- Special Sections
- Public Notices
Holden Beach commissioners asked the town manager to draft a resolution opposing any rate increases in residential insurance in coastal North Carolina, during their regular monthly meeting in town hall Tuesday night.
The state’s rate bureau has filed for a 30 percent increase.
“The insurance commissioner in all probability will not approve this rate,” said insurance expert Stuart Powell, manager of the insurance agency that insures the state of North Carolina.
“If the rate bureau files a rate and it is approved by the commissioner, then that becomes the rate in North Carolina,” Powell explained. “Now, the commissioner’s authority allows him to accept the rate, reject it or negotiate a rate between the existing rate and the filed rate.”
North Carolina is the last state that has a rate insurance bureau, Powell said.
“Realistically, I don’t think prices will change in the next few months,” he said.
Powell, who spent 22 years as a retail agent, said, “There is an inherent tension in the marketplace between the availability of insurance and the affordability of insurance. No seller likes prices to go up. But if the suppliers don’t think they can get an adequate return, sometimes they will just withdraw their product (from the market).”
Some companies can go to South Carolina and Virginia and get rates 18 percent higher, he said.
“The insurance companies are taking their products to states where they can get more money,” he said.
The insurance industry has an estimated surplus that would pay only about half of the total revenues potentially at risk on the coasts of North and South Carolina, he said.
“If we had another (Hurricane) Hazel, losses could be $20 billion to $25 billion,” Powell said. “We’re sitting on a ticking time bomb with the beach plan.”
He said the beach plan stabilized the market in North Carolina three years ago.
He said rates in North Carolina haven’t gone up in three years.
Commissioner Dennis Harrington said, “If the rate hasn’t increased, how come my rate has gone up every year? I just got an increase of $270.”
Powell said, “The homeowners’ (insurance) and wind and hail rates haven’t changed since 2009.”
Harrington said, “Well, something has changed.”
Powell said insurance agents have changed credits and other things that affect bills.
Commissioner Sheila Young said, “Our bills are going higher. We’re paying higher deductibles, and we’re still paying more.”
Some insurance companies are also sending out consent to rate forms to be signed which means “they are charging more than the state rate allows,” Powell said.
He said it wouldn’t make coastal homeowners feel any better about the proposed 30 percent hike, but “the rate the computer told them they needed was 119 percent.”
Powell, who drove down from Cary to make his presentation, also said flood insurance money still has to be paid back for coverage of Hurricane Katrina.
“None of us has done a good job of adequately funding these exposures,” he said. “It’s going to take a lot of money to fix these problems.”