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North Carolina homeowners could face massive double-digit increases in home insurance rates in 2024.
The North Carolina Rate Bureau, representing insurers statewide, has asked the North Carolina Department of Insurance to approve a statewide home insurance rate increase of 42.2%. The bureau also requested a rate increase of 99% for homeowners in coastal areas.
The average annual rate for $300,000 in dwelling coverage in North Carolina, with a $500 deductible, is $2,024, according to Insurify data. A 42% increase on this premium would drive annual rates to $2,874.
The bureau and department of insurance will now negotiate the rate increase.
The proposed rate hike comes at a difficult time for homeowners, who are already dealing with inflation and other rising costs. Add in an increase of 42% or 99% for home insurance, and some fear they won’t be able to afford the costs associated with their homes.
The Department of Insurance hosted a public comment period for the proposed rate hike throughout January. Residents who attended the public hearings largely spoke against the rate increase.
“Many people in [coastal] Pamlico County live on fixed incomes and will be priced out of their homes and face bankruptcy,” Minnesott Beach Town Commissioner Patrick O’Donnell said at one hearing. “This is not affordable.”
While the bureau requested increases of 42.2% and 99%, it’s unlikely the department will approve those exact numbers. It’s more probable that smaller rate increases will ultimately reach homeowners.
In November 2020, the rate bureau requested a home insurance rate increase of 24.5%. But negotiations between the bureau and North Carolina Insurance Commissioner Mike Causey ultimately led to a rate increase of 7.9%.
For the Department of Insurance, these negotiations represent a balancing act as the department tries to keep rates affordable but also allow insurers to continue doing business in the state.
“What we do not want to happen is what is happening in some other states, and I’m thinking of Florida comes to mind, where insurance companies are leaving the state and consumers don’t have choices,” NCDOI spokesperson Barry Smith told WBTV.
Insurance companies have fled Florida due to costly payouts stemming from hurricane activity. As a result, Citizens Property Insurance Corporation, the insurer of last resort in Florida, is now the state’s largest policy writer.
While North Carolina doesn’t face such depletions in its insurance market, negotiations surrounding the proposed rate increase could be key to the future of the market.
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