I-Team: Bad news gets worse for homeowners insurance premiums

Wednesday, November 22, 2017
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The I-Team digs deeper into the proposed homeowners insurance rate increase.

It's a near certainty that most homeowners and renters in North Carolina will pay much more for property insurance premiums in 2018 - and beyond.

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While the North Carolina Rate Bureau (NCRB) announced an average rate increase of 18.7 percent, an ABC11 I-Team analysis of the proposal found an even bleaker outlook for the Triangle.

In preparation for this report, the I-Team reviewed nearly 2,000 pages of data submitted by the NCRB to the North Carolina Department of Insurance, the entity which will ultimately accept, reject or negotiate a settlement on rates. The data covers the years 2011 to 2015, and includes data on premiums, claims, loses, variables and more on homeowners insurance, renters insurance, and insurance for owners of condominiums. According to the NCRB, 639 companies are licensed to write policies for property insurance.

While it's impossible to simplify the not-so-simple business of insurance actuaries, the I-Team found several factors behind the proposed rate hikes:

  • $1.3 billion in excess losses paid out by insurance companies on top of the projected claims from 2011 to 2015. Based on its own forecasts, insurance companies allocated $4.49 billion for claims over five years, but instead they paid more than $5.79 billion.
  • Severe weather continues to wreak havoc on North Carolina. Significantly, the data does not cover Hurricane Matthew (2016 data isn't available yet), but the report does take into account Hurricane Irene, tornadoes, hail storms, and wind damage among other factors.
  • Rising costs for materials, labor and repairs - all while insurance rates have remained stagnant since 2012. According to the Department of Insurance, this rate filing is the first homeowners insurance rate filing the Department of Insurance has received from the Rate Bureau asking for an increase in rates since 2014. That filing resulted in the first homeowners insurance hearing in over 20 years with the Insurance Commissioner finally deciding on a "No Change" decision on behalf of policyholders.

Also in its review, the I-Team dug deeper into where the proposed rates would hit hardest; the 18.7% average is actually a weighted average of the 19.7 percent average for homeowners (95 percent of all policies), 36.4 percent increase for renters, and 35.9 percent increase for condominium unit owners. Though actuaries estimate rate increases of up to 80 percent in some cases, the NCRB is capping all homeowners policies at a 25 percent increase, and 40 percent for renters and condo owners.

The NCRB divides the state's 100 counties into 39 territories when deciding rates: 10 territories, covering all coastal counties and the Sandhills, would see rate increases of 25 percent; six territories, including Wake/Durham, would see a rate increase over 20% in the proposal; the others range from 4.2 percent to 16.3 percent. Four territories - including the three westernmost territories - will actually see rate decreases of up to 7.1 percent.

North Carolina law requires a public comment period to give people the opportunity to address the Rate Bureau's proposed rate increase. According to the Department of Insurance, there are three ways to provide comment:

  • A Public Comment forum will be held to listen to public input on the Rate Bureau's rate increase request at the NC Department of Insurance's Second Floor Hearing Room from 10 a.m. to 4:30 p.m. on Dec. 12, 2017. The Department of Insurance is located in the Albemarle Building, 325 N. Salisbury St., Raleigh, NC.
  • Emailed public comments should be sent by Dec. 29, 2017 to: 2017HomeInsurance@ncdoi.gov
  • Written public comments should be mailed to Tricia Ford to be received by Dec. 29, 2017 and addressed to: 1201 Mail Service Center, Raleigh, NC 27699-1201

Officials add the last time a homeowners insurance rate increase request from the Rate Bureau resulted in higher rates for homeowners was in 2012, and the proposed rate was lowered after public comment and negotiation. The Rate Bureau at that time asked for a 17.7 percent increase, then after negotiation settled at an overall statewide average of 7 percent increase.