Base homeowners insurance premium rates in North Carolina will increase approximately 15% by mid-2026

RALEIGH. NC (AP) — North Carolina homeowners insurance base premium rates will increase by an average of about 15% by mid-2026 under a settlement reached by the state Department of Insurance. State and industry.

The agreement announced Friday ” by state Insurance Commissioner Mike Causey contrasts with the January 2024 request from the North Carolina Rate Bureau, which represents insurance companies, for an overall average increase of 42.2%.

Causey, an elected official who began his third term earlier this month, formally rejected the office’s request last year. This led to a formal ceremony hearing which began in October and included several weeks of witnesses, evidence and arguments. The state Insurance Department said its witnesses would argue that rates should be lowered or raised by less than 3 percent.

Without the settlement, a hearing officer – in consultation with Causey – would have decided what the new rates should be. The Tariff Board could have appealed this decision to the courts.

Causey said in a news release that the proposed rate increases “are sufficient to ensure that insurance companies, which have paid significant sums due to natural disasters and face increasing reinsurance costs due to catastrophes national authorities, have sufficient funds to pay claims. »

The bureau attributed the significant demand to high inflation – particularly on building materials – combined with catastrophic storms and “severely inadequate” premium rates to cover losses. The increases requested by the bureau varied widely, from just over 4 percent in some parts of the mountains to more than 99 percent in some beach areas.

The agreed increases, carried out in two parts, vary depending on location. On average statewide, the base rate will increase by 7.5% on June 1 and by an additional 7.5% on June 1, 2026.

The highest increases will generally occur in parts of eastern North Carolina hit hard by Hurricane Matthew in 2016 and Hurricane Florence in 2018, The News & Observer of Raleigh. reported. For example, beach areas from Carteret Counties to Brunswick Counties will see an average increase of 16% by mid-2025 and an additional 15.9% by mid-2026.

Areas most affected by historic flooding from Hurricane Helene in the fall will face below-average increases. Base rates in Buncombe, Watauga and Yancey counties, for example, will increase 4.4% in 2025 and 4.5% in mid-2026.

Among highly populated areas, base rates in Raleigh and Durham will increase by an average of 7.5% in each of the next two years. In Charlotte, rates would increase 9.3% in 2025 and 9.2% in 2026.

The settlement also prohibits the Rate Bureau from undertaking an effort to increase rates again before June 1, 2027, Causey’s statement said.

The bureau’s chief operating officer, Jarred Chappell, said separately that the settlement is “a step in the right direction” but that the bureau had asked for a larger increase “because that’s what the recent data called for.” on complaints”.

“Storms have become more violent and more devastating, more people live in disaster-prone areas, construction inflation has been particularly high, and reinsurance costs have skyrocketed. All of these cost factors remain an issue,” Chappell said in a written statement.

North Carolina’s insurance law contains a “rate consent” exception that allows industry members to insure high-risk homeowners if they agree to pay premiums at rates up to 250 % of office rate.

Although some insurers have pulled out of disaster-prone areas of North Carolina, the exception helped prevent a mass exodus of home insurers from the state. About 40% of the state’s landlord policies were set by rate consent policies in 2022, The News & Observer reported.