North Carolina Regulator Denies Homeowners Rate Increase

North Carolina insurance companies that wanted to raise the cost of homeowners coverage by an average of roughly 25 percent were told Friday the state’s regulator is instead approving a zero overall change.

Insurance Commissioner Wayne Goodwin said that after a hearing on the requested rate increase that lasted several weeks this fall, he found “no factors or events justified the excessive costs requested by the insurance companies.”

The rates vary by geographic territory and type of insurance, but Goodwin’s office said the impact is no average change on the statewide cost of policies taking effect beginning in June. North Carolina homeowners saw a statewide average 7 percent increase last year.

The North Carolina Rate Bureau sought the increase on behalf of nearly 100 companies selling homeowners policies in the state. It is needed to cover expectations of a sharp rise in projected repair and replacement costs and the growing risk of catastrophic losses, Rate Bureau General Manager Ray Evans said.

“The commissioner looked more at the historical record than the prospective,” he said. “It is a surprise. We put on what we thought was a good case with lots of supporting detail both from our experts, the data and statistics, showing an increase overall is in order.”

The Rate Bureau’s board of directors will meet next week to discuss whether to appeal Goodwin’s decision, which would go to the state Court of Appeals, Evans said.

Goodwin’s order turned the insurance industry’s wish list upside down in some of the state’s regions.

While companies asked to raise homeowners premiums in the cities of Durham and Raleigh by 25 percent and in Durham and Wake counties by 33 percent, Goodwin ordered an average 4 percent reduction in these areas, according to state Insurance Department data.

Policies in Greensboro and Winston-Salem that companies proposed increasing by an average of 21 percent and in surrounding Triad counties by double digit percentages were held flat combined by Goodwin’s order. Charlotte homeowners might have faced a 15 percent increase, but when combined with several western Piedmont and foothills counties – Mecklenburg, Union, Alexander, Iredell, Stanly and Wilkes – Goodwin wants on average essentially no change.

Homeowners in coastal counties that have seen years of rapid premium increases also can anticipate reductions under Goodwin’s order. Insurers have warned that homes along the coast are under threat from hurricanes.

Insurers are responding to premiums they think are inadequate to make their risk worthwhile by increasingly refusing to issue policies unless homeowners sign an agreement accepting rates higher than those set by Goodwin’s office.

Such policies increased last year to 30 percent of North Carolina’s $2.4 billion homeowners market, up from 23 percent in 2010, according to state Insurance Department data.