North Carolina homeowners push back in hearing on request to hike insurance rates

By Theresa Opeka

Raleigh, NC – Property owners filled a public comment forum Monday, opposing the North Carolina Rate Bureau’s request for an average increase of 42% in homeowners’ insurance rates. The hearing was both online and in person at the NC Department of Insurance.

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As expected, no one was in favor of the increase, which could see rates in coastal areas, like Swansboro, Onslow County, go as high as 71.4% and 99% in places like Emerald Isle. 

John Davis, the mayor of Swansboro, and Mike McHugh, executive director of the Swansboro Chamber of Commerce, voiced their opposition. 

McHugh said their community, like so many others across the country, have small business owners who are coming out of the pandemic and operating on razor-thin margins, and the last thing they or their workers need is another price increase while so many insurance company CEOs are making millions of dollars. 

“If, in fact, the insurance companies are hemorrhaging money as they claim to be, it’s hard to swallow that this increase would be necessary, given the salaries that the CEO’s of the major insurance companies take in each year,” he said. “The CEO of State Farm Insurance in the year 2021 received compensation of $24.5 million, and in 2022, a similar amount of $24.4 million.” 

“People cannot afford the rate increase and will be forced to move, and businesses will suffer due to the lack of customers,” said Patrick O’Donnell, Minnesott Beach, Pamlico County commissioner. “Many people that live in Pamlico County live on fixed incomes and will be placed out of their homes and face bankruptcy. This is unaffordable.”

Barbara Scott Akinwole, an AARP North Carolina executive council member from Brunswick County, said the organization is very concerned about the increase. She said it doesn’t reflect the current economic conditions and people’s ability to shoulder it.

“In North Carolina, over a quarter of residents aged 65 and older rely on Social Security as their only source of income in retirement,” she said. “Before this year’s cost of living adjustment, those who rely on Social Security alone only had $18,500 in annual income. The average homeowner’s insurance in the U.S. is $1687.00 a year, and this proposed increase would add something like $708 to most North Carolinians’ policies.”

Scott Akinwole said the state is already experiencing an affordable housing crisis, along with increasing home values and property taxes in larger communities. The added high insurance cost, she said, will cause more displacement, disruption, and potential homelessness. 

Raleigh resident Mike Randall said he and his wife are both retired and receiving Social Security (SSI) and a pension from the state. The $135 per month cost of living (COLA) increase from SSI is the only pay increase he will receive, other than the less than 1% he and his wife have gotten in a COLA from the state in their pensions since they retired in 2017. Compare that to a proposed 40% increase in homeowners’ insurance, 62% for property taxes, and 17% for car insurance, which equals about $184 monthly. Factor in the cost of living going up 11% last year for things like medicine, food, gas, electricity, or $150 a month, and something has to give. 

“That comes to $334 a month in increases, compared to an increase in salary of $135 a month, which means I’m gonna have to make up a couple $100 somewhere,” he said. “Cut out the bird seed and the feed for those squirrels. I’ve cut out the golf, although I did take a job at a golf course, so now I can play all the golf I want.”

Sen. Natasha Marcus, D-Mecklenburg, who is also running for state insurance commissioner on the Democratic ticket in the March 5 primary, voiced her concerns that current NC Insurance Commissioner Mike Causey was absent from the proceedings. 

“The commissioner of insurance is elected by the people and is supposed to represent the people in all matters related to insurance and rates,” she said. “In a situation like this that has had the attention of a lot of people, I believe that Commissioner Causey should be here today to hear directly from the people, not just notes taken by staff given to him later. People traveled from all across the state to be here. He should be here as well.”

She said the public should have a full public hearing, with Causey presiding, starting no later than July 1 and ending by Aug. 1 on the proposed rate increase that would include evidence presented by insurance companies under oath about their profits, their salaries, about the claims made in the different regions of the state, and that evidence needs to be cross-examined by Causey.  

Paul Jones, Cumberland County, said he worked in the insurance industry for a number of years and is curious about what drove such a large increase. 

“I suspect it’s both inflation, which companies typically have an inflation endorsement that increases the replacement cost, which would cover that portion of it, but I also suspect it’s largely due to a hurricane model or storm model that obviously they’re trying to predict what the losses would be in the event of various storm events in the state.” 

He also asked if there would be an opportunity for citizens to view the rate filing to determine how the rates are developed. 

Jay Dozier, a U.S. Army veteran and insurance agent from the Fayetteville/Fort Bragg area, said a rise in rates would devastate the real estate industry.

“Home prices in North Carolina have skyrocketed, and the market is cooling,” Dozier said. “The increase in insurance rates will make it more difficult for people to buy homes since they will not meet the cap requirement because the insurance quote is too high for their own credit.” Costs would also be passed down to the renter as well.

He was especially concerned for those in the military, who rely heavily on a cost-of-living adjustment and military benefits to help pay for their homes. 

Dozier said he has a potential solution, with the increase being prorated over a three to five-year period, which would allow homeowners time to adjust to the rising costs, but if inflation and other costs go down, so should the insurance rates.

“In all homeowners policies, there’s an inflation guard that adjusts for inflation in case the cost of repairing homes becomes too expensive,” Dozier said. “I would ask that we consider a similar provision in the proposed rate increase so that if the inflation rate and the cost of construction prices go down, the insurance rate will then adjust to decrease to match. This is important because many times government creates a rate hike, and it rarely gets removed or decreased without some kind of massive effort.”

The public can still " target="_blank" rel="noopener">email comments by February 2nd. Written public comments must be received by Kimberly W. Pearce, Paralegal III, by Feb. 2 and addressed to 1201 Mail Service Center, Raleigh, NC 27699-1201.

Public comments will be shared with the NCRB. If NCDOI officials do not agree with the requested rates, the rates will either be denied or negotiated with the NCRB.

Causey will request a hearing if a settlement can’t be reached within 50 days.

A specific table of proposed homeowners’ rate increases across the state can be found here.

Theresa Opeka is the Executive Branch reporter for the Carolina Journal.