
NORTH CAROLINA — The Department of Insurance received nearly 25,000 public comments opposed to a proposed homeowner insurance rate hike of 99% in tri-county beach areas. Insurance Commissioner Mike Causey reached a significantly lower negotiated settlement for the next two years but expressed concerns about long-term coverage.
READ MORE: NC Real Estate Commission’s property flood history disclosure rule begins soon
ALSO: Coastal insurance rates likely to be negotiated down from 99% increase request
North Carolina has a unique arrangement for setting insurance rate increases. The North Carolina Rate Bureau represents the insurance industry to make policy suggestions to the Department of Insurance, which then negotiates with the state government. After a year of review, negotiations, and hearings, DOI reached a settlement this month prohibiting NCRB from requesting additional increases until June 2027.
“It was a long, grueling process,” Insurance Commissioner Mike Causey told Port City Daily. “This was certainly more difficult than past negotiations.”
Homeowner insurance rates in beach areas of New Hanover, Brunswick, and Pender counties will increase 16% on June 1 and 15.9% next year. Eastern portions of the tri-county region will hike 10.5% this year followed by 10.1% in 2026, while western areas will go up 5% in 2025 and 4.8% the following year.
North Carolina Rate Bureau chief operating officer Jared Chappell described the settlement as a “step in the right direction.”
“The North Carolina Rate Bureau asked for a larger increase because that’s what recent claims data called for,” he wrote in a statement to PCD. “Storms have gotten stronger and more damaging, more people are living in disaster-prone areas, inflation in the construction industry has been particularly high and reinsurance costs have exploded. All these cost drivers remain an issue.”
The average North Carolina homeowner increase is 15% over the next two years. The hike is significantly lower than the North Carolina Rate Bureau’s request last January for an average statewide homeowners’ insurance rate increase of 42.2% with hikes as high as 99.4% in beach areas of coastal counties.
“They were excessive in my view,” Causey said. “And they were also unfairly discriminatory to certain sections of the state, [including] the coastal beach areas of southeastern North Carolina.”
The insurance commissioner said the department received almost 25,000 letters opposed to the exorbitant proposed hike.
“People would say: inflation is killing us,” he said. “The grocery prices have tripled. Our fuel prices are double what they used to be a few years ago. Everything I pay for has gone up and up, but my paycheck has not.”
However, Causey determined some increase was necessary, despite the request after he, staff, and consultants examined NCRB’s roughly 3,000-page rate filing.
“You can’t change the fact that homeowner insurance companies are paying out more in claims every year than they take in premium dollars in North Carolina,” he said. “For every one dollar they take in premiums they’re paying out in claims anywhere from $1.15 to $1.30 and you can’t stay in business like that.”
NCRB cited storm risk as a leading cost for higher insurance on the coast. NCRB uses storm and climate modeling from Moody’s and Verisk credit services to inform their calculations on catastrophic storm risk, which he said is trending upward. In October 2023, Nationwide decided to not renew over 10,000 homeowners’ insurance policies in Eastern North Carolina after a review of weather-related losses and climate severity.
“Unfortunately, when the two years covered by this settlement are up, we will almost certainly be in a similar position, calling for a significant increase to keep the North Carolina market strong and to encourage as many carriers as possible to compete here for customers,” Chappell said.
Causey said Hurricane Helene’s impact did not influence NCRB’s January proposal. Alternatively, Hurricanes Florence and Matthew played a significant role due to a several-year lag in risk calculation.
The General Assembly established the North Carolina Rate Bureau in 1977. It combines the functions of the North Carolina Fire Insurance Rating Bureau, the North Carolina Automobile Rate Administrative Office, and the Compensation Rating and Inspection Bureau of North Carolina into a single organization. It administers the state’s Workers Compensation Insurance Plan and serves as a hearing officer for the Safe Driver Insurance Plan.
NCRB is a nonprofit funded by member companies and its budget — roughly $20 million in 2023 — is split proportionately by market share. Member companies elect 12 voting members to the NCRB governing committee including representatives from Allstate Insurance, Nationwide Mutual Insurance, State Farm, Liberty Mutual Insurance, and the NC Farm Bureau.
Business Alliance for a Sound Economy CEO Tyler Newman told Wilmington Business Journal lawmakers should consider eliminating the rate bureau to bring down rates with increased transparency and competition.
The Insurance Commissioner originally campaigned on eliminating the NCRB to create a free market system, but now believes it is an effective mechanism to reach compromises with industry and prevent providers from pulling out of disaster-prone areas.
Newman noted to Port City Daily many tri-county homeowners also pay for separate flood and wind/hail policies — unlike inland areas of the state — creating a cumulative negative impact on regional housing affordability.
Homeowner insurance policies do not cover flood damage. FEMA’s National Flood Insurance Protection Program accounts for the vast majority of national flood insurance policies, but the federal program has accumulated over $20 billion in debt.
According to an October Raleigh News & Observer analysis, less than 3% of North Carolina households have flood insurance. Most policy holders live on the coast, including 6% to 20% of households in the tri-county region.
Causey said the department will prioritize increasing access to flood insurance, expanding a fortified roof premium discount program, and request General Assembly funding for insurance fraud investigations this year.
“We have a crisis because very few people have flood insurance,” he said. “The [FEMA] flood insurance program is in deep debt. The solution would be to find more ways to encourage people to buy flood insurance and more people paying premiums into the program.”
The North Carolina Real Estate Commission finalized an amendment mandating flood history and risk disclosures in residential property sales last year. In 2022, The Southern Environmental Law Center, National Resources Defense Council, and NC Justice Center submitted a petition to the commission arguing the state allowed property owners to unfairly withhold information from potential buyers.
“North Carolina and other states are seeing more instances of extreme weather and disasters spurred by climate change,” National Resources Defense Council flooding solutions director Rob Moore told Port City Daily. “But as insurance companies raise premiums, reduce coverage, or even refuse to do business in climate-vulnerable states, the cost of disasters is increasingly put on the shoulders of homeowners.”