RALEIGH, N.C. — With many Western North Carolina residents still without power and water in the wake of Hurricane Helen, the insurance industry is calling for an average increase in homeowners insurance rates of more than 42% across the state. A public hearing on the request began Monday.
Insurance Commissioner Mike Causey has begun what is expected to be several weeks of witnesses, evidence and legal arguments against the state Insurance Department and the North Carolina Rate Bureau, which represents insurers seeking rate increases. .
In more than 2,000 pages of data submitted last January, the rate agency called for proposed increases ranging from just over 4% in some mountainous areas to 99% in some coastal areas. The proposed increases in and around large cities like Raleigh, Charlotte and Greensboro are about 40%.
Across the 11 western counties hardest hit by Helen, including Buncombe County in Asheville, the required increase is 20.5%. This percentage is based on past years of claims payments and future claims projections.
After accepting public comments, Causey denied the request in February, prompting a public hearing. In previous rounds of premium requests, industry and the Secretary have negotiated settlements before public hearings. Ahead of a final public hearing scheduled for early 2022, the agency agreed to an average premium rate increase of 7.9% a few weeks ago, instead of the 24.5% it had sought.
This time, Mr. Coursey told reporters on Monday, “We didn’t come close to it. That’s why we’re here today.”
Once the hearing concludes, the hearing officer, in consultation with Causey, will have 45 days to determine whether the proposed fees are excessive and, if so, issue an order establishing new fees. The order could be challenged in a state appellate court.
Mickey Spivey, the rate attorney, told hearing officer Amy Funderburk that the combination of the highest inflation in 40 years, particularly in building materials, and the “increasingly worsening” catastrophic storm are contributing to the current situation. He said this shows insurance rates are “grossly inadequate.”
Spivey said Helen, which caused unprecedented destruction to mountain communities in the western part of the state, and Hurricane Florence in 2018, which caused billions of dollars in damage in eastern North Carolina, much of it paid for by insurance companies. listed.
Although it wasn’t mentioned Monday, Hurricane Milton has exploded into a Category 5 hurricane and is heading toward Florida, with its path expected to mostly pass through North Carolina.
“Whether you want to call it climate change or not, the fact is that we are experiencing catastrophic storms that are bigger, stronger, and more damaging than anything we have ever experienced in our lifetimes. There’s no denying it,” Spivey said.
Terrence Friedman, an attorney for the insurance department, argued that the insurance industry continues to use actuarial methods to calculate rate increases that ignore what state law requires.
Friedman said the agency’s requested interest rate has been inflated and that the agency’s actuaries will certify that there is an “alternative recommended rate that the agency’s members are constitutionally entitled to.”
But Spivey said the Department of Insurance’s witnesses will seek to either actually lower rates or keep increases to less than 3%.
Not all owners’ premiums will increase or decrease based on the final approved rate. There are other factors that insurance companies consider when setting up your bill.
Mr. Spivey said that without a fair profit and the ability to cover claims, industry companies would insure high-risk homeowners only if they agreed to pay premiums of up to 250% of the authority’s rates. He said the legal exception would have to be invoked more frequently. Otherwise, more insurance companies will stop issuing insurance policies altogether, he said.
David Marlette, an insurance professor at Appalachian State University, said the “consent to rating” exception in North Carolina’s law has helped prevent a mass exodus of home insurers, as some states have experienced. .
While each state has a different model for regulating rates, states affected by additional hurricanes and storms essentially face two options, Marlette said. Either they allow rates to rise to cover insurance claims, or they “somehow build structures that can withstand climate change.” ”
Friedman criticized the agency for citing Herren in his opening statement, saying it should not be used as a basis for raising rates for storm survivors. He also pointed out that most of Helen’s damage was caused by flooding and would be covered separately from the homeowners policy currently being considered.
The hearing is likely to continue after early voting begins on October 17th. Causey, a two-term Republican commissioner, is being challenged by Democratic state Sen. Natasha Marcus.
Marcus, speaking at a press conference outside the Health Department’s headquarters, criticized Causey’s refusal to preside over the hearing, calling it “an ludicrous dereliction of one of the primary duties of this office.” She also lamented that any decision would be taken after voting day.
Causey said he is not trying the case, in part because he is not a lawyer. State law allows a person to choose another person to preside over the hearing, which is a quasi-judicial proceeding.
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This article corrects the insurance professor’s name to David Marlett, not David Marlett.
