North Carolina home insurance premium base rates increasing about 15% by mid-2026

RALEIGH. N.C. (AP) — Base rates for North Carolina homeowners' insurance premiums will increase on average by about 15% by mid-2026 as part of a settlement reached by the state Insurance Department and the industry.

The agreement announced Friday by state Insurance Commissioner Mike Causey contrasts with the January 2024 request by the North Carolina Rate Bureau, which represents insurance companies, seeking a 42.2% overall average increase.

Causey, an elected official who began his third term earlier this month, formally rejected the bureau's request last year. That led to a formal hearing that began in October and included multiple weeks of witnesses, evidence and arguments. The state Insurance Department said its witnesses would contend rates should be lowered or increased by less than 3%.

Except for the settlement, a hearing officer — in consultation with Causey — would have decided what the new rates should be. The Rate Bureau could have appealed that decision in court.

Causey said in a news release that the proposed rate increases “are sufficient to make sure that insurance companies, who have paid out large sums due to natural disasters and face increasing reinsurance costs due to national catastrophes, have adequate funds on hand to pay claims."

The bureau attributed its large request to high inflation — particularly on building materials — combined with calamitous storms and “severely inadequate” premium rates to cover claims. The bureau’s requested increases had varied widely from just over 4% in parts of the mountains to over 99% in some beach areas.

The agreed-upon increases, carried out in two parts, will vary based on location. On average statewide, the base rate will increase by 7.5% on June 1 and by another 7.5% on June 1, 2026.

The highest increases generally will occur in parts of eastern North Carolina hit hard by Hurricane Matthew in 2016 and Hurricane Florence in 2018, The News & Observer of Raleigh reported. For example, beach areas from Carteret to Brunswick counties will see an average 16% increase in mid-2025 and an additional 15.9% in mid-2026.

Areas harmed the most by historic flooding from Hurricane Helene in the fall will face lower-than-average increases. Base rates in Buncombe, Watauga and Yancey counties, for example, will increase by 4.4% in 2025 and 4.5% in mid-2026.

Among highly populated areas, base rates in Raleigh and Durham will increase on average by 7.5% in each of the next two years. In Charlotte, rates would increase by 9.3% in 2025 and by 9.2 % in 2026.

The settlement also bars the Rate Bureau from undertaking an effort to increase rates again before June 1, 2027, Causey's release said.

Bureau Chief Operating Officer Jarred Chappell said separately that the settlement is “a step in the right direction" but that the bureau had asked for a larger increase “because that’s what recent claims data called for."

"Storms have gotten stronger and more damaging, more people are living in disaster-prone areas, inflation in the construction industry has been particularly high and reinsurance costs have exploded. All these cost drivers remain an issue,” Chappell said in a written statement.

North Carolina insurance law contains a “consent-to-rate” exception that allows industry members to insure high-risk homeowners if they agree to pay premiums at rates that are up to 250% of the bureau’s rate.

While some insurers have pulled out of disaster-prone parts of North Carolina, the exception has helped prevent a mass exodus of home insurers from the state. About 40% of the state’s homeowners’ policies were set by consent-to-rate policies in 2022, The News & Observer reported.