Homeowners in North Carolina, especially those in coastal areas, are bracing for higher insurance premiums over the next two years. N.C. Insurance Commissioner Mike Causey announced a settlement with insurance companies to cap the increase, but rates will still rise significantly.

The insurance industry initially proposed an average statewide rate hike of 42%, with some coastal areas seeing rates nearly double. However, after negotiations, the approved settlement limits the increase to an average of 15% over two years. This means premiums will rise by 7.5% starting this year and another 7.5% next year.

While Commissioner Causey considers this settlement a win for consumers, homeowners in the Wilmington area and other coastal regions will feel the financial pinch. Let’s dive deeper into why these increases are happening and what they mean for residents.

Why Are Insurance Rates Rising?

The request for higher premiums stems from several factors:

Inflation and Rising Costs: Labor, materials, and repair costs have surged, partly due to inflation and lingering effects of COVID-19 on supply chains.

Climate Change: Stronger and more frequent hurricanes are driving up property damage costs. For example, 2018’s Hurricane Florence caused damages exceeding $22 billion in North Carolina.

Reinsurance Costs: Insurance companies rely on reinsurance (insurance for insurers) to cover large-scale disasters. Rising global reinsurance costs, due to events like wildfires in California and hurricanes in Florida, impact North Carolina rates as well.

What Does the Settlement Mean?

The approved settlement outlines the following:

Statewide Increase: 7.5% this year and another 7.5% next year, effective June 1.

Higher Coastal Increases: Coastal areas, including New Hanover, Brunswick, and Pender counties, will see rate hikes up to 16% this year, followed by another 15.9% next year.

Breakdown by Region:

Eastern Coastal Areas: +10.5% in 2024, +10.1% in 2026.

Outer Banks: +5.1% this year, +4.8% next year.

Wake and Durham Counties: +7.5% each year.

Asheville (Buncombe County): +4.4% this year, +4.5% next year.

Why Coastal Areas Are Hit Harder

The coastal region’s higher increases are tied to their vulnerability to hurricanes and flooding. Damage from past storms like Hurricane Florence still impacts insurance rates, and newer storms haven’t even been factored into this settlement.

Additionally, more people are moving to disaster-prone areas, increasing risks and potential payouts for insurers.

What’s Next?

According to the settlement, insurance companies cannot request another rate increase until June 2027. While this provides temporary relief, industry leaders warn that current rates may still be insufficient to cover future costs.

Insurance companies argue that the approved increases don’t fully address rising claims from natural disasters, inflation in construction costs, and reinsurance challenges. They predict another rate hike request in a few years as these pressures persist.

How This Affects You

For homeowners in North Carolina, especially in coastal areas, it’s essential to prepare for higher insurance costs. Reviewing your current policy, exploring discounts, and budgeting for these changes can help ease the burden.

While the settlement prevents a drastic hike for now, homeowners may face further increases in the future as climate change and other factors continue to drive up costs.

Disclaimer—Our team has checked this article to ensure its accuracy and eliminate any misinformation. We are committed to providing clear and reliable information for our readers.