North Carolina braces for potential 42.2% rise in homeowners' insurance costs

[LinvilleGorge]

Yeah, it's a negotiation ploy.

In a statement following Causey’s announcement, NC Rate Bureau Chief Operating Officer Jarred Chappell said, “This is an expected step, and part of the rate filing process. It doesn’t preclude settlement talks, and many rate negotiations have been settled before the hearing date arrives."

Last time around they were asking for like 25% and settled for about 8%. Shoot for the moon and hope you land in the stars. They'll probably end up getting about 15%.

[Happy Panther]

15 hours ago, Davidson Deac II said:

Admittedly I don't read the details, but didn't they originally ask for much higher amounts the last couple of times, and what they got ended up being less than half of what they originally requested?

Yes this is what I was alluding to earlier.

One reason the request is likely so high is because the requests keep being denied. If every 3 years you demonstrate that you need X and only get half of X then it snowballs due to inflation.
And construction cost inflation is 10% per year.

And remember that a rate increase for a policy written on 1/1/2024 might be to pay a claim that settles in 7 years

What the head of the DOI (an elected official) is doing is trying to give insurance companies just enough increase to survive while keeping consumers happy enough to keep buying insurance. The question is where do insurance companies find the extra money if they can't get the rate they want.

The answer is cutting employee expenses for one. Then you get rid of insureds that lose you money. That's why your company drops you if you have a claim that isn't your fault.

The next options are not good. Denying claims or eventually exiting the state although there are significant barriers to exit. 

What all this isn't is just a negotiation tactic. You can't just submit a frivolous rate request. It will get thrown out. The DOI rejects any little thing that isn't mathematically sound.

Filings are public. Attached is a sample:

Mike Causey knows that 42% is likely a real number and he also knows he can't approve it. Tough job and it's all likely unsustainable.

 

[LinvilleGorge]

They're just trying to survive, y'all.

https://newsroom.statefarm.com/2022-by-the-numbers/#:~:text=Net income for 2022 was,insurance in force%2C %241.1 trillion.

 

[Happy Panther]

37 minutes ago, LinvilleGorge said:

They're just trying to survive, y'all.

https://newsroom.statefarm.com/2022-by-the-numbers/#:~:text=Net income for 2022 was,insurance in force%2C %241.1 trillion.

 

That's the life side from 2022.
For P&C:

Quote

The net worth for State Farm Mutual Automobile Insurance Company ended the year at $131.2 billion compared with $143.2 billion at year-end 2021 and $126.1 billion at year-end 2020. The change during 2022 includes a noteworthy decrease in the value of the P-C companies’ unaffiliated stock portfolio, driven by decreases in the U.S. equities market, along with the P-C group of companies pre-tax operating loss. The State Farm P-C group of companies reported earned premium of $74.3 billion and a combined underwriting loss of $13.2 billion. This result compared to an underwriting loss of $4.7 billion on earned premium of $67.2 billion in 2021, along with $401 million in dividends to State Farm Mutual Automobile Insurance Company policyholders. The 2022 underwriting results reflect significantly higher auto lines incurred claims as well as higher homeowners non-catastrophe incurred claims and another year of catastrophe activity across the country. The 2022 underwriting loss, combined with investment and other income of $4.9 billion, resulted in a P-C pre-tax operating loss of $8.3 billion.

 

[LinvilleGorge]

Sorry, can't pity them. Insurance companies happily take your money and then when it's time to pay up here comes the bullshit. Their books look just fine. If they start laying off rank and file workers it'll be to pay out more dividends not because they're struggling to survive.

[Davidson Deac II]

1 hour ago, LinvilleGorge said:

Sorry, can't pity them. Insurance companies happily take your money and then when it's time to pay up here comes the bullshit. Their books look just fine. If they start laying off rank and file workers, it'll be to pay out more dividends not because they're struggling to survive.

I have had to file claims and never really had much of a problem getting them to pay.  They usually do what they are supposed to.  My stepfather passed away a couple of years ago, and they paid his 30,000-life insurance in about 3 weeks.  My brother in-law died of cancer last month, and my sister's 400,000 policy payment is being processed.  Had to file a claim on my house for some ice damage about 20 years ago, they paid up quickly.  Had to provide a lot of paperwork, but they were very helpful in both situations.  

 

 

Edited February 8, 2024 by Davidson Deac II

[Davidson Deac II]

2 hours ago, Happy Panther said:

That's the life side from 2022.
For P&C:

 

Quote

 

They were turned down.  

 

https://www.wxii12.com/article/north-carolina-insurance-commissioner-rejects-42-increase-home-insurance-rates/46660257#

[Happy Panther]

14 hours ago, Davidson Deac II said:

 

They were turned down.  

 

https://www.wxii12.com/article/north-carolina-insurance-commissioner-rejects-42-increase-home-insurance-rates/46660257#

I know!