Homeowners insurance controversy is brewing in North Carolina

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Homeowners issue complaints regarding rising insurance rates

Homeowners in North Carolina are voicing their concerns over some insurance companies raising premiums over the state-approved maximum. In many parts of the state, homeowners insurance is becoming more expensive due to a loophole that exists in the state’s laws. This loophole allows insurers to send “Consent to Rate” notifications to homeowners that are about to renew their insurance policies. These notifications inform homeowners that their rates will be going up more than state law would allow for normally.

Consent to Rate becomes a very problematic issue in the state

The matter has been brought to the attention of the state’s Insurance Commissioner, Wayne Goodwin, whom has received more than 700 complaints regarding the issue this year. The Commissioner notes that those receiving Consent to Rate notifications are scared of the implication behind these notices. The state’s insurance regulators are moving to protect consumers on the matter, but the Commissioner is calling for people to continue pressuring insurance companies with questions regarding Consent to Rate notices.

Old state law allows insurers to bypass current rate increase restrictions

homeowners insurance business ownerConsent to Rate notices are made possible through state law that is several decades old. The law was meant to address certain issues concerning high risk consumers, but insurers are now using this law to bypass the state’s current rate increase restrictions. Commissioner Goodwin suggests that some insurers have threatened to leave the state market if they were unable to make use of Consent to Rate notices.

Homeowners insurance companies could raise rates by 250% without approval if their Consent to Rate forms are signed by policyholders

Notably, many of the Consent to Rate notices being sent to homeowners show that their rates will only rise by $1. Once a Consent to Rate notice is signed by the homeowner, however, the insurance company can raise rates by as much as 250% at any point in the future without receiving any further consent. Homeowners are being encouraged not to ignore any Consent to Rate notice they receive because doing so could cause a lapse in their insurance coverage.

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2 Thoughts to “Homeowners insurance controversy is brewing in North Carolina”

  1. Diane dahlheimer

    I am an Allstate agent and have more experience than I would like on the matter of CTR’s. This article is very misleading to the consumer. The biggest issue I have with the state of NC setting rates is that they are not the actual company managing the profits and losses. It’s like a bureau telling your family how much you should be spending on groceries per month; but they don’t know how many children are in the HH and what the diet needs are. The state of NC experiencing many wind, hail and ice related claims on a more frequent basis. Collectively, the loss pay-outs are enormous. Also, we are now required to have a CTR signed at every renewal when they apply. The “loophole” is not to allow the company to spike the rates up to 250% on a whim; otherwise we would not be competitive and would lose our customer base. The 250% simply means, that in the extremely rare case that our rate would exceed the NCRB rate by 250% (never seen it), then we would not be able to offer the customer a policy. Perhaps interviewing someone who actually underwrites the insurance risk would have been a more accurate reflection of the use of CTR’s.

    1. Michelle Carlisle

      I am a State Farm agent and I concur with Diane, Allstate agent, remarks.
      1) If someone is going to charge 250% more, then who is going to stay with them.
      2) the purpose is to allow greater segmentation so that a neighbor without multiple claims isn’t paying the same insurance for those with multiple claims.
      3) NC is the only state in America that has their rates approved/denied by an insurance commissioner.
      4) Insurers will no longer continue doing business in NC if they can’t make a profit. Remember Florida?
      5) If insurers start pulling out or not writing new business.
      6) Call the top seven companies who make up more than 70% of the marketshare in NC and they are doing this. Why? Because we can’t continue to operate at a loss.
      7) in our case, we are able to provide substantial discounts at the renewal for those with both home-auto.
      8) Is it fair that you may have 0 claims and your neighbor has four theft claims in last three years and you pay the same rate?
      9) I can’t speak for other insurers however not all claims will increase rates (just two examples are catastophe claims (i.e. hurricane/tornado) or weather-related claims (i.e. hail/lightning/wind).
      10) I do understand an insured’s concern however if I love driving a Toyota and go to purchase one and they tell me that they could charge me up to 250% of the cost of it if I buy another one in the future, then I will be looking at a Honda. If I sign a receipt at Whole Foods that says the organic milk I buy may be 250% more the next time that I buy it, then I won’t be buying it.

      I also am totally flummoxed by why we still are required to have rate increases approved. If we need to take a 17% increase based on anticipated claims and past history (called actuarial science), and we can only take 7%, then we won’t be writing insurance in NC.
      Some companies won’t write your insurance if you don’t have your auto with them. One of the top four NC insurers non-renewed over 22,000 policies in 2012.
      🙂

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