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North Carolina residents are going to pay more for homeowners insurance—again.
North Carolina Insurance Commissioner Wayne Goodwin has signed a settlement agreement with homeowners insurance companies that will impact coastal counties with the highest rate hikes.
The agreement represents an overall average statewide increase of 7 percent. The highest hikes are nearly 20 percent for beach coastal areas of Brunswick County, with lower increases for inland coastal areas.
The increases take effect July 1.
The settlement includes a rate increase of 19.8 percent for beach areas and 8.6 percent for inland areas of Brunswick, Carteret, New Hanover, Onslow and Pender counties.
This compares to settlement rate increases of 17 percent for the beach and 3.4 percent for inland areas of Currituck, Dare and Hyde counties, and 9.7 percent for Bladen, Columbus and Robeson counties.
Other settlement rate increases are 2.8 percent for Durham and Raleigh, 8.5 percent for Cumberland County, 1.1 percent for Winston-Salem and Greensboro, 8.5 percent for Charlotte and 9.4 percent for Gaston, Mecklenburg and Union counties.
Eric Edgerton with the Alliance of Brunswick County Property Owners Associations said he was surprised Goodwin had agreed to the rate settlement.
“While the insurance companies did not get all they asked for, there are underlying problems with justification for the rate increases and how the increases are applied to your policy,” Edgerton said Monday.
“Testimony at the last public hearing in Raleigh showed that the insurance company rate requests are based on mythical catastrophic models rather than projection models using actual loss history,” Edgerton said. “The actual losses are higher in the non-coastal areas of the state.”
The problem with the increase for those on the coast is their homeowners insurance is really for fire and theft.
“This is what will get the 19.8 percent increase,” Edgerton said. Wind and hail are covered by a separate policy with the state pool, he said.
Homeowners insurance includes wind and hail in North Carolina’s 82 non-coastal counties, which are getting only a 7 percent average increase, Edgerton said.
“This means that the coastal counties are really paying more than their fair share of the insurance costs in the state,” he said.
“This situation can be corrected with new legislation in Raleigh,” Edgerton added. “I would encourage those who care about this to contact your elected representatives at both the county and state level and discuss with them your concerns.”
Insurance companies represented by the N.C. Rate Bureau had requested an overall statewide average rate increase of 17.7 percent last Oct. 1, according to the N.C. Department of Insurance. That included about a 30 percent increase for territory 8 encompassing Brunswick County.
“The difference between the requested and settled rates amounts to $237 million in savings to policyholders,” the N.C. Department of Insurance stated in a March 5 press release.
DOI experts spent months studying insurance companies’ request, according to the DOI.
DOI stated it had become apparent some increase was justified, “largely due to the steadily rising cost of reinsurance related to hurricane risks and ongoing concerns regarding availability.”
To minimize the increase, DOI opted to settle on rates, eliminating the need for a hearing scheduled June 3.
“Homeowners insurance is a very complex issue,” Goodwin said. “We face a great challenge in making sure that it is not only affordable but available to consumers across the state. I feel this settlement helps strike that balance, and I am pleased that the increase will be significantly smaller than what insurers originally requested.”
The last homeowners’ insurance rate filing was in 2008, when insurance companies requested a 19.5 percent statewide average increase. A settlement agreement allowed for a 4.05 percent statewide average increase that went into effect in May 2009.
Laura Lewis is a staff writer at the Beacon. Reach her at 754-6890 or email firstname.lastname@example.org.