NC homeowners’ insurance rate hearing opens, likely to continue through election

As many in Helene-ravaged Western North Carolina pick through the remnants of their lives, the state’s department of insurance (DOI) kicked off a hearing into insurance companies’ request to raise homeowners’ premiums statewide by an average 42.2%.

On Monday, attorneys on both sides met for the quasi-judicial proceeding in the department’s second-floor hearing room in Highwood Towers at 3200 Beechleaf Court in northeast Raleigh.

The hearing is expected to take weeks. One person close to the case, however, was noticeably absent.

Unlike his predecessors, Insurance Commissioner Mike Causey wasn’t there to preside over the hearing. State law allows him to designate someone else. So Amy Funderburk, the department’s general counsel, is the hearing officer.

“Both of my predecessors were attorneys. I’m not an attorney,” Causey told a gaggle of reporters in the building’s foyer outside, just before the hearing began. However, he assured those gathered that the final decision rests with him. “I’ve always made those decisions and will continue to do so.”

The hearing is the first under the two-term commissioner’s watch. In eight years as the commissioner, Causey has raised property insurance rates 16 times — all without a public hearing.

On Monday, he defended his record. “In past years, we’ve been successful in negotiating settlements. In this case, we were not able to come anywhere close. So that’s why we’re here today.”

Shortly after making his comments, Causey left the floor. He did not attend the morning session and was not present for opening statements.

What insurers want

After a moratorium on rates lifted in January, the Rate Bureau, which represents some 110 companies operating in the state, submitted a rate filing asking for a statewide 42.2% average increase.

The proposed increases are based on past payouts and future claims projections and vary greatly by county.

In Durham and Wake counties, it’s asking for a 39.8% increase. In Chatham and Orange counties, it’s requesting 25.1%.

Meanwhile, coastal regions — like Brunswick, Carteret, New Hanover, Onslow and Pender counties — could face the steepest increases. The Rate Bureau wants to nearly double premiums in those counties — a 99.4% jump.

In places hit hardest by Helene like Buncombe County, home to Asheville, it’s around 20.5%.

On Feb. 6, Causey rejected the request, calling it “excessive and discriminatory.”

It’s been almost four years since the last homeowners’ rate increase — in November 2020 when the Rate Bureau asked for an overall rise of 24.5% and ultimately received 7.9%.

Inside the hearing room on Monday, the Rate Bureau’s attorneys presented 2,000 pages of data in two five-inch white binders to justify its latest proposal.

Rising construction and labor costs, billion-dollar-loss events like Helene and the state of the reinsurance market — the insurance that covers insurance companies — are driving up costs, argued the Rate Bureau attorney Marvin “Mickey” Spivey, an attorney with Raleigh-based Young Moore Attorneys.

“Whether you want to call it climate change or not, there’s no denying that we are having bigger, stronger and more costly catastrophic storms than we’ve seen in any of our lifetimes,” he said in his opening statement.

The department’s witnesses would seek to either reduce current rates or limit increases by less than 3%, he added. “To put it bluntly, that just does not make sense,” he said.

As underwriters tighten guidelines, more residents are being subject to “consent-to-rate” notices, which allow insurance companies to charge rates higher — up to 250% more — than the state-approved rate. They’re also turning to the “insurer of last result,” the North Carolina Insurance Underwriting Association (NCIUA), or the “beach plan,” he said.

These realities signal that the current rates are “not adequate,” he said. Without a “fair rate,” many companies may “choose not to write at all.”

The insurance department’s attorney, Terence Friedman, countered by calling the bureau’s requested rates inflated. He also argued its filing relied on outdated data and practices. “They’re continuing on using the same methods, regardless of the commissioner’s admonitions,” he said.

He also criticized the Rate Bureau’s mention of Helene in its opening statement.

“The tragedy shouldn’t be used as grounds to raise homeowners’ rates,” Friedman said, pointing to the growing reality that much of Helene’s damage was caused by flooding. (Standard homeowners’ policies do not cover flooding, landslides or anything caused by moving water.)

This case is going to be “long and very dense,” he warned. But ultimately, the department’s actuaries would prove that alternative rates would allow the bureau’s members to earn “what they’re constitutionally entitled to,” but which are also “fair and reasonable.”

Looking ahead

State law gives the commissioner 45 days to issue an order once the hearing concludes.

Causey, a Republican, is up for reelection Nov. 5, casting an even greater spotlight on proceedings.

Earlier in the morning, his challenger, state Sen. Natasha Marcus, a Democrat, held a news conference outside on the steps of DOI’s headquarters. She criticized Causey’s decision not to officiate, calling it “a ridiculous dereliction of one of the most important duties of his office.”

She also took a swipe at the hearing’s timing. With only 28 days until the election, a ruling is not expected until after voters hit the ballot box. “Voters won’t get a chance to weigh in,” she said.

North Carolina is one of very few states where a Rate Bureau still exists. In almost every other state, each carrier files its own homeowners’ rates independently. But here, the Rate Bureau, created in 1977 by the General Assembly, has the responsibility to file and negotiate rates on behalf of the entire industry.

The hearing is open to the public. Attendees will be seated on a first-come, first-served basis.

Transcripts of each day’s hearing are expected to be posted online the following day.

For additional information, see the homeowners’ rate hearing webpage.

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