Insurance Commissioner rejects insurance companies’ huge rate hike request

By Connie Leinbach

Ocracoke homeowners can breathe a sigh of relief for several more months since North Carolina Insurance Commissioner Mike Causey has said “No” to the insurance companies’ average 42.2% proposed increase in homeowners’ insurance rates.

The issue of a rate increase will then be made after a hearing that Causey scheduled in October or it could come before that if the Rate Bureau goes back with another proposal before then.

Causey made his announcement Feb. 6 on the N.C. Department of Insurance (DOI) website for the rate increases that had been made by the North Carolina Rate Bureau, which represents insurance companies.

Proposed rate increases ranged from 4.3% in far western counties of the state to 71.4% in some down east counties. (See rate table below)

According to the proposed rate hikes, homeowners’ insurance rates on Ocracoke — a part of the beach areas of Hyde County — would have gone up by a possible 45.1%. Coastal areas on mainland Hyde could have seen a 33.9% increase.

Causey has set a hearing date for Oct. 7 at 10 a.m.  State law gives the Insurance Commissioner 45 days to issue an order once the hearing concludes.

At the hearing, attorneys for the Rate Bureau and the DOI make their cases, said Barry L. Smith, deputy director of communications for the Department of Insurance, in an interview.

But before that, the Rate Bureau might come back to the DOI and try to work out another plan, which is what they have done in the past.

Smith said that in 2017, the Rate Bureau asked for an 18.7% rate hike and settled on a 4.8% hike. In 2018, they sought a 17.4% increase and received 4%, and in 2020, they asked for a 24.5% increase and settled on a 7.9% increase.

“In the last seven years, this is the fourth rate-increase request,” Smith said. 

Causey, in a press release on the DOI website, said he hasn’t “seen the evidence to justify such a drastic rate increase on North Carolina consumers. The Department of Insurance has received more than 24,000 emailed comments on this proposal, with hundreds more policyholders commenting by mail. Scores more consumers spoke during a public comment forum. North Carolina consumers deserve a more thorough review of this proposal. I intend to make sure they get that review.”

The Hyde County commissioners at their Feb. 5 meeting noted for public record a resolution they sent before the Feb. 2 comment deadline opposing the rate hike.

“The North Carolina Rate Bureau’s requested rate increase is inequitable, disproportionate and unjustified, and will likely harm Hyde County, its residents, its tourism industry, the welfare and prosperity of the county’s residents and property owners, and hinder the economic development of Hyde County,” the resolution said.

Proposed rates by the North Carolina Rate Bureau on behalf of the insurance companies writing policies in the state range from 4.3% in some of the mountain counties to 99.4% in some of the southern North Carolina beach areas.

“Homeowners were shocked with the high amount requested by the insurance companies, and so was I,” Causey said.

In the notice for hearing, Commissioner Causey called the insurance companies’ proposed increase “excessive and unfairly discriminatory.”

Under state law, the comments that were received by Feb. 2 will be shared with both the Department of Insurance and Rate Bureau (insurance companies), Smith said.

The N.C. Rate Bureau is not a part of the Department of Insurance. It is an unincorporated nonprofit created by the General Assembly in 1977 to provide services and programs for the insurance industry in North Carolina for automobile, property and workers compensation.  Any insurance companies writing homeowners’ insurance or personal automobile insurance policies in North Carolina must be a member of the Rate Bureau.