Settlement: North Carolina homeowner insurance to rise next two years

(The Center Square) – North Carolina homeowners will likely see insurance rates increase over the next two years, but not by as much as the insurers had hoped.

The North Carolina Department of Insurance says it has settled a legal dispute with insurance companies over proposed rates increases requested last January.

Under the settlement, average homeowner's insurance rates statewide can increase 15.5% over the next two years, starting in June, Insurance Commissioner Mike Causey told The Center Square.

Insurers had requested an average 42.2% increase. Under the agreement, insurers can't raise rates more than 35% in any one territory. They had requested permission to raise rates up to 99.4% in beach areas in the southern part of the state, Causey said.

Those rate increases don't reflect claims from damage inflicted by Hurricane Helene in the fall, Causey said.

"The damage from Helene was significant, but most of the losses were caused by floods," the third-term Republican said. "Homeowner policies do not cover floods."

In 2018 after Hurricane Florence, more than 100,000 North Carolina residents filed claims on their homeowner policies for flood damage, Causey said.

"They got zero," he said.

The Department of Insurance is urging homeowners to seriously consider taking out separate flood insurance policies, even if only a minimal amount.

"I've been told the average flood insurance claim is around $20,000," Causey said. "That amount of flood insurance in most cases is not that expensive."

After Florence, the state learned that less than 2% of homeowners had flood insurance, the commissioner said. The state then established rates for private flood insurance in the state. There is also a federal government flood insurance program.

However, when Helene hit, less than 3% of homeowners in the mountain counties had flood insurance, Causey said.

In the longer term, damage from Helene will likely cause the state's homeowner insurance rates to increase, the commissioner said. It usually takes five or six years for claims from a storm to impact rates, he said.

"We're just now seeing an impact from Hurricane Florence in 2018," Causey said.

In North Carolina and nationally, insurance companies are paying out more in homeowner insurance claims than they are making in premiums, Causey said.

In North Carolina, some companies are telling Causey that they are paying out as much as $1.30 in claims for every dollar in premiums.

"That's why there is so much upward pressure on premiums, while they are always asking to raise rates," Causey said.

The recent rate settlement was not as much as the insurance companies wanted but still provides some relief to cover the losses, the commissioner said. That will help prevent companies from pulling out of the North Carolina market, leaving less competition, he said.

"We have much lower average homeowner insurance rates than our neighboring states," said Causey. "We are the lowest in the Southeast. We have a very stable and healthy insurance market."