'Consent to rate' insurance forms worry homeowners
Posted August 20, 2014
Raleigh, N.C. — Complaints and questions keep pouring in to 5 On Your Side about home insurance companies raising rates beyond the state-approved maximum.
Insurers are using a loophole in a state law to send “Consent to Rate” letters to homeowners who are coming up for renewal, and many are wondering what they can do to stop it.
State Insurance Commissioner Wayne Goodwin said he’s already received about 700 complaints this year about the Consent to Rate forms.
“There are people – tens of thousands of people – getting these letters,” he said. “They read the letters and they're scared to death – as I would imagine they should be – because they see terms and dollar signs and deadlines."
Goodwin said his office is trying to protect consumers, but he needs their help.
“I need more people to do what you're doing, and that is to ask questions, press companies,” he said. “We're pressing companies, but we're limited to what we can require companies to do"
The Consent to Rate form is allowed under a decades-old law that was intended for high-risk customers. It appears insurance companies are now using it as a way to bypass the rate-change process.
"There are other companies that said if they don't have this as a tool then they will leave the state," Goodwin said.
That would result in fewer companies, fewer options and potentially higher rates, he said.
Many of the forms show only a $1 increase, which may not seem like a big deal. But once a homeowner signs the form, the insurer can increase future rates up to 250 percent without further approval.
Goodwin said homeowners need to shop around for better rates now and don't wait until they are pressured by the letter and its deadline. 5 On Your Side has heard from many customers who found big savings by doing so.
But homeowners should not ignore the letter or their coverage could lapse, causing more problems.
As for any effort to close the loophole or change how insurance rates are established in North Carolina, Goodwin said, “I share the concerns that we've discussed here. But we need to look at all the different facets of it to make sure don't create a worse problem."
He said he wants to hear what homeowners who receive the letter are being told about it by their insurance company. Contact his office or file a complaint by visiting the Department of Insurance website.