowners, and all of us who need insurance, for there to be a vibrant marketplace of insurance options,” she said.

Competition, Marcus says, will keep prices lower. She also said she would actively recruit new companies to the state to give consumers more choice to help further drive down prices.

“That competition makes prices better.”

How climate change affects insurance rates

North Carolina’s coast has been impacted by several hurricanes in the past decade, causing extensive flooding, home damage, and loss of life.

The threat of hurricanes, their increased frequency, and the overall impact of climate change ultimately play a role in the cost of insuring a coastal property. 

Last year, Nationwide Insurance announced it would drop over 10,000 people from coverage in North Carolina, citing in part ‘climate severity’ and ‘weather-related losses.’ Most of those who lost coverage live in Eastern North Carolina, and around 1,000 of them were located on the Outer Banks.

Marcus says climate change will continue to present serious challenges the state will have to meet.

“North Carolina is one of the states in the United States that is most at risk for the negative impacts of climate change because we have a long coastline, a lot of low-lying land that is subject to flooding, and a lot of damage when storms come through,” Marcus said. “It doesn’t necessarily have to be a full on hurricane to do a lot of damage in North Carolina. People who live on the coast know this.”