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Back You are here: Home Opinion Opinion Section Letters to the Editor CONCERNED ABOUT THE RISING COST OF HOMEOWNERS INSURANCE?

CONCERNED ABOUT THE RISING COST OF HOMEOWNERS INSURANCE?

Coastal NC policyholders were recently informed that their homeowners’ insurance rates are going up by as much as almost 20%. This news comes on top of double digit rate increases and higher deductibles that went into effect in 2009.
In the coming year, homeowners face an even greater increase in flood insurance premiums.  The rising cost of property insurance has a direct impact on the affordability of housing, financing and investment in our communities. These rising costs are especially burdensome to young families and those on fixed incomes. If you are concerned, we need to hear from you!
NC 20, a non-profit organization dedicated to the economic and environmental interests in North Carolina’s twenty coastal counties, has been advocating for fair and accessible homeowners insurance rates for the past four years. NC 20 has recently joined forces with other coastal state representatives on this issue. Stakeholders in this coalition include representatives from Alabama, Louisiana, Mississippi, Massachusetts, Florida, Texas and California. Homeowners in these states are experiencing the same issues that coastal NC policyholders are facing – affordability of coverage, access to insurers and wide rate disparity throughout their states.  
In order to effectively communicate the importance and seriousness of this issue with legislators, we need input and feedback from policyholders. A short survey has been developed to gather information about the current cost and quality of homeowners insurance. The survey can be found at www.uphelp.org, a secure site hosted by the national consumer advocacy group United Policyholders. 
A pop-up will appear directing you to the survey. A survey link is also posted on www.nc-20.com.
No insurance companies are involved in this project and no personal information will be revealed without express consent.
Respondents can participate anonymously. The more responses, the better - so please share this survey with others. It should only take a few minutes of your time to complete. Results will be compiled and shared in the future.  
NC-20 membership relies on membership support and contributions to further its mission. Membership is open to individuals, businesses, associations and local governments.  Find more information at www.nc-20.com.
The issue:
Recently NC Department of Insurance Commissioner Wayne Goodwin has 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.
NC DOI called the hearing for numerous reasons including:
• "The data contained therein are so questionable that a property evaluation ........is obstructed.
• In many instances the filing lacks necessary data, documentation and explanations of methodology to meet the Bureau's statutory burden of proof.
• The filing is not clear, concise, internally consistent or readily understandable.
• Due consideration has not been given to actual loss and expense experience within this State for the most recent three-year and five-year periods for which such information is available.
• The "net cost of reinsurance" provision in the filing appears to disregard the actual reinsurance experience in NC.
• The filing appears to disregard the actual hurricane loss experience in NC
• The AIR computer model results are based upon outdated data and experience.
• Evaluating the AIR Model is impeded by the fact that numerous assumptions, parameters, formulas, data and other components underlying that model have not been disclosed."
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%.
This settlement agreement represents an overall statewide increase of 7% with the largest increases impacting coastal counties. The beach areas of the coast will see increases as of July 1, 2013 as high as almost 20%; inland coastal areas will see much lower increases.
Homeowners insurance policyholders with NCIUA (Beach Plan) wind coverage will be impacted the greatest, since the largest portion of the rate is for wind coverage and NCIUA policies pay above the maximum approved rate. There are approximately 135,000 homeowners - wind only policyholders covered by the NCIUA.
The settlement agreement will cause rates to higher than rates that have been in place since 1993 in Charlotte and 32 other NC counties. The increase in those areas is as much as 8.4% - an increase from $529 to $574, a difference of only $45 in twenty years.
While the settlement agreement may represent a softer blow to coastal homeowners insurance policyholders than prior rate settlement agreements and what was originally proposed by the NC Rate Bureau, NC 20 maintains that the rate increases are unwarranted and unjustified, especially given NC DOI's statements included in the Notice of Hearing. NC 20 was hopeful that the hearing would be held, thus allowing further public transparency of the rate making process and a better understanding of how our homeowners insurance rates are determined.
NC 20 will continue it's efforts to improve the property insurance rate-making system and ensure fair, equitable and accessible insurance rates for coastal policyholders.
While the overall statewide average increase is 7 percent, it is 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 will see an increase up to 8.6%.