Goodwin Denies Insurance Companies' Request to Raise Homeowners Rates

Goodwin Denies Insurance Companies' Request to Raise Homeowners Rates Featured

By / Local News / Wednesday, 07 January 2015 05:00

By WILLARD KILLOUGH III
Managing Editor

RALEIGH, N.C. : North Carolina homeowners can rest a little easier following an order issued by State Insurance Commissioner Wayne Goodwin commanding a zero percent statewide overall average change in homeowners insurance rates effective June 1st, 2015.
According to a release from Goodwin's office in December, "The ordered rates vary by geographic territory and type of insurance. On average, homeowners insurance rates are to decrease by 0.3 percent, renter's insurance rates are to  increase by 11.2 percent, and condo owner's insurance rates are to increase by 8.1 percent."
The decision comes after Goodwin held a hearing to examine the insurance companies' request to raise overall average rates by 25.6 percent.
The insurance companies, represented by the North Carolina Rate Bureau, requested an overall statewide average increase of 25.3 percent for homeowners insurance rates, varying by geographic territory, on January 3, 2014. Insurance Commissioner Wayne Goodwin ordered that a hearing be held in the matter because the proposed rates appear to the Department of Insurance to be excessive and unfairly discriminatory.
Insurance Commissioner Wayne Goodwin issued the following statement in January: "New homeowners insurance rates went into effect in July 2013. I am appalled that the insurance companies would request another increase just six months later. I believe the insurance companies should withdraw this rate filing immediately. If they do not, the insurance companies should expect a full hearing on this matter; I will not entertain any settlement negotiations. I urge North Carolina homeowners to take advantage of the public comment period and let their insurance companies know what they think about the notion of another homeowners insurance rate increase. Also, I take offense at the insurance companies' concerted efforts to file this request late on a Friday afternoon, when they think the public won't be paying attention."
After an initial review of the January 2014 filing and more than 10,000 comments submitted by the public, NCDOI experts believed the requested rate increases were not justified. Among NCDOI's initial concerns were:
• The filing uses hypothetical data, rather than actual data, when calculating costs including those for the net costs of reinsurance and trended modeled hurricane loss costs.
• The filing lacks necessary data, documentation and explanations to meet statutory burden of proof for rate increases.
• Old data is used in the filing when more when more recent data should be available and included in the analysis.
• A public comment period on the rate filing was held from Jan.3 through Jan. 31 to engage the public in the ratemaking process.
During that period, the Department of Insurance received more than 10,000 emailed or mailed comments, and approximately 25 people made comments in-person during a public comment session held on Jan. 24.
During the hearing held over 12 days in October and November, experts from the N.C. Rate Bureau, on behalf of the insurance companies, and experts from the N.C. Department of Insurance, representing the interests of the public, presented their cases for and against the rate hikes. It was the first hearing on homeowners insurance rates since 1992.
On December 19th, Goodwin explained, "The rates I have ordered are the result of the most thorough inspection of North Carolina homeowners insurance rates in more than 20 years," said Goodwin. "After considering all of the evidence and data available, I have determined that no factors or events justified the excessive rates requested by the insurance companies."
The ruling takes effect June 1st, 2015 and insurance rates will decrease an average of 0.3% throughout
North Carolina. Renter's insurance will go up 11.2% while condo insurance will see an 8.1% increase.
The Rate Bureau is currently reviewing the 350 order issued by Goodwin last month and could appeal the decision in the North Carolina Court of Appeals.
The highest increase as of June 1st will be in Avery and Mitchell Counties at 21.4%. Davidson, Cabarrus, Rowan and Randolph counties will see a 19% increase. Gaston, Lincoln, Rutherford and Cleveland counties will see an 18.2% hike while Transylvania, Madison, Swain and Haywood counties will see a 16.7% hike.
Other counties were listed as decreasing by -12 to -18%. For example, some areas in coastal counties of Brunswick, New Hanover, Carteret, Onslow and Pender are listed as decreasing -18%.
This decision follows a decision in early 2013 when Goodwin reached a settlement agreement with the NC Rate Bureau on the Homeowners Insurance Rate Filing that was submitted in October 2012. A public comment period was held on the filing shortly thereafter and over 9,000 comments were submitted. The NC Department of Insurance, upon reviewing of the filing and consideration of the comments, issued a Notice of Hearing on the filing to begin June 3, 2013.
The Hearing would have been the first on a Homeowners Insurance Rate Filing since 1993 and would have given NCDOI the opportunity to further scrutinize the filing through testimony and evidence submitted by the NC Rate Bureau. Ultimately the June hearing was never held and instead Commissioner Goodwin approved an agreement.
The NC Rate Bureau's filing represented a 30% rate increase for eighteen NC coastal counties. Based on filing data however, indicated rates - those the Rate Bureau concluded were the actuarial sound rates needed - were as high as 119% more than current rates.
The NC Rate Bureau capped the increase request at 30%. That settlement agreement represented an overall statewide increase of 7% with the largest increases impacting coastal counties.
The beach areas of the coast experienced  increases as of July 1, 2013 as high as 20%; inland coastal areas received much lower increases.
While the overall statewide average increase was 7 percent, it was much higher for coastal counties with the highest increase of 19.8% in New Hanover, Brunswick, Carteret, Onslow and Pender counties in areas nearest to the ocean.
Areas within those counties farther inland got an increase up to 8.6%.


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