Janice R. Andrews
As Western North Carolina grapples with the lingering effects of Hurricane Helene, a significant legal dispute has emerged over a proposed increase in homeowner insurance premiums. The North Carolina Rate Bureau, which represents insurance companies, has requested an average 42% hike, pointing to escalating costs from severe storms and inflation in building materials. The hearing, which began on Monday, is expected to be contentious and prolonged.
The Push for Higher Premiums
Earlier this year, the North Carolina Rate Bureau (NCRB) submitted a comprehensive 2,000-page document outlining the justification for a 42% statewide premium hike. However, the proposed increases vary dramatically by region. In parts of the state’s mountainous areas, the requested hike is just over 4%, while some coastal regions could face a staggering 99% increase. Major cities like Raleigh, Charlotte, and Greensboro are also targeted for about a 40% rise. In Buncombe County, an area particularly devastated by Hurricane Helene, the suggested increase is 20.5%.
The NCRB attributes these proposed increases to years of claims data and predictions of future storm-related damage. Their attorney, Mickey Spivey, emphasized the growing severity and frequency of natural disasters in North Carolina, underscoring the urgency for higher premiums.
“Whether it’s climate change or not, there’s no denying that we’re seeing more intense, costly storms than ever before,” Spivey remarked.
Pushback from the Insurance Commissioner
Despite the Bureau’s argument, North Carolina Insurance Commissioner Mike Causey previously rejected the request in February due to public concern. This rejection led to the current hearing, where both sides will present evidence in a legal process that could last for weeks. Commissioner Causey, who is up for re-election, expressed frustration with the Bureau’s demands, stating, “We couldn’t come close to an agreement, which is why we’re here today.”
The last similar rate increase request occurred in 2021, when the Bureau initially sought a 24.5% rise, which eventually settled at 7.9% after negotiations. This time, however, talks broke down, leaving the issue to be resolved through legal proceedings.
Once the hearing concludes, hearing officer Amy Funderburk, alongside Commissioner Causey, will have 45 days to determine whether the proposed rates are justified or excessive. If the rates are deemed too high, the state could issue an order to lower them, although insurers could appeal the decision in court.
Homeowners Face High Stakes
The outcome of this hearing could have serious consequences for North Carolina homeowners. The Rate Bureau has warned that if premiums aren’t allowed to rise significantly, insurers may be forced to stop issuing new policies. Spivey warned that without rate hikes, insurers might increasingly turn to a “consent to rate” system, which allows them to charge up to 250% of the standard rate in high-risk areas.
David Marlett, an insurance expert from Appalachian State University, noted that states impacted by severe weather face two choices: allow rates to rise in response to growing claims or invest in infrastructure that can better withstand climate-related disasters.
Inflation Adds to the Pressure
In addition to the growing threat of storms, insurers point to inflation as a critical factor behind the proposed rate hike. Spivey explained that the costs of building materials have soared, making home repairs and rebuilding after storms significantly more expensive. The destruction caused by Hurricane Helene, which devastated many of North Carolina’s western communities, further demonstrated the need for higher premiums, according to the insurers.
However, Terence Friedman, the Insurance Department’s attorney, argued that the Rate Bureau is inflating its projections. He accused the industry of using outdated calculation methods and emphasized that alternative models could ensure insurers still turn a profit without such drastic rate increases.
Political Implications
The timing of the hearing, with early voting for North Carolina’s elections set to begin on October 17, has also added a political dimension. Commissioner Causey, a Republican, faces Democratic state senator Natasha Marcus in the upcoming election. Marcus has criticized Causey for not overseeing the hearing personally, calling it a “dereliction of duty.” She also raised concerns that any decision could be delayed until after Election Day, potentially impacting the election’s outcome.
Causey defended his decision to appoint Funderburk to preside over the hearing, citing his lack of legal expertise as the reason for his absence.
Conclusion
As North Carolina continues its recovery from Hurricane Helene, the decision on whether to approve the requested 42% premium hike could have far-reaching implications for homeowners. With inflation, climate change, and political pressures all playing a role, the outcome of this case will be closely watched by insurers, residents, and politicians alike.
The image generated portrays a courtroom scene tied to the legal proceedings over the insurance premium hike, with subtle hurricane damage in the background as a reminder of the storms’ impact.
