‘We have no voice’: NC consumers sidelined as state and insurers negotiate new rates
For the last 17 years,
Newly retired and living on a fixed income, they budget for recurring expenses, like homeowners’ insurance, setting aside funds each month into a savings account.
But it’s getting harder to do, says the 71-year-old.
In seven years, their premiums with
“It feels like price gouging. I don’t get it,” said Rupert, who increased her deductible to stay at a lower, more affordable rate. “We’re both on
The Ruperts reflect a growing reality for homeowners across
Stronger hurricanes, frequent wildfires and billion-dollar-loss events from convective storms — like the recent “catastrophic flash flood” in
The slump has led to a surge in denied claims and nonrenewals, consumer groups said. Last October,
Carriers are also boosting rates in a bid to return to profitability. Just last year, rates jumped 11.3% nationwide, a separate
By all accounts,
Prices are also contained. The average cost is
But “better than most” is not much consolation. Relief, meanwhile, doesn’t appear on the horizon anytime soon, experts say.
After a filings moratorium lifted in January, the
Across the nation, insurers are strategically lobbying for expedited rate-increase approvals, said
In the Old North State, homeowners are pushing back.
“Scores more consumers spoke during a virtual forum,” Insurance Commissioner
Causey promised a “thorough review” and closed public comments. (Redacted public input can be found here.)
Causey and the
“We can’t comment on pending litigation,” said Barry Smith, a spokesman for the state’s
The
Homeowners, meanwhile, say they feel increasingly shut out of the process. On community platforms like
“My takeaway is that we’re not being represented well,” Rupert said. “It’s getting to the point where we have very few options. Companies should be held accountable; I don’t see that happening.”
Behind closed doors
Causey’s headquarters occupy most of the 10-story glassy
Like disputed filings before, negotiations are typically “tense,” said
“It’s deep, dense conversations about sets of actuarial findings: a lot of scientific mathematical calculations, just going back and forth,” he said.
Though not privy to ongoing negotiations, Stewart, a lobbyist, spends most days pacing the halls of the state’s
They’re analyzing a number of scenarios: the loss cost per unit of exposure; administrative expenses, or “loading,” and the profit that comes with insuring millions of dollars in property against future disasters. Ultimately, the commissioner’s job is to protect consumers by keeping rates as low as possible while maintaining a solvent insurance market.
“The key is finding a happy middle point,” Stewart said, something that’s “neither excessive nor inadequate.”
“It’s a delicate balancing act. The problem is, we’re kind of at the front end for the destabilizing consequences of climate change, he said. He pointed to states like
Experts say it’s anachronistic, a holdover from a bygone era. That’s not to mean it’s any worse, said
As the “insurer of last resort,” she said she’s “absolutely agnostic” about the
“You’ve got states right now that don’t have a
Insurance commissioner election
It’s been three years since the last rate increase — in
Causey, a Republican, is up for reelection
His challenger, state Sen.
“The best predictor of future behavior is past behavior,” she said in an email to The N&O.
In eight years as the commissioner, she pointed out, Causey has raised property insurance rates 16 times — all without a public hearing. Case in point: In June, he approved a dwelling-rate increase of 8%, canceling a
“I feel confident predicting that he won’t hold a public hearing this time either,” Marcus said. “They don’t want the scrutiny that public hearings provide.”
On
The last dwelling rates’ hearing, in 2011, under Commissioner
“Hearings are the exception,” Causey added, “when negotiations fail.”
‘Struggling to cover costs’
For its part, the
That’s despite a recent New York Times report that shows insurers, in fact, made money on homeowners’ insurance for most of the past decade in
By contrast, in 2023 alone, insurers lost money on homeowners’ insurance coverage in 18 states, more than a third of the country, its analysis of newly available financial data found.
While acknowledging North Carolina’s better-than-average results in the
State-by-state profit numbers are difficult to calculate, he said. That’s in part “because so many companies operate across state lines.” He also pointed to the report’s methodology, which didn’t include reinsurance payments. Reinsurance — the insurance that covers insurance companies — has skyrocketed in recent years, he said.
Risk analysis firm Guy Carpenter recently reported that reinsurance rates on property in the
“A single devastating storm can, in days, wipe out years of profit,” Chappell added.
Through the state’s consent to rate, roughly 40% of policyholders already pay premiums above the approved rate, Chappell said. “It’s a recognition that the risk is often higher than the commissioner’s approved rate can cover.” He added: “No one wants to pay more for insurance.” But if adequate rates cannot be achieved, policy cancellations will most likely become “more prevalent.”
‘Still anyone’s guess’
At this point, analysts say, it’s still too early to tell where talks will land.
Most say it’s not in either party’s interest to prolong the process. Carriers will only stay as long as the market remains buoyant; and no commissioner wants to preside over an availability crisis. While some predict a single-digit number “no greater than 9.9%,” it’s still just speculative.
“I have no idea what Causey is going to do,” said
Bottom line: “There’s going to be some increase whether it’s through a hearing or litigation,” he said. “The losses are increasing. There’s no silver bullet.”
NC Reality Check is an N&O series holding those in power accountable and shining a light on public issues that affect the Triangle or
©2024 The Charlotte Observer. Visit charlotteobserver.com. Distributed by Tribune Content Agency, LLC.
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