Homeowners in some areas of eastern North Carolina, including Beaufort County, could see their insurance rates increase by 30 percent if a proposed increase on insurance premiums is approved by the N.C. Department of Insurance.
The N.C. Rate Bureau, which represents the property insurance companies writing policies in North Carolina, is seeking a 17.7 percent (statewide average) increase in premiums for homeowners insurance. It submitted its filing Oct. 1. A public-comment period on the proposal was held Wednesday in Raleigh.
According to the Department of Insurance, it had received at least 3,900 complaints about the request as of Thursday evening.
If approved, the new rates would take effect June 1, 2013.
If that happens, said Beaufort County Commissioner Al Klemm, it could wreak havoc with the finances of many Beaufort County residents, considering that other expenses such as utilities continue to increase.
“To be perfectly honest with you, the citizens of Beaufort County are at the point they can’t absorb this type of stuff,” said Klemm. “It’s just ridiculous. Most people are having trouble paying their electric bills and their insurance bills presently. My insurance bill for my property went up $300 last year.”
Klemm said he would like to see Beaufort County weigh in on the issue.
“I think it would be appropriate for the Beaufort County commissioners to do a resolution opposing the increase that is proposed,” Klemm said.
Klemm said he has trouble understanding the justification behind the filing by the N.C. Rate Bureau.
Klemm also said it’s more than likely, if a rate increase is allowed, it will be in the area of 5 percent instead of 30 percent proposed in the coastal areas. That’s what’s happened with previous rate-increase requests, he noted.
Ray Evans, general manager of the N.C. Rate Bureau, said the rate increase is needed because of several factors, including the rise of reinsurance. Evans said reinsurance is a major concern for insurers such as the North Carolina Farm Bureau with a concentration of policies in the state.
Evans said the cost of reinsurance has increased by 65 percent since the last filing for a rate increase in 2008 and it’s challenging to find adequate reinsurance.
Evans also noted that insurers’ claims costs have increased as the claims-frequency trend continues moving upward, along with the severity of claims filed. In nonhurricane-related claims, the frequency has increased by 14 percent and the severity by 18 percent, according to Evans.
Willo Kelly, president of NC-20, a nonprofit that represents economic-development interests in the 20 counties under the Coastal Area Management Act, said the rate increase is not needed.
NC-20, has taken interest in the filing for the increase in premiums. NC-20 believes the requested rates are excessive, discriminatory and not in the public’s interest. It wants the request denied.
NC-20 is asking the Department of Insurance to hold a public hearing on the request to increase premiums, Kelly said.
“Just as in the 2008 rate filing, we feel these rates are excessive and they are unfair. Considering we have to pay a rate based on a computer model, we’re opposed to this rate filing,” she said.
NC-20 contends the Rate Bureau has overstated losses, duplicated data and does not have data to support the rate filing. It wants a full evidentiary hearing before Goodwin.
Kelly said Insurance Commissioner Wayne Goodwin has three options in dealing with the request. Those options are to approve the request as submitted, negotiate a different rate than proposed and reach a settlement or disapprove the request and issue a notice of pubic hearing.
“The public hearing is not like a public hearing held at a county commissioners meeting. A public hearing is like a trial, and the only people who are allowed to speak at the public hearing are Department of Insurance witnesses and Rate Bureau witnesses. Wayne Goodwin will preside over that public hearing as the hearing officer. He will then make a decision,” Kelly said.
“We would ask that since there’s not been a public hearing on a rate filing since 1993 — on a homeowners insurance rate filing since 1993 — we request that he issue notice of public hearing on this rate filing,” Kelly said.