Home insurers are calling for an average rate increase of 42 percent in North Carolina

RALEIGH, NC (AP) — With many residents in western North Carolina still without power and running water since Hurricane Helene, a hearing began Monday on the insurance industry’s request to raise homeowner’s premium rates nationwide by over 42% on average.

A top lieutenant of insurance commissioner Mike Causey opened what is expected to be several weeks of witnesses, evidence and arguments from attorneys for the state Department of Insurance and the North Carolina Rate Bureau, which represent insurance companies. insurance that want to increase.

In more than 2,000 pages of data filed last January, the Rate Bureau looked at proposed increases ranging widely from just over 4 percent in parts of the mountains to 99 percent in some beach areas. Proposed increases in and around major cities like Raleigh, Charlotte and Greensboro are about 40 percent.

In 11 western counties that were hit hard by Helene, including Asheville’s Buncombe County, the requested increase is 20.5 percent. The percentages are based on past years’ insurance payouts and future claims predictions.

After making public comments, Causey denied the request in February, prompting the hearing. In previous rounds of major tariff requests, industry and the commissioner negotiated settlements before a hearing. Ahead of the latest hearing set for early 2022, they weeks earlier set an average premium rate increase of 7.9 percent after the bureau sought 24.5 percent.

This time, Causey told reporters Monday, “we couldn’t get anywhere close, so that’s why we’re here today.”

When the hearing concludes, the hearing officer, in consultation with Causey, will decide within 45 days whether the proposed rates are excessive and, if so, issue an order establishing new rates. That order could be appealed to the state Court of Appeals.

Rate Bureau attorney Mickey Spivey told hearings officer Amy Funderburk that the highest inflation in 40 years — particularly on building materials — combined with calamitous storms that are “getting worse and worse” show that rates current premiums are “severely inadequate”.

Spivey cited Helene, which caused unprecedented destruction in the western mountain communities of the state, as well as Hurricane Florence in 2018, which caused billions of dollars in damage in eastern North Carolina, mostly paid for by companies of insurance.

Not mentioned Monday: Hurricane Milton, which explosively grew to a Category 5 hurricane as it neared Florida on a path expected to largely miss North Carolina.

“Whether you want to call it climate change or not, there’s no denying that we have bigger, stronger and costlier catastrophic storms than we’ve seen in any of our lifetimes,” Spivey said.

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Insurance Department attorney Terence Friedman argued that the industry continues to use actuarial methods that ignore state law in calculating rate increases.

Friedman said the bureau’s requested rates are inflated and that the department’s actuaries will demonstrate that there are “recommended alternative rates that will allow the members of the bureau to earn what they are constitutionally entitled to.”

But Spivey said the Insurance Department witnesses would try to actually lower premium rates or limit increases to less than 3 percent.

Not all homeowner premiums will increase or decrease with the final approved rates; there are other factors that insurers take into account when setting the bill.

Without a fair profit and the ability to cover claims, Spivey said, companies in the industry will have to more often invoke a statutory exception that insures high-risk homeowners only if they agree to pay premiums at rates that are up to 250% of the office rate. Otherwise, he said, more insurers will stop issuing policies altogether.

The “consent to appraise” exception in North Carolina’s law has helped prevent the mass exodus of home insurers that some states have experienced, said David Marlett, an insurance professor at Appalachian State University.

While each state has different models for regulating rates, those affected by multiple hurricanes and storms essentially face two options, Marlett said: Allow rates to continue to rise to meet demand, or “somehow we build structures that are able to withstand climate change. “

Friedman criticized the bureau for citing Helene in its opening statement, saying it should not be used as a reason to raise rates for storm survivors. He also noted that most of Helene’s damage was caused by flooding, which is covered separately by the homeowners’ policies that are now being considered.

Proceedings are likely to continue after early voting begins on October 17. Causey, a two-term Republican commissioner, is being challenged by Democrat Natasha Marcus, a state senator.

Marcus held a news conference outside the Insurance Department headquarters, criticizing Causey for refusing to chair the hearing, calling it “a ridiculous neglect of one of his major duties in this job.” She also lamented that any decision will be made after election day.

Causey said he is not hearing the case separately because he is not a lawyer. State law allows him to choose someone else to preside over the hearing, which is a quasi-judicial proceeding.

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The story corrects the insurance professor’s name to David Marlett, not David Martlett.