Homeowner insurance rates in southeastern North Carolina are again set for the highest increases in the state per the industry’s latest filing.
Scheduled to take effect June 1, 2013, on new or renewed policies are 30-percent increases to the mainland and coastal rates in New Hanover, Brunswick and Pender counties, per a statewide case the N.C. Rate Bureau (NCRB) filed Monday.
“Here we go again,” Wilmington Regional Association of Realtors Governmental Affairs Director Kathleen Riely said Tuesday, referring to NCRB rate cases filed over the past few years that highlighted the coast as most at risk to storm damage.
The average statewide rate increase would be 17.7 percent, according to NCRB’s cover letter on the filing. NCRB represents insurers writing policies in North Carolina.
Officials in protest of the filing and its methodology complained the model used to determine the rates is not based on past occurrences. That means hurricanes that have cut inland, pounded the state’s mountains and created a slew of claims there have not necessarily factored in to the ratemaking. The territory that covers the mountainous areas was slated for a 13.7 percent change.
Brunswick County Association of Realtors Executive Vice President Steve Candler said that’s fundamentally unfair, considering past claims help to determine rates for automobile insurance and health insurance, but not homeowner insurance, which is based on loss projection models.
“The coastal territories are most vulnerable to hurricane losses,” NCRB’s supporting documents state. “The estimated loss costs are highest in coastal territories 7 and 8, as well as territories 48 and 52,” which include southeastern North Carolina.
Coastal officials have disputed that, noting for one that most of the wind damage claims made in North Carolina since 1992 have originated west of the 20 coastal counties.
Said Riely, “They’re going to hear from the coast.”
The public indeed will have the chance to shape the rates before they go into effect, following legislative changes the N.C. General Assembly enacted in its last session.
Law now provides that any NCRB rate filing “shall be open to public inspection immediately upon submission” to the state insurance commissioner. Also per the law, ahead of a related public hearing, the N.C. Department of Insurance is supposed accept and consider public comments. Persons can submit them via email, paper mail, or in person at the public hearing, the date for which was not set at the time this story posted.
“At the hearing, the burden of proving that the proposed rates are not excessive, inadequate, or unfairly discriminatory is on the (Rate) Bureau,” the legislation states.
The public’s lack of influence on ratemaking churned up a cause in 2009, when homeowner base-rates changed statewide with increases in 63 counties, particularly on the coast. The order approved by former insurance commissioner Jim Long gave mainland New Hanover, Brunswick, Pender and Onslow counties a 30 percent increase and for the beaches a 17.5 percent increase.
Before negotiations, that mainland base-rate was set for a 70-percent increase, per NCRB’s recommendation.
To fight the increases, coastal counties and towns petitioned to put a brake on the approved hikes and open them for review. But a Wake County Superior Court judge denied them. Per the ruling, the public lacked standing; the real stakeholder in rate cases was the insurance industry, represented by NCRB.
Local officials and homeowners chaffed at the finding and argued policyholders were the ones ultimately affected by NCRB’s recommendations. The public asserted it should at least have a say in the ratemaking.
“Keep in mind that rates in our coastal counties are already two to three times higher than inland counties for the same perils: fire, theft, etc. Additionally, coastal homeowners all have separate wind policies on top of the higher rates,” the Business Alliance for a Sound Economy noted in a press release about the latest rate filing Tuesday.
If approved as filed, a $75,000 policy on an area beach home would rise in cost from the current $1,522 to $1,979, according to NCRB. On an inland home, the current rate of $1,050 would rise to $1,365.
Persons may view the entire filing here.
