North Carolina insurance companies are unrelenting in their efforts to raise homeowners’ and dwelling insurance policies despite North Carolina Insurance Commissioner Mike Causey’s apparent concern that the rates are not justified.
Earlier this week Commissioner Causey announced that he will conduct a hearing in September 2021 to consider all the facts provided by both insurance companies and homeowners to determine if the requested rate increase, averaging 24.5% statewide, is warranted.
Two weeks earlier, on Dec. 14, the North Carolina Rate Bureau, an organization representing N.C. accredited insurance companies, submitted another rate increase request to the North Carolina Department of Insurance (NCDOI) which must approve any changes in coverage or rates. This new request, amounting to 18.7%, covers dwelling policies. Unlike homeowners’ policies which provide broader coverage including contents, dwelling policies provide coverage to structures only. Dwelling policies are designed for apartments and part time residences such as condominiums and cottages.
This request is a follow up of an earlier rate increase of 19.2% proposed in 2019. That request resulted in a NCDOI hearing after which Commissioner Causey approved an average statewide increase of 4%.
One important note about these rate requests. They are expressed as statewide averages but the actual cost varies by regions as determined by the insurance industry. In some regions of the state there can be and have been actual reductions in insurance premium charges while in other areas, particularly the coastal regions, there have been upwards to 32% increases in proposed rates. The rates in all 29 regions, or territories as described in the filing, are averaged and it is that number presented to the NCDOI for approval.
As the saying goes, “the devil is in the details.” Those details are very complex, requiring actuarial and accounting expertise with knowledge of the unique insurance terminology to understand the conclusion in the rate proposals.
In the case of the homeowners’ insurance increase presented in November, just before the Thanksgiving holidays, the request amounted to 2,000-plus pages of detailed information. And the most recent dwelling insurance rate increase involves just over 1,700 pages of details. Both filings, involving two parts each, are found only on the N.C. Rate Bureau website at ncrb.org and not on the NCDOI website.
The only references to the insurance bureau’s rate increase requests on the department of insurance website are press releases which have been submitted to newspapers statewide for publication. These press releases are only published if the local editors and publishers feel the news releases are important for their readers. Considering the consolidation of the newspaper industry with many editorial choices being made outside of the immediate market, homeowners and apartment renters should be concerned
But the newspaper editors and reporters are not to blame for failing to understand the impacts and procedures for insurance rate proposals. As noted earlier this is a complex issue that involves not only actuarial details but a variety of proprietary facts only known by the insurance industry such as how claims are tracked by territories or regions and compared to other states.
Many of these issues are the responsibility of the state’s Insurance Commissioner. But the state should do more to inform homeowners.
In a previous editorial we noted that Commissioner Causey should delay the requested homeowners’ insurance rate increase until a more detailed and public hearing is conducted. He did that Tuesday announcing that a formal hearing is scheduled for September 20. Likewise, he should do the same with the December 14 dwelling insurance rate increase request.
Even though the commissioner has scheduled a hearing he still has the privilege to negotiate a rate without any public explanation should the NCDOI staff and the state’s Rate Bureau come to an agreed rate.
That option notwithstanding, the N. C. Legislature should also take action to assure homeowners and renters are better informed. The commissioner and the rate bureau should be required to conduct regional meetings to explain the reasoning for the increase and public notices must be published in newspapers statewide notifying the public about the proposed rate hikes.
There is no guarantee that either effort will reach everyone affected but it is far better than a casual press release that may or may not be published.
As we noted in our Dec. 13 editorial, North Carolina’s economy is taking a serious hit because of Governor Cooper’s mandates and the public fears resulting from the pandemic. Any additional economic disruptions without adequate explanation and notice, particularly at this time, are totally unacceptable.