Raleigh. NORTH CAROLINA (AP) — Base rates for homeowners insurance premiums in North Carolina will increase by an average of about 15% by mid-2026 as part of a settlement between the state insurance department and industry.
The agreement announced Friday by Commissioner Mike Causey contrasts with a January 2024 request from the N.C. Rate Bureau, which represents insurance companies, seeking an overall average increase of 42.2%.
Causey, an elected official who began his third term earlier this month, formally rejected the bureau's request last year. That led to formal hearings that began in October and included weeks of witnesses, evidence and arguments. The state Insurance Department said its witnesses argued rates should be lowered or increased by less than 3 percent.
In addition to a settlement, the hearing officer, in consultation with Causey, will decide what the new rate should be. The rates board could have appealed the decision to the courts.
Causey said in a press release that the proposed rate increase "is sufficient to ensure that insurance companies, which have made large payments due to natural disasters and face increasing bills due to national disasters, have sufficient funds to pay claims." Reinsurance costs.
The bureau attributed its huge request to high inflation, particularly on construction materials, coupled with catastrophic storms and "grossly inadequate" premium rates to cover claims. The increases required by the bureau vary widely, from just over 4% in some mountainous areas to more than 99% in some beach areas.
The agreed markup is in two parts and will vary depending on location. The statewide average base rate will increase by 7.5% on June 1 and by an additional 7.5% on June 1, 2026.
The highest increases typically occur in parts of eastern North Carolina devastated by Hurricanes Matthew in 2016 and Florence in 2018, the Raleigh News & Observer reported. For example, the beach area from Carteret County to Brunswick County will grow an average of 16% by mid-2025 and another 15.9% by mid-2026.
Areas most affected by Hurricane Helene's historic flooding in the fall will face below-average growth. For example, base rates in Buncombe, Watauga and Yancey counties will increase by 4.4% in 2025 and 4.5% in mid-2026.
In densely populated areas, base rates in Raleigh and Durham will increase by an average of 7.5% over the next two years. In Charlotte, rates will increase 9.3% in 2025 and 9.2% in 2026.
The settlement also prohibits the rate bureau from raising rates again until June 1, 2027, Causey's news release said.
Jarred Chappell, the bureau's chief operating officer, said separately that the settlement was "a step in the right direction," but that the bureau had requested a significant increase "because that's what recent claims data is calling for." of".
"Storms are getting stronger and more destructive, more people are living in disaster-prone areas, inflation in the construction industry is particularly high and reinsurance costs are exploding," Chappell said in a written statement. "All of these cost drivers are Still a problem."
North Carolina insurance law contains an "agreed-to-rate" exception that allows industry members to insure high-risk homeowners if they agree to pay premiums at a rate up to 250% of the Bureau's rate.
While some insurance companies have already pulled out of disaster-prone areas of North Carolina, this exception helps prevent a mass exodus of home insurance companies from the state. According to The News & Observer, by 2022, about 40% of homeowner policies in the state will be based on consent rates.