SURF CITY — Last week Mayor Doug Medlin signed a resolution opposing a statewide average homeowners insurance increase of 17.4 percent requested by the North Carolina Rate Bureau, which promulgates rates on behalf of all insurance companies doing business in the state.
On Dec. 21 the Rate Bureau filed the increase request with the North Carolina Department of Insurance (NCDOI). Medlin’s resolution, citing a state law that “rates or loss costs shall not be excessive, inadequate or unfairly discriminatory,” urged Surf City property owners to voice their concerns to the NCDOI.
“Now, therefore be it further resolved that the Town of Surf City Town Council opposes the rate increase requested by the Rate Bureau … and supports the Commissioner of Insurance in his public efforts to encourage [the bureau] to withdraw the rate filing immediately.”
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Homeowners’ struggles with insurance post-Florence
On Thursday the head of the rate bureau, Ray Evans, said there is approximately $2.5-billion worth of insurance premiums spread among two million policies, resulting in an average policy worth just more than $1,000.
“So a 17-percent increase, if that would materialize, would amount to something like a $13-a-month increase for all policy holders on the average,” Evans said. “We’re not sure that’s going to stick, and my guess is we’ll negotiate [with the NCDOI].”
Last year the Rate Bureau requested an 18.9-percent increase in homeowners’ insurance rates but reached a settlement with Insurance Commissioner Mike Causey on an average 4.8-percent increase.
Mayor Medlin emphasized that the Rate Bureau’s request was for an average, statewide increase.
“What that means is, for some people on the oceanfront, you’ll be looking at a 30-percent increase. It’ll hurt sales down here terrificly,” Medlin said, adding that he knows of homes two to three blocks from the oceanfront that face premiums as high as $4,000.
Medlin said he recently met in Burgaw with state representative Carson Smith and officials from U.S. congressman David Rouzer’s office to discuss the proposed hike – and how difficult it will be for homeowners who have already struggled to collect insurance after Hurricane Florence.
“It seems like they put all the punishment down here, but many of the damages were further inland because of the flooding from the rivers,” Medlin said. “We seem to always catch the brunt of the increase. I don’t think it’s right for us to pay for it.”
Surf City realtor Peggy Arsenault said the Rate Bureau’s request doesn’t make sense in light of many resident’s struggles with their insurance companies after Florence.
“Because [insurance companies] haven’t paid claims. They’ve been slower than dirt. It’s ridiculous how horrible it is for everybody … I pay close to $6,000 for flood and homeowners’ insurance. Then I have one thing happen in the 15 years living in that house, and they don’t want to give me two cents,” Arsenault said.
Negotiations expected
NCDOI spokesman Barry Smith said that homeowners have until February 26 to submit written or emailed complaints, and can come to Raleigh on February 26 to provide comments in a public forum.
He said to look at last year’s settlement with the Rate Bureau — the two institutions are separate entities — as guidance for what may occur this year.
“I think our folks feel that we’re just a long way from being able to approve something like that,” Smith said.
He said actuaries and experts at the NCDOI are currently reviewing hundreds of pages of data submitted by the Rate Bureau, and ultimately Commissioner Causey must make a decision that balances the needs of protecting homeowners while also ensuring a healthy insurance climate in North Carolina — which means “more competition, more choices for consumers.”
“I think that our experts don’t feel like the evidence shows, at least at this point – and again we are still in the process of reviewing it — that the request is justified,” Smith said.
Florence losses not included in Rate Bureau’s model
In December the NCDOI said in a release that the Rate Bureau “attests the increase is needed to cover increased losses, hurricane losses and the net cost of reinsurance.”
But Evans said the losses incurred by Florence itself did not play into the 17-percent increase request, as the bureau uses a model that averages hurricane losses from a period spanning more than a hundred years, and roughly 100 hurricanes, while taking into account inflation.
“For hurricanes, we have to model as the losses happen infrequently,” Evans said. “As a result, this filing does not include any of the Florence losses. Because we model losses for the future, hurricane losses are included as an average of what’s calculated … We do a 100,000 of these kinds of simulations, then take the averages to arrive at what we anticipate to be, over a long pole, the actual hurricane losses.”
He said real data on Florence’s losses will not be available until later this year or sometime in 2020, but said the bureau is convinced, “in the best actuarial science we can muster, that this is the amount that’s needed.”
“We think it’s scientific, and actuarily correct. But we don’t know that. The actual results that do happen over a period of time would modify our thinking,” Evans said.
Although Evans said he is sensitive to the rate change and to the homeowners of Surf City, he urged them to look at it within a larger context.
“In my mind, the comfort of having an insurance policy and being able to cover the losses that happen — if it’s a $12-increase a month, or something like that, we would hope everybody would consider how that is in the giant scheme of things,” Evans said.
Mark Darrough can be reached at Mark@Localvoicemeida.com
