As your local independent agent, I want to keep you informed about changes in the insurance industry to help you avoid getting blindsided when changes effect you… especially your check book. Well, there are changes coming soon. Homeowners insurance rates are going up in North Carolina within the next year. This has been a long time coming but it looks like it’s going to happen.
Back in January of this year, Wayne Goodwin, the North Carolina Insurance Commissioner was absolutely livid about insurers in the state proposing a homeowners insurance rate hike that would boost averages statewide by 25% filed by the North Carolina Rate Bureau (NCRB). The cause of Goodwin’s anger was twofold. For one, a new rate increase had only went into effect in August of 2013, and with insurers asking for another increase such a short time later, it was understandable that someone was going to be upset about it besides homeowners.
The second part of Goodwin’s ire was sparked because of the day of filing, which was January 3rd, a Friday. Goodwin believed that the late Friday afternoon filing was done intentionally to try to slip the proposal past the public as quietly as possible.
The justifications given by the NCRB were as follows:
- The request that led to the 7% homeowners insurance rate hike last August had actually been for 30%, but insurers agreed to 7%.
- Filings for rate increases have been irregular, and the January filing for a rate increase was an attempt to get on track to file a request annually or more regularly than before. This was only the fifth filing request since 2000.
- Insurers claim that a 41% average hike is needed to cover costs for future claims and still make a profit.
Goodwin basically left the insurance companies with two options: withdraw the filing or expect a hearing on the matter. Fast forward to October 2014…
Hearings began last month about the proposed statewide homeowner’s insurance rate hike that was filed in January. Insurance rates are regulated by the Insurance Commissioner. One homeowner, Craig Smith, spoke at the hearings, frustrated about not being able to get coverage unless he signed a consent-to-rate, which allows insurance companies to charge rates higher than the set regulations if the customer signs an agreement permitting it.
Smith said that no company would insure his home unless he signed, leaving him and other homeowners little to nothing in the way of choices. The hearings were expected to last about a month, with Goodwin making a final decision toward the end of the year. It is almost certain he will approve a rate increase although it is not yet certain how much.
Could rates go even higher?
The insurance companies are arguing that more than the 25% proposed hike is actually needed to cover costs for claims that would be filed in the event of a hurricane, which many homes in North Carolina would be affected by as it is a coastal state. It would seem that major changes are needed to the rating system in order to make both sides happy.
The consent-to-rate allowance leaves homeowners with a sign or chance not being covered, as insurance companies can refuse to cover homes unless the customer signs, and if the homeowner does not take homeowner’s insurance, then they lose everything in a disaster with nothing to fall back on.
Is there anything a consumer can do to stop the rate hike?
All homeowners can do at the moment is voice their opinions as loudly as they can and wait for Goodwin’s decision on how much of the proposed rate increase gets approved. Some homeowners feel that Goodwin is forcing the insurance companies into these consent-to-rate situations, and it seems that most of the insurance companies are using this strategy to bypass the regulated rates, as long as they do not exceed 25% of the regulated rate. Homeowners can expect increases of roughly 20% to 35%, depending on where they live.
Solutions to the rate hike issue
If the aftermath of this newest rate hike will make homeowner’s insurance no longer affordable to pay each month, there are alternative options that could possibly offset these increasing costs.
- Increase deductibles to reduce your premium.
- Make sure you’re getting every discount you deserve.
- Combine your home and auto insurance to take advantage of the multi-policy discount which can save you as much as 25%!