Insurance Commission Reaches Settlement with NC Rate Bureau | Eastern North Carolina Now

News Release:

    NC 20 learned earlier today that NC Department of Insurance Commissioner Wayne Goodwin has reached a settlement agreement with the NC Rate Bureau on the Homeowners Insurance Rate Filing that was submitted in October 2012. A public comment period was held on the filing shortly thereafter and over 9,000 comments were submitted. The NC Department of Insurance, upon reviewing of the filing and consideration of the comments, issued a Notice of Hearing on the filing to begin June 3, 2013. The Hearing would have been the first on a Homeowners Insurance Rate Filing since 1993 and would have given NCDOI the opportunity to further scrutinize the filing through testimony and evidence submitted by the NC Rate Bureau. NC DOI called the hearing for numerous reasons:

    * "The data contained therein are so questionable that a property evaluation ........is obstructed.
    * In many instances the filing lacks necessary data, documentation and explanations of methodology to meet the Bureau's statutory burden of proof.
    * The filing is not clear, concise, internally consistent or readily understandable.
    * Due consideration has not been given to actual loss and expense experience within this State for the most recent three-year and five-year periods fo which such information is available.
    * The 'net cost of reinsurance' provision in the filing appears to disregard the actual reinsurance experience in NC.
    * The filing appears to disregard the actual hurricane loss experience in NC.
    * The AIR computer model results are based upon outdated data and experience.
    * Evaluating the AIR Model is impeded by the fact that numerous assumptions, parameters, formulas, data and other components underlying that model have not been disclosed."
    * and more!

    To review the full Notice of Hearing go to: http://www.ncdoi.com/media/documents/NoticeOfHearingInTheFilingForRevisedHomeownersInsuranceRates.pdf

    The NC Rate Bureau's filing represented a 30% rate increase for eighteen NC coastal counties. Based on filing data however, indicated rates - those the Rate Bureau concluded were the actuarial sound rates needed - were as high
as 119% more than current rates. The NC Rate Bureau capped the increase request at 30%.

    This settlement agreement represents an overall statewide increase of 7% with the largest increases impacting coastal counties. The beach areas of the coast will see increases as of July 1, 2013 as high as almost 20%; inland coastal areas will see much lower increases. Homeowners insurance policyholders with NCIUA (Beach Plan) wind coverage will be impacted the greatest, since the largest portion of the rate is for wind coverage and NCIUA policies pay above the maximum approved rate. There are approximately 135,000 homeowners - wind only policyholders covered by the NCIUA.

    The settlement agreement will cause rates to go higher than rates that have been in place since 1993 in Charlotte and 32 other NC counties. The increase in those areas is as much as 8.4% - an increase from $529 to $574, a difference of only $45 in twenty years. The attached map outlines the impact of the increases on coastal North Carolina policyholders. Also attached is NC DOI's press release and a chart outlining the settled rate revision breakdown by territory.

    While the settlement agreement may represent a softer blow to coastal homeowners insurance policyholders than prior rate settlement agreements and what was originally proposed by the NC Rate Bureau, NC 20 maintains that the rate increases are unwarranted and unjustified, especially given NC DOI's statements included in the Notice of Hearing. NC 20 was hopeful that the hearing would be held, thus allowing further public transparency of the rate making process and a better understanding of how our homeowners insurance rates are determined.

    NC 20 will continue its efforts to improve the property insurance rate-making system and ensure fair, equitable and accessible insurance rates for coastal policyholders.


    Willo Kelly
     President, NC 20, government Affairs

     Outer Banks Home Builders Association
     Outer Banks Association of Realtors
     willokelly@gmail.com     (252) 202-7927