Insurance Commissioner Mike Causey announces statewide 8% dwelling rate increase
What is the percentage increase in dwelling rate that was negotiated by Insurance Commissioner Mike Causey for North Carolina?
Insurance Commissioner Mike Causey negotiated an average statewide 8 percent dwelling rate increase for North Carolina. This increase is 42.6 percent points lower than the 50.6 percent increase requested by the NC Rate Bureau.
What type of properties does dwelling insurance typically cover?
Dwelling insurance, also known as Coverage A, typically covers non-owner-occupied residences with four or fewer units. This type of insurance is designed to protect the structure of a home against damage from various destructive events such as fires, wind, hail, and falling objects5. It is important to note that dwelling insurance is different from homeowners insurance, as it focuses primarily on the physical structure of the property rather than the belongings inside or liability coverage.
How does the agreed upon rate increase compare to the initial increase requested by the NC Rate Bureau?
The agreed-upon rate increase is significantly lower than the initial increase requested by the NC Rate Bureau2. The Bureau initially requested an average statewide increase of 50.6% for dwelling insurance rates. However, after negotiations, Insurance Commissioner Mike Causey announced an average statewide 8 percent dwelling rate increase for North Carolina1. This means the increase is 42.6 percentage points lower than the requested increase.
This outcome is in line with recent history, where final agreed-upon average rate increases have often been significantly lower than the initial requests by the Rate Bureau2. For instance, during the last round of negotiations on homeowners' policies in November 2020, the Bureau initially sought an overall average increase of 24.5%. However, the final settlement resulted in a much smaller 7.9% average increase.
The difference between the initial request and the final agreed-upon rate increase can be attributed to the negotiation process, during which the Department of Insurance and the Rate Bureau discuss and analyze the data and justifications for the rate changes. The decision on rate requests after the hearing can also be appealed to court, which adds another layer of review and potential adjustment to the requested rates2.
In this particular case, the lower agreed-upon rate increase is seen as a victory for North Carolina consumers, who will save more than $151.7 million per year compared to what the insurance companies initially requested. The new rate, which varies by territory, will take effect on November 1.