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N.C. Homeowners' Insurance Rate Hike Sparks Complaints

By David Ranii, The News & Observer (Raleigh, N.C.)
McClatchy-Tribune Information Services

Jan. 24--RALEIGH -- About a dozen upset and exasperated elected and appointed officials from coastal North Carolina counties led a barrage of complaints about the latest insurance industry request for a major hike in homeowners' insurance rates.

Mayors, county commissioners, county and town managers, and a state legislator testified at a public comment session Friday that they are mystified why the rates along the coast are already so high and why the insurance companies still want more. They also told Bob Mack, the deputy state insurance commissioner who presided over the session, that high rates are pushing people out of their homes.

"People are exiting Holden Beach because of the growing costs," said Alan Holden, the mayor of Holden Beach.

Altogether, more than 20 people urged Insurance Commissioner Wayne Goodwin to reject the rate hike request that the N.C. Rate Bureau, which represents the state insurers, submitted this month. Many also presented petitions against the hike.

The industry wants an average increase of 25.3 percent statewide, but it varies by territory and is as high as 35 percent in some beach areas. The industry is seeking a 24.4 percent increase for homeowners in Raleigh and Durham, and a 32.1 percent increase in the rest of Wake and Durham counties as well as in Chatham and Orange counties.

The industry contends the hike is needed because of higher claims by homeowners in recent years stemming from tornadoes and storms.

Severe weather cited

On the eve of the public-comment session, the Property Casualty Insurers Association of America issued a news release touting that "losses per insured housing unit in North Carolina rose 35 percent from 2008-2012 largely due to the constant rash of severe weather."

"While increases are unpopular, insurance companies are trying to keep up with the high number of wind claims, rising costs and rates that have been suppressed for some time now," PCI's regional counsel, Oyango Snell, said in a prepared statement.

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But several officials of coastal towns and counties testified that their communities have been spared in recent years.

"Our experience has been insignificant damage from storms and therefore we question the use of models that seem to ignore the real-world experience," said Walt Eccard, the mayor of Shallotte in Brunswick County. The industry uses computer models to calculate potential losses from severe weather.

Goodwin, the insurance commissioner who would have to approve any rate increase, already has come out against it. On the day the request was filed he urged the industry to withdraw it immediately.

Under state law, next month is the deadline for Goodwin to either approve the request -- which he's already made clear he won't do -- or approve a compromise or call for a public hearing at which the industry and state regulators would argue their case. Goodwin would preside over that hearing and then issue a ruling that could be appealed to the courts.

'Unfair and unreasonable'

The last time the industry asked for higher rates, in 2012, it sought an average increase of 17.7 percent but ultimately settled on a statewide increase that averaged 7 percent but went as high as 19.8 percent in beach areas. That hike went into effect July 1, but hasn't shown up yet in some bills because the higher rates aren't imposed until a policyholder's coverage expires.

Jimmy Farrington, a Carteret County commissioner, reading from a letter by board Chairman Jonathan Robinson, testified that rates in Carteret have doubled since 2005 and would be 173 percent higher if the industry's latest request is approved.

"With rates nearly six times higher than some other areas of North Carolina, if the proposed rate increase is approved it will likely add more than $1,000 in additional costs to the typical policyholder," Farrington said. "These increases are unfair and unreasonable."

A few people suggested that the state's rate-approval process, which is unlike any other in the nation, should be changed.

Although most of those who testified were from the coast, a few Triangle homeowners spoke out against the rate proposal.

"We are really, really appalled because the insurance rate increased last year and in another six to eight months it is going to be increased again" if the rate hike is approved, said Carolyn Rodger Stone, vice president of the AARP chapter in Durham County. "We are really being placed in a bind."

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Ranii: 919-829-4877


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