Proposed 42% average rate insurance increase rejected by NC insurance commissioner

RALEIGH, N.C. (WNCN) — North Carolina Insurance Commissioner Mike Causey has rejected the proposed 42% average insurance rate increase for homeowners, he announced Tuesday morning.

“We went every day going through every line of that proposal,” Causey (R) said. “I’ve always said ‘no’ since I’ve been in this office to every proposed rate hike request for automobile and home owners.”

The North Carolina Rate Bureau, which represents insurance companies, made the request to the state Department of Insurance. The last rate hike was approved in 2020.

The state received feedback from around 25,000 homeowners from across North Carolina, the majority of whom were in opposition to the significant rate hike. Causey described the public as “outraged” and “shocked” at the proposed increase.

“People said that they were struggling with the high cost of groceries and fuel. Taxes have gone up in their localities,” said Causey of the comments received from homeowners. “I heard loud and clear what the public said.”

Causey said a hearing on the issue is set for Oct. 7. The involved parties will try to reach a settlement in the meantime.

“It is possible that we could negotiate a settlement if the companies are willing to talk about a reasonable settlement,” Causey said.

Causey also mentioned a conversation he had with an insurance provider who said for every $100 in premiums collected that they were paying out $112 in claims.

While the average increase in the suggested plan is 42%, the proposal varies significantly across the state. In some beach communities, the proposed increase is 99% compared to some western mountain counties where it would be 4%.

The average proposed increase in Wake County is 39.8%.

In a statement following Causey’s announcement, NC Rate Bureau Chief Operating Officer Jarred Chappell said, “This is an expected step, and part of the rate filing process. It doesn’t preclude settlement talks, and many rate negotiations have been settled before the hearing date arrives. This is an expensive time. Climate change, inflation, the increased frequency and severity of major storms – the very real cost of insuring homes in North Carolina has impacted what we all pay for insurance. Our bureau is responsible for collecting data on claims and that data shows rates need to increase in order to maintain a healthy market in the state.”

Causey is up for re-election this year and is facing challengers in the Republican primary in March.

Back in 2020, the Rate Bureau requested a 24.5% average increase, which was negotiated down to 7.9%.

Meg O’Donnell, an insurance broker in Raleigh, says she expects whatever settlement is reached this time to be for a higher amount than that.

“It wouldn’t be beneficial if we saw that low of an increase. We really do need to keep insurance companies in the state to give people options. That’s what creates true competitiveness,” she said. “It’s a huge and very realistic concern. We’re already seeing it happen. There’s a lot of insurance companies that are no longer writing insurance in the state, and the insurance they are writing is very expensive.”

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