Lee homeowners looking at higher insurance rates
Lee County residents may see a 6.8 percent increase in their homeowners insurance costs this summer in light of a settlement agreement signed this week by the state's insurance commissioner.
The increase is lower than the 22.1 percent increase originally requested by the N.C. Rate Bureau, a Raleigh-based group that represents insurance companies in the state, for the territory that includes Lee, Harnett and Moore counties.
For a Lee County home valued at $150,000, an average insurance policy would rise from $700 to $748 annually. Under the suggested 22.1 increase, the policy cost would have jumped to $856.
The bureau had initially requested an overall, statewide average increase of 17.7 percent. According to a news release Tuesday from the N.C. Department of Insurance, the settlement agreement signed by Insurance Commissioner Wayne Goodwin allows for a statewide average rate increase of 7 percent, varying by territory and form, beginning July 1.
"We face a great challenge in making sure that (homeowners insurance) is not only affordable, but available, to consumers across the state," Goodwin said in the release. "I feel this settlement helps strike that balance, and I am pleased that the increase will be significantly smaller than what insurers originally requested."
For the area that includes Chatham, Durham, Orange and Wake counties, the original request was to allow for a homeowners insurance rate increase of 11.1 percent. The settlement agreement allows for an increase of 2.7 percent, increasing the typical insurance policy cost by $17 for a home valued at $150,000.
Coastal counties will see a steeper increase. The settlement agreement would allow for homeowners in Brunswick, Carteret, New Hanover, Onslow and Pender counties to see an increase of 19.8 percent.
Goodwin's office noted in the release that insurance department officials found some increase was justified due to the rising cost of reinsurance related to hurricane risks, and concerns regarding availability.
Kerry Hall, a spokesman for the department of insurance, said in an email that in the past several years, insurance companies have been constricting the amount of homeowners insurance they're writing, particularly along the coast.
"We don't want to experience insurers pulling out of the state altogether because they consider the risk of doing business in North Carolina too high," she said.
Hall added that the claims history for an individual territory influences its rates. If there is a history of losses in one territory versus another, that territory is likely to have higher rates, she said.
Hall said in the email that hurricanes are the predominant reason insurance costs are higher on the coast. She said insurance companies purchase reinsurance to insure themselves so that they're not "wiped out" in the case of a catastrophic event. She said the use of reinsurance became "very widespread" after Hurricane Andrew.
The last request for a homeowners insurance rate increase request in North Carolina was in 2008, when insurance companies requested a 19.5 percent statewide average increase. A settlement agreement was reached allowing for a 4.05 percent statewide average increase. That went into effect in May 2009.