As Outer Banks faces major insurance hikes, commissioner addresses residents’ concerns

MANTEO — A court date is set for Oct. 7, at which time North Carolina Insurance Commissioner Mike Causey said he will hear evidence supporting the North Carolina Rate Bureau’s request for an average homeowners insurance rate increase of 42.2% that’s “up to 99.4%” in some coastal counties.

The proposal could mean over 60% jumps in rates for Dare County’s beach communities, according to local resolutions and letters against the increase for reasons that include compounding difficulties in home ownership.

The Rate Bureau is a non-governmental agency the state legislature created in 1977, and it represents the insurance industry, Causey explained.

“It was the largest rate hike I’ve ever seen since I’ve been in this job,” Causey — who was sworn into office in 2017 — said of the January rate increase filing as he addressed 26 people Monday afternoon at the Virginia S. Tillett Community Center, located at 950 Marshall C. Collins Drive in Manteo.

N.C. Insurance Commissioner addresses criticism ahead of general election

In response to questions about a percentage of increase he would find acceptable and agree to, he remained noncommittal.

When the matter is brought to court this fall, Causey said he’s “keeping an open mind. I want to see what sort of proof and evidence the insurance industry through the Rate Bureau brings forward.”

For the previous average 24.5% homeowners rate increase requested in 2020, Causey canceled the hearing and settled outside of court for an average 7.9% increase, according to a Nov. 23, 2021, Department of Insurance press release.

Causey said Monday that he’d capped that increase at 10%, and it went into effect in January 2022.

He also said at various times during his talk that he was supposed to be a neutral party, that he was working on behalf of consumers and that he was responsible for keeping the insurance industries solvent.

Many insurance companies say they’re paying out more in homeowners claims than they’re taking in on premiums, Causey said. For every dollar they receive in premiums, they pay out $1.15, and “some estimates are higher.”

A man in attendance who identified himself as a Farm Bureau employee said that insurance companies are required to purchase reinsurance, and its “cost has doubled in the past two years. Every insurance company lost money over the last two years.”

Local governments, people and organizations across the state immediately and vehemently expressed opposition to the proposed rate hike, which the North Carolina Rate Bureau asked to go into effect Aug. 1.

Causey said his office received over 25,000 letters and emails mostly opposing the increase. Organizations including the AARP, realtors’ associations and city councils sent in correspondence.

Locally, the towns of Duck, Kitty Hawk, Kill Devil Hills and Manteo each adopted resolutions against the proposed rate increase during their respective January meetings. The Dare County Board of Commissioners and the Town of Southern Shores each sent a letter of opposition to the increase to Causey, also in January.

The proposal would raise rates 45.1% for Dare and Currituck counties’ beach communities and 33.9% for their inland areas, according to the resolutions and letters.

Homeowners with coverage through the N.C. Insurance Underwriting Association — commonly called “the Beach Plan” — would also face the 15% surcharge imposed by state law, “ultimately resulting in an insurance rate increase of 60.1% for beach communities and 48.9% for inland areas,” the Kill Devil Hills, Kitty Hawk and Manteo resolutions noted.

The Beach Plan insures about 70% of homes in the state’s 20 coastal counties, Causey said.

The Beach Plan insures the fourth-largest number of plans in the state, but it’s “not comparable” to other insurance companies, Donna Creef, Outer Banks Association of REALTORS® (OBAR) Government Affairs Director, said during the question-and-answer part of the talk.

Creef has expressed frequent concerns in recent months about the state’s insurance market’s “narrowing” and more people being driven to the Beach Plan, which the legislature set up as the market of last resort. She was one of many Outer Banks homeowners who recently lost their insurance with Nationwide, despite never having filed a claim.

The Virginian-Pilot broke the story in September that Nationwide would not renew over 10,500 homeowners insurance policies in North Carolina, with over 1,000 of those nonrenewals on the Outer Banks.

OBAR and Dare County jointly hosted a property insurance forum on Nov. 2 to educate the local community about how insurance rates are set in North Carolina.

A man in attendance Monday opined that the rate increases “always hit northeastern North Carolina,” despite the area not having “heavy claims” in comparison to the rest of the state.

“We have this thing called Cape Hatteras,” he said, observing that hurricanes either go out to sea from there or go inland. But “every time we’re getting socked” with higher rate increases than other regions in the state that storms affect, where more claims are filed, he contested.

“I noticed that,” Causey acknowledged. This year’s rate increase filing asked for a 4% increase for Haywood County, where he said “floods devastated a whole community.”

The remnants of Tropical Storm Fred in August 2021 led to deadly flooding in Haywood County, which is in the mountains west of Asheville, according to multiple news reports.

In response to questions about his office swaying insurance companies or overhauling the state’s insurance system, Causey several times directed people to the only group he said could change the system.

“The legislature is by far the most powerful branch of government in North Carolina,” Causey said. “They pretty much do what they want to do. I encourage you to talk to your legislators.”

This is the fourth homeowners insurance rate increase request since Causey has been in office, according to the Rate Bureau website. Five requests for dwelling rate increases have also been filed during his tenure.

Dwelling policies cover non-owner-occupied properties, such as rental and investment homes.

The most recent dwelling rate filing, July 13, 2023, was proposed to go into effect June 1 and would mean a 78.6% increase for policies on the Outer Banks. The statewide average increase would be 50.6%.

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Causey continued that hearing from April 8 to July 22, according to a March 8 Department of Insurance press release.

Causey worked in the insurance industry for over 25 years, including owning his own agency, according to his professional biography. He told The Pilot he worked in life, accident and health insurance.

Causey won his three-way Republican primary earlier this month with almost 61% of the vote, according to the North Carolina State Board of Elections website, but he told reporters before the talk that this was not a campaign tour stop.

He told The Pilot that he holds forums such as the one in Manteo across the state, and he’d already had a meeting in neighboring Currituck County scheduled with various law enforcement agencies about “what we need to do to go after insurance fraud.”

He said during the talk that insurance fraud “is one of the biggest drivers pushing up our insurance premium.”