Homeowners Insurance Premiums Increase

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 16^th, 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.