North Carolina Communities Fight Insurance Rates In Court

Published: Sun 24 Jan 2010

Larry Roth

Homeowners along the North Carolina coast might get the gift of more money in their pockets from the state Court of Appeals.

That's because the court is considering whether some homeowners insurance premiums should be frozen or even reduced after they spiked by nearly 30 percent at the same time those living in counties that are the farthest inland saw their premiums trimmed about a third.

The three-member court has heard arguments in the suit filed by communities along the coast. They contend the former insurance commissioner approved increases in 2008 without the residents knowing there had been requests by insurers to raise rates, which the plaintiffs also claim are unreasonably high. They complained about the models used to decide the rates and procedures used in the approval process.

Attorneys who represent the insurance commissioner's office and the North Carolina Rate Bureau, which represents insurers, said the law mandates the commissioner is charged with representing consumers. Therefore, approved rates can't be appealed by anyone else.

The court's ruling could be announced later this year.

The commissioner's decision allowed a 29.8 percent increase for homeowners policies covering coastal properties from Morehead City to Sunset Beach. The premiums for coverage of homes in the Outer Banks counties of Pamilco, Hyde, Dare and Currituck became 22 percent higher, which still was well below the doubling of rates originally requested by insurers. The jump affected policies renewed or written as of May 1.

Meanwhile, homeowners in 32 western counties saw their premiums drop.

The rate changes affected policies written by both private insurers and the Beach Plan, North Carolina's insurer of coastal properties. North Carolina's General Assembly had to bolster the plan by capping insurers' costs and passing the liability on to all property owners in the state. Some insurers said they would stop doing business in the state unless their exposure to losses through the Plan was reduced.

This all comes too late for at least one insurance company. State Farm has decided to no longer provide homeowners coverage to the approximately 1,600 policy holders if has on North Carolina's barrier islands starting May 1. The non-renewal notices will be sent March 1. Company officials say the company's risk on the islands is higher than they like. It also is considering ending some coverage in other coastal states.

In a separate move, State Farm and Nationwide are ending their coverage of some mobile homes in North Carolina.