Homeowners in North Carolina may notice an increase in their homeowner’s insurance premiums in the next few months. The Rate Bureau and insurance
companies reached an agreement for a rate revision. The average increase will
be 7%, increasing in coastal counties. However, The rate revision is not the only
reason why we are seeing a change in our premiums.
Geographically, North Carolina’s coast sticks out like a nose waiting to be
punched. During the past couple of years, the outer banks and counties along the coast had taken a beating
by Hurricane Irene and other tropical systems. Further inland, millions of
dollars of damage were caused by severe weather, the bulk of the damage caused
by the long-track tornadoes on April 16th, 2011.
Long before these events occurred, companies were taking part in a practice
called cash flow underwriting. Before
the crash of 2008, most companies were making substantial amounts of money on investments.
Since this money was being made, underwriting standards were flexible and
companies were covering exposures for cheap rates. When the stock market
crashed, the investment dollars were gone and companies had to scramble to
make up for the loss. Underwriting started to become more strict, and rates rose to balance revenue and claims.
Due to these heavy losses from claims, reinsurance companies (companies who cover
substantial losses for insurance companies) demanded for North Carolina
carriers to either purge their books of business or raise rates to make up for
their losses. Remember that carriers have to pay a premium for their book of
business. This explains why some carriers do not want to write anything east of
I-95 due to “high wind exposure” unless it is supported with an auto policy. If you had been non-renewed by your insurance company and it was not supported with an auto policy, that is why.
Luckily we have access to various insurance markets to place your business. We represent companies that specialize in one market. For example GMAC and Progressive are great markets for car insurance. NC Grange Mutual company specializes in homeowners insurance. There is no need for a supported auto policy unlike captive agencies.