On Jan. 3, the North Carolina Rate Bureau filed a petition on behalf of insurance companies for rate increases with the N.C. Department of Insurance. What that could potentially mean for eastern North Carolina homeowners all depends on location.

According to the petition, insurance companies are aiming for an average statewide 25-percent hike. This comes on heels of the last increase that took place six months ago. Now, local lawmakers are speaking out against the proposed rate changes.

“This increase is completely unacceptable,” N.C. Rep. Paul Tine said in a press release earlier this week. “This is a major issue as we try to grow our economy and get people back on their feet, and the last thing eastern North Carolina needs is a large rate increase like this.”

Tine represents Beaufort, Dare, Hyde and Washington counties. The proposed homeowner’s insurance increase varies dramatically within his jurisdiction, and is mapped out according to territories defined by insurance companies. If approved, insurance premiums for beach areas in Dare and Hyde counties could be hiked 35 percent; coastal areas in the same counties, 9.8 percent. Coastal Beaufort County is lumped with other coastal eastern North Carolina territories in Camden, Chowan, Craven, Jones, Pasquotank, Perquimans, Tyrrell and Washington counties. The requested increase for these areas is 7.8 percent.

The report attached to the petition states that the purpose of varying rates by territory is to reflect the different risk characteristics of different geographic areas and proposes that risks located in areas with higher loss potential should be charged more than risks located in areas with lower loss potential.

Homeowners who stand to see the highest increases, near or at 35 percent, are largely located in the coastal and mountainous regions of the state, but other eastern North Carolina counties — Duplin, Lenoir and Greene counties, as well as those counties around Fayetteville — fall into this bracket, as well.

In an effort to head such rate hikes off, Tine introduced a bill in the General Assembly’s last session that aimed to improved the rate-making process —incorporating historical loss reporting, using two hurricane loss-prediction models instead of one, and disclosing the storm load for all of the territories in the state — in an effort to make the process’ outcomes more transparent. The bill passed with overwhelming support in the House, 116-0, but the Senate refused to take the bill to a vote.

But that may change, according to Tine.

“I think now, though, with this rate filing, people’s ears are a lot more open,” Tine said. “This rate increase is pretty substantial all over the state.”

N.C. Sen. Bill Cook, who represents Beaufort, Camden, Currituck, Dare, Gates, Hyde, Pasquotank and Perquimans counties, said he is doing everything he can to stop the rate increases.

“I talked to the (NCDOI) commissioner’s office, and they assured me they are going to try to stop these increases because it was only six months ago that the last increase rates were drafted,” Cook said. “These increases, as far as I’m concerned, are totally uncalled for.”

Tine said there’s a simple explanation as to why another increase has been proposed: insurance companies did not get the rates they wanted the last time around.

“I can’t see how in six months they have actuarial data that says they need a new rate increase,” Tine said. “You only get your increase at the renewal, so we’ve only seen a rate increase in 50 percent of the policy holders. They haven’t even let that work out.”

In prefiled testimony included with the 1,187-page petition filed with NCDOI, David Appel, director of economics consulting and a principal with the New York-based firm of Milliman Inc., states, “Insurers in North Carolina incur a substantial cost for bearing the risk of homeowners insurance in the state. The market cost of bearing that risk (whether the risk is retained by the insurer or transferred to a reinsurer) must be included in the rates.”

Appel further stated that homeowners insurance in North Carolina is subject to substantial catastrophe exposure because of the possibility that hurricanes and other serious windstorms may strike the state, and as that catastrophe potential varies significantly from region to region within the state, regional differences in relative risk should be taken into account when determining the allocation of reinsurance costs within the state.

Reinsurance is insurance that is purchased by an insurance company from one or more other insurance companies in order to manage risk.

In conclusion, Appel said, the filed underwriting profit provision complies with North Carolina state law and “will produce rates that are just, reasonable and not excessive, inadequate or unfairly discriminatory.”

The report also states, with respect to risks located in territories 7, 8, 48, 49, 52A and 52B — which encompass beach and coastal regions in eastern North Carolina — premium credits shall be made available for insureds who build, rebuild or retrofit certain residential dwellings, in accordance with specified standards, to better resist hurricanes and other catastrophic windstorm events.

If approved, the proposed increases would go into effect on or after Aug. 1, 2014. Tine noted that NCDOI Commissioner Wayne Goodwin could settle, decline or make adjustments to the rate, and the insurance companies, if dissatisfied with the outcome, could appeal the decision, taking the case to the courts.

Both Cook and Tine are encouraging eastern North Carolina residents to voice their opinions on the matter. A public hearing will be held Jan. 24, from 9:30 a.m. to 4 p.m., in the Jim Long Hearing Room of the Dobbs Building, 430 N. Salisbury St., Raleigh. Written comments can be submitted before Jan. 31 to NCDOI, Attn: Bob Mack, Property & Casualty Division, 1201 Mail Service Center, Raleigh, NC 27699-1201 or by emailing 2014homeowners@ncdoi.gov.

The petition filed by the North Carolina Rate Bureau can be found at http://pserff.ncdoi.net/filing.html?serffFiling=NCRI-129361028.