North Carolina home owners... Prepare thy Anus.

[Ja Rhule]

 

 

CHARLOTTE, N.C. — 

Every single homeowner in North Carolina could soon have to pay more for insurance, and it's not just a little jump. Eyewitness News uncovered documents that show insurance companies are pushing for a hike on average of 25 percent.

Documents were just filed today by the N.C. Rate Bureau, which represents every company that writes homeowners insurance policies in the state. It's asking for an average increase of 25 percent.

The actual dollar amount will vary by what part of the state you live in, but if approved, it would go into effect on August 1. 

"They just put in an increase last year," Adam Burg said. "They put in an increase this year -- what's it going to be next year?"

According to the North Carolina Department of Insurance, new homeowners insurance rates went into effect in July.

The insurance commissioner already spoke out against the hike: "I am appalled that the insurance companies would request another increase just six months later," Insurance Commissioner Wayne Goodwin said in a statement. "I believe the insurance companies should withdraw this rate filing immediately. If they do not, the insurance companies should expect a full hearing on this matter; I will not entertain any settlement negotiations."

This isn't a done deal by any means. There will be an opportunity for people to speak up about this during a public session in Raleigh on Jan. 24. The Department of Insurance said they will determine if any rate adjustments are warranted. Eyewitness News reached out to the group representing the insurers, but we did not immediately hear back.

 

 

http://www.wsoctv.com/news/news/local/homeowners-could-face-insurance-rate-increase/nccF7/#cmComments

 

 

 

 

[KendrickPanther]

It's like they don't want people to own houses.

[Happy Panther]

This is what I used to do for a living (set rates) and I can tell you it is all usually BS (from both sides but more often from the DOI). While I never set NC rates here is how it often works.

 

Company uses a bunch of math to show that it needs a 10% rate increase on say single family homes in Lincoln County because they are losing money. DOI says no rate increases over 5% that is our rule. Company can raise rates on other areas (people in other counties) or in other lines (auto) to make up for the downfall or start cancelling policies in Lincoln county except...the DOI also has rules against cancellation so the company is stuck with unprofitable business.

 

Next year comes and the company now says we need a 15% increase. Repeat and eventually the needed rate increase becomes huge.

 

The insurance commissioner is an elected official and approving a 25% rate increase would be political suicide so he says he is "appalled." He mentions six months but that is usually how often rates are reviewed, nothing new in that. The DOI will determine if rate increases are needed basically means they will say no.

 

The end result of this can be that eventually companies just decide to stop writing business in the state or when a really bad year hits they go insolvent. Usually the commissioner gets replaced and things work out but sometimes they don't

 

You can look at this report and see that companies generally lose money on the actual business they write but make up for it on investments and tax losses. While 2013 looks like a pretty good year you can see that for 2011 companies paid out $1.10 for every $1.00 they took in. You can also see some ROI numbers below 5% which is terrible for any industry. The companies have been lucky to see increased capital.

 

http://www.naic.org/documents/topic_insurance_industry_snapshots_2013_pc.pdf

 

These numbers are usually realistic as far as what increase is needed although the insurance companies will do some funny things too.